BROADWIND, INC. 10-Q

Item 1. Financial Statements   BROADWIND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share data)         March 31,     December 31,       2022     2021                     ASSETS                 CURRENT ASSETS:                 Cash   $ 773     $ 852   Accounts receivable, net     18,898       13,802   Employee retention credit receivable     —       497   Contract assets     3,175       1,136   Inventories, net     39,067       33,377   Prepaid expenses and other current assets     2,482       2,661   Total current assets     64,395       52,325   LONG-TERM ASSETS:                 Property and equipment, net     44,545       43,655   Operating lease right-of-use assets     17,588       18,029   Intangible assets, net     3,269       3,453   Other assets     658       585   TOTAL ASSETS   $ 130,455     $ 118,047   LIABILITIES AND STOCKHOLDERS’ EQUITY                 CURRENT LIABILITIES:                 Line of credit and other notes payable   $ 13,855     $ 6,650   Current portion of finance lease obligations     2,250       2,060   Current portion of operating lease obligations     1,798       1,775   Accounts payable     26,944       16,462   Accrued liabilities     3,402       3,654   Customer deposits     8,399       12,082   Total current liabilities     56,648       42,683   LONG-TERM LIABILITIES:                 Long-term debt, net of current maturities     170       177   Long-term finance lease obligations, net of current portion     3,713       2,481   Long-term operating lease obligations, net of current portion     17,951       18,405   Other     180       167   Total long-term liabilities     22,014       21,230   COMMITMENTS AND CONTINGENCIES                     STOCKHOLDERS’ EQUITY:                 Preferred stock, $ 0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding     —       —   Common stock, $ 0.001 par value; 30,000,000 shares authorized; 20,292,073 and 19,859,650 shares issued as of March 31, 2022, and December 31, 2021, respectively     20       20   Treasury stock, at cost, 273,937 shares as of March 31, 2022 and December 31, 2021     ( 1,842 )     ( 1,842 ) Additional paid-in capital     395,435       395,372   Accumulated deficit     ( 341,820 )     ( 339,416 ) Total stockholders’ equity     51,793       54,134   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 130,455     $ 118,047       The accompanying notes are an integral part of these condensed consolidated financial statements.   ​ 1 Table of Contents     BROADWIND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data)       Three Months Ended March 31,       2022     2021   Revenues   $ 41,844     $ 32,728   Cost of sales     39,832       32,446   Gross profit     2,012       282   OPERATING EXPENSES:                 Selling, general and administrative     3,902       4,410   Intangible amortization     183       183   Total operating expenses     4,085       4,593   Operating loss     ( 2,073 )     ( 4,311 ) OTHER (EXPENSE) INCOME, net:                 Interest expense, net     ( 345 )     ( 229 ) Other, net     21       3,362   Total other (expense) income, net     ( 324 )     3,133   Net loss before provision for income taxes     ( 2,397 )     ( 1,178 ) Provision for income taxes     7       32   NET LOSS     ( 2,404 )     ( 1,210 ) NET LOSS PER COMMON SHARE—BASIC:                 Net loss   $ ( 0.12 )   $ ( 0.07 ) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC     19,708       17,178   NET LOSS PER COMMON SHARE—DILUTED:                 Net loss   $ ( 0.12 )   $ ( 0.07 ) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED     19,708       17,178       The accompanying notes are an integral part of these condensed consolidated financial statements.   2 Table of Contents     BROADWIND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (in thousands, except share data)       Common Stock     Treasury Stock     Additional                       Shares     Issued             Issued     Paid-in     Accumulated               Issued     Amount     Shares     Amount     Capital     Deficit     Total                                                             BALANCE, December 31, 2020     17,211,498     $ 17       ( 273,937 )   $ ( 1,842 )   $ 384,749     $ ( 342,263 )   $ 40,661   Stock issued for restricted stock     241,806       —       —       —       —       —       —   Stock issued under defined contribution 401(k) retirement savings plan     26,265       —       —       —       258       —       258   Share-based compensation     —       —       —       —       219       —       219   Shares withheld for taxes in connection with issuance of restricted stock     ( 105,399 )     —       —       —       ( 847 )     —       ( 847 ) Sale of common stock, net     1,100,000       1       —       —       6,100       —       6,101   Net loss     —       —       —       —       —       ( 1,210 )     ( 1,210 ) BALANCE, March 31, 2021     18,474,170     $ 18       ( 273,937 )   $ ( 1,842 )   $ 390,479     $ ( 343,473 )   $ 45,182                                                             BALANCE, December 31, 2021     19,859,650     $ 20       ( 273,937 )   $ ( 1,842 )   $ 395,372     $ ( 339,416 )   $ 54,134   Stock issued for restricted stock     480,595       —       —       —       —       —       —   Stock issued under defined contribution 401(k) retirement savings plan     146,790       —       —       —       282       —       282   Share-based compensation     —       —       —       —       192       —       192   Shares withheld for taxes in connection with issuance of restricted stock     ( 194,962 )     —       —       —       ( 411 )     —       ( 411 ) Net loss     —       —       —       —       —       ( 2,404 )     ( 2,404 ) BALANCE, March 31, 2022     20,292,073     $ 20       ( 273,937 )   $ ( 1,842 )   $ 395,435     $ ( 341,820 )   $ 51,793     The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 3 Table of Contents     BROADWIND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)       Three Months Ended March 31,       2022     2021   CASH FLOWS FROM OPERATING ACTIVITIES:                 Net loss   $ ( 2,404 )   $ ( 1,210 ) Adjustments to reconcile net cash used in operating activities:                 Depreciation and amortization expense     1,519       1,553   Deferred income taxes     ( 7 )     ( 5 ) Change in fair value of interest rate swap agreements     2       5   Stock-based compensation     192       219   Allowance for doubtful accounts     ( 23 )     ( 218 ) Common stock issued under defined contribution 401(k) plan     282       258   Loss (gain) on disposal of assets     3       ( 23 ) Changes in operating assets and liabilities:                 Accounts receivable     ( 5,073 )     1,229   Employee retention credit receivable     497       ( 3,372 ) Contract assets     ( 2,038 )     ( 269 ) Inventories     ( 5,690 )     ( 13,552 ) Prepaid expenses and other current assets     179       699   Accounts payable     10,538       7,591   Accrued liabilities     ( 254 )     419   Customer deposits     ( 3,683 )     ( 1,764 ) Other non-current assets and liabilities     ( 45 )     3   Net cash used in operating activities     ( 6,005 )     ( 8,437 ) CASH FLOWS FROM INVESTING ACTIVITIES:                 Purchases of property and equipment     ( 492 )     ( 612 ) Proceeds from disposals of property and equipment     —       23   Net cash used in investing activities     ( 492 )     ( 589 ) CASH FLOWS FROM FINANCING ACTIVITIES:                 Proceeds from line of credit, net     7,207       3,223   Proceeds from long-term debt     125       595   Payments on long-term debt     ( 8 )     ( 150 ) Principal payments on finance leases     ( 495 )     ( 339 ) Shares withheld for taxes in connection with issuance of restricted stock     ( 411 )     ( 847 ) Proceeds from sale of common stock, net     —       6,101   Net cash provided by financing activities     6,418       8,583   NET DECREASE IN CASH     ( 79 )     ( 443 ) CASH beginning of the period     852       3,372   CASH end of the period   $ 773     $ 2,929     The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 4 Table of Contents   BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars are presented in thousands, except share, per share and per employee data or unless otherwise stated)     NOTE 1 — BASIS OF PRESENTATION     The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Heavy Fabrications, Inc. (“Broadwind Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Industrial Solutions, LLC (“Broadwind Industrial Solutions”). All intercompany transactions and balances have been eliminated. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10 -Q and Article 10 of Regulation S- X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included.   Operating results for the  three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2022, or any other interim period, which may differ materially due to, among other things, the risk factors set forth in our Annual Report on Form 10 -K for the year ended December 31, 2021 .   The December 31, 2021 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2021 .   There have been no material changes in the Company’s significant accounting policies during the  three months ended March 31, 2022 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2021 .   Company Description      Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications. The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company’s capabilities include, but are not limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, gearbox repair, heat treatment, assembly, engineering and packaging solutions. The Company’s most significant presence is within the U.S. wind energy industry, which accounted for 53 % and 63 % of the Company’s revenue during the first   three months of 2022  and 2021, respectively.    Liquidity   The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the Credit Facility (as defined below), equipment financing, and access to the public or private debt and/or equity markets, including the option to raise capital from the sale of our securities under the Form S- 3  (as discussed below).   See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt.    Total debt and finance lease obligations at  March 31, 2022 totaled $ 19,988 , which includes current outstanding debt and finance leases totaling $ 16,105 . The Company's revolving line of credit balance is included in the “Line of credit and other notes payable” line item in the Company's condensed consolidated balance sheet.    5 Table of Contents   On August 18, 2020, the Company filed a “shelf” registration statement on Form S- 3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 13, 2020 ( the “Form S- 3” ) and expires on October 12, 2023. This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.    On March 9, 2021, the Company entered into a $ 10,000  Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC. Pursuant to the terms of the Equity Distribution Agreement, the Company issued 1,897,697   shares of the Company’s common stock thereunder during the first two quarters of  2021. The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $ 9,725   after deducting commissions paid of approximately $ 275   and before deducting other expenses of $ 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 ERC is available for wages paid through September  30, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. The maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. In the first and second quarters of 2021, the Company received ERC benefits of $ 3,372 and $ 3,593 , respectively, which were recorded in “Other income (expense), net” in the Company’s condensed consolidated statement of operations. The Company did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019. The receivable for the remaining uncollected ERC benefit was $ 497  as of December 31, 2021 and was included in the “Employee retention credit receivable” line item in the Company’s condensed consolidated balance sheet at December  31, 2021. The remaining $ 497 for the uncollected ERC benefit was collected during January 2022.   The Company 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. ​ If assumptions regarding the Company’s production, sales and subsequent collections from certain of the Company’s large customers, as well as receipt of customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID- 19 pandemic, emerging variants and its effects on domestic and global economies, the Company may in the future encounter cash flow and liquidity issues. If the Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants, and could lose access to its Credit Facility. This could limit the Company’s operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and debt covenants, there can be no assurances that its operations will generate sufficient cash, or that credit facilities will be available in an amount sufficient to enable the Company to meet these financial obligations. ​ Management’s Use of Estimates   The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, health insurance reserves, and valuation allowances on deferred taxes. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates, particularly in light of the COVID- 19 pandemic.     NOTE 2 — REVENUES   Revenues are recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.   The following table presents the Company’s revenues disaggregated by revenue source for the three months ended March 31, 2022 and 2021 :       Three Months Ended March 31,       2022     2021   Heavy Fabrications   $ 27,272     $ 22,777   Gearing     10,584       5,349   Industrial Solutions     4,073       4,604   Eliminations     ( 85 )     ( 2 ) Consolidated   $ 41,844     $ 32,728     6 Table of Contents   Revenue within the Company’s Gearing and Industrial Solutions segments, as well as industrial fabrication product line revenues within the Heavy Fabrications segment, are generally recognized at a point in time, typically when the promised goods or services are physically transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.   For many tower sales within the Company’s Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.   During the three  months ended March 31,  2022 and 2021, the Company recognized a portion of revenue within the Heavy Fabrications segment over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Within the Gearing segment, the Company recognized revenue over time of $ 172  for the three months ended March 31,  2021  as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Since the Company's projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts. During the fourth quarter of 2021, the Company ceased recording revenue over time within the Gearing segment due to a change in terms. Within the Heavy Fabrications segment, the Company recognized revenue over time of $ 2,471  and $ 1,256  for the three  months ended March  31, 2022 and 2021, respectively. Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment. Contract assets represent the Company’s rights to consideration for work completed but not billed at the end of the period.    The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.   The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less.     NOTE 3 — EARNINGS PER SHARE     The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2022 and 2021 , as follows:        Three Months Ended       March 31,       2022     2021   Basic earnings per share calculation:                 Net loss   $ ( 2,404 )   $ ( 1,210 ) Weighted average number of common shares outstanding     19,707,815       17,178,136   Basic net loss per share   $ ( 0.12 )   $ ( 0.07 ) Diluted earnings per share calculation:                 Net loss   $ ( 2,404 )   $ ( 1,210 ) Weighted average number of common shares outstanding     19,707,815       17,178,136   Common stock equivalents:                 Non-vested stock awards (1)     —       —   Weighted average number of common shares outstanding     19,707,815       17,178,136   Diluted net loss per share   $ ( 0.12 )   $ ( 0.07 )     ( 1 ) Restricted stock units granted and outstanding of 623,191  and 1,171,093  as of March 31, 2022 and 2021, are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company’s net loss for the three months ended March 31, 2022 and 2021. ​ 7 Table of Contents     NOTE 4 — INVENTORIES     The components of inventories as of March 31, 2022 and December 31, 2021 are summarized as follows:       March 31,     December 31,       2022     2021   Raw materials   $ 24,461     $ 16,148   Work-in-process     12,574       13,639   Finished goods     4,004       6,575         41,039       36,362   Less: Reserve for excess and obsolete inventory     ( 1,972 )     ( 2,985 ) Net inventories   $ 39,067     $ 33,377     ​   NOTE 5 — INTANGIBLE ASSETS   Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC completed in 2017. Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 1   to 6   years.   As of March 31, 2022 and December 31, 2021 , the cost basis, accumulated amortization and net book value of intangible assets were as follows:       March 31, 2022     December 31, 2021                                       Remaining                                     Remaining                                       Weighted                                     Weighted                       Accumulated     Net     Average                     Accumulated     Net     Average       Cost     Accumulated     Impairment     Book     Amortization             Accumulated     Impairment     Book     Amortization       Basis     Amortization     Charges     Value     Period     Cost     Amortization     Charges     Value     Period   Intangible assets:                                                                                 Noncompete agreements   $ 170     $ ( 146 )   $ —     $ 24       0.8     $ 170     $ ( 139 )   $ —     $ 31       1.1   Customer relationships     15,979       ( 7,361 )     ( 7,592 )     1,026       3.8       15,979       ( 7,284 )     ( 7,592 )     1,103       4.0   Trade names     9,099       ( 6,880 )     —       2,219       5.5       9,099       ( 6,780 )     —       2,319       5.8   Intangible assets   $ 25,248     $ ( 14,387 )   $ ( 7,592 )   $ 3,269       5.0     $ 25,248     $ ( 14,203 )   $ ( 7,592 )   $ 3,453       5.2   ​ As of March 31, 2022 , estimated future amortization expense was as follows:   2022   $ 550   2023     664   2024     661   2025     661   2026     422   2027 and thereafter     311   Total   $ 3,269   ​ ​    NOTE 6 — ACCRUED LIABILITIES   Accrued liabilities as of March 31, 2022 and December 31, 2021 consisted of the following:        March 31,     December 31,       2022     2021   Accrued payroll and benefits   $ 2,703     $ 2,992   Fair value of interest rate swap     —       27   Accrued property taxes     188       —   Income taxes payable     16       1   Accrued professional fees     81       129   Accrued warranty liability     115       125   Self-insured workers compensation reserve     113       166   Accrued other     186       214   Total accrued liabilities   $ 3,402     $ 3,654     8 Table of Contents     NOTE 7 — DEBT AND CREDIT AGREEMENTS   The Company’s outstanding debt balances as of March 31, 2022 and December 31, 2021 consisted of the following:       March 31,     December 31,       2022     2021   Line of credit   $ 13,556     $ 6,350   Other notes payable     272       274   Long-term debt     197       203   Less: Current portion     ( 13,855 )     ( 6,650 ) Long-term debt, net of current maturities   $ 170     $ 177     Credit Facility   On October 26, 2016, the Company established a three -year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On February 25, 2019, the line of credit was expanded and extended for three years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto, providing the Company and its subsidiaries with a $ 35,000 secured credit facility (as amended to date, the “Credit 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.   On October  29, 2020, the Company executed the First Amendment to the Amended and Restated Loan Agreement, implementing a payoff of a syndicated lender and a pricing grid based on the Company’s trailing twelve month EBITDA under which applicable margins range from 2.25 % to 2.75 % for London Interbank Offering Rate (“LIBOR”) rate loans and 0.00 % and 0.75 % for base rate loans, and extending the term of the Credit Facility to  July  31, 2023.   On February 23, 2021, the Company executed the Second Amendment to the Amended and Restated Loan Agreement, which waived testing of the fixed charge coverage covenant for the quarters ended March 31, 2021 and June 20, 2021, added a new liquidity covenant applicable to the quarter ended March 31, 2021 and new minimum EBITDA covenants applicable to the quarters ended March 31, 2021 and June 30, 2021. As of September 30, 2021, the Company transitioned back to a fixed charge coverage covenant.   On November 8, 2021, the Company executed the Third Amendment to the Amended and Restated Loan Agreement (the “Third Amendment”) which waived the fixed charge coverage ratio default for the quarter ended September 30, 2021, suspended testing of the fixed charge coverage ratio covenant through September 30, 2022, added a minimum EBITDA covenant applicable to the three -month period ending December 31, 2021, the six -month period ending March 31, 2022, the nine -month period ending June 30, 2022 and the twelve -month period ending September 30, 2022  and added a reserve of $ 5,000  to the Revolving Loan Availability through December 31, 2022.    On February 28, 2022, the Company executed the Fourth Amendment to the Amended and Restated Loan Agreement (the “Fourth Amendment”) which reduced the line of credit from $ 35,000 to $ 30,000 , extended the maturity date until January 31, 2024, waived the minimum EBITDA covenant for the three -month period ended December 31, 2021, revised the fixed charge coverage ratio covenant as of December 31, 2022 for the trailing nine -month period after March 31, 2022, revised the minimum EBITDA covenant applicable to the three -month period ending March 31, 2022, the six -month period ending June 30, 2022 and the nine -month period ending September 30, 2022, revised the liquidity reserve to $ 2,500 and amended certain other provisions in connection with the discontinuation of LIBOR and replacement with the forward-looking term Secured Overnight Financing Rate (Term SOFR) administered by CME Group, Inc.   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 customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications.    In conjunction with the Amended and Restated Loan Agreement, during June 2019, the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of $ 6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire original term of the Credit Facility at 2.13 %, before considering the Company’s risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which may subject the Company’s results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company’s condensed consolidated financial statements as of   December 31, 2021 . The interest rate swap expired in  February 2022.    As of March 31, 2022 , there was $ 13,556   of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional $ 13,944 . The Company was in compliance with all financial covenants under the Credit Facility as of March 31, 2022.   9 Table of Contents   Other     In 2016, the Company entered into a $ 570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, net of current maturities” line item of the Company’s condensed consolidated financial statements as of March 31, 2022 and December 31, 2021 . The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021, 2020, 2019, and 2018, $114 of the loan was forgiven. As of March 31, 2022 , the loan balance was $114. In addition, the Company has outstanding notes payable for capital expenditures in the amount of $ 355   and $ 363  as of March 31, 2022 and December 31, 2021 , respectively, with $ 185 and $ 186  included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of March 31, 2022 and December 31, 2021 . The notes payable have monthly payments that range from $ 3  to $ 16  and an interest rate of approximately 4 %. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature in  September  2028.   NOTE 8 — LEASES   The Company leases certain facilities and equipment. The leases are accounted for under Accounting Standard Update 2016 - 02, Leases (“Topic 842” ) and the Company elected to apply each available practical expedient. The discount rates used for the leases are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.   The Company has elected to apply the short-term lease exception to all leases of one year or less. During the three months ended March 31, 2022  and 2021, the Company had additional operating leases that resulted in right-of-use assets obtained in exchange for lease obligations of $ 0 and $ 907 , respectively. Additionally, during the  three months ended March 31, 2022  and 2021, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of $ 92   and $ 263 , respectively.    Some of the Company’s facility leases include options to renew. The exercise of the renewal options is typically at the Company’s discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.   10 Table of Contents   Quantitative information regarding the Company’s leases is as follows:       Three Months Ended March 31,       2022     2021   Components of lease cost                 Finance lease cost components:                 Amortization of finance lease assets   $ 288     $ 186   Interest on finance lease liabilities     80       68   Total finance lease costs     368       254   Operating lease cost components:                 Operating lease cost     698       759   Short-term lease cost     151       196   Variable lease cost (1)     226       230   Sublease income     ( 47 )     ( 46 ) Total operating lease costs     1,028       1,139                     Total lease cost   $ 1,396     $ 1,393                     Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2022 and 2021:                 Cash paid for amounts included in the measurement of lease liabilities:                 Operating cash outflow from operating leases   $ 869     $ 887                     Weighted-average remaining lease term-finance leases at end of period (in years)     2.9       1.9   Weighted-average remaining lease term-operating leases at end of period (in years)     8.7       9.5   Weighted-average discount rate-finance leases at end of period     6.2 %     9.0 % Weighted-average discount rate-operating leases at end of period     8.6 %     8.5 %     ( 1 ) Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment. ​ As of March 31, 2022 , future minimum lease payments under finance leases and operating leases were as follows: ​     Finance     Operating               Leases     Leases     Total   2022   $ 2,006     $ 2,605     $ 4,611   2023     1,921       3,388       5,309   2024     1,038       2,933       3,971   2025     634       3,015       3,649   2026     422       3,059       3,481   2027 and thereafter     722       14,045       14,767   Total lease payments     6,743       29,045       35,788   Less—portion representing interest     ( 780 )     ( 9,296 )     ( 10,076 ) Present value of lease obligations     5,963       19,749       25,712   Less—current portion of lease obligations     ( 2,250 )     ( 1,798 )     ( 4,048 ) Long-term portion of lease obligations   $ 3,713     $ 17,951     $ 21,664   ​    NOTE 9 — FAIR VALUE MEASUREMENTS     Fair Value of Financial Instruments     The carrying amounts of the Company’s financial instruments, which include cash, accounts receivable, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.    11 Table of Contents   The Company entered into an interest rate swap in June 2019 to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these condensed consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date. The interest rate swap expired in February 2022.    The Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:   Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.   Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.    Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.   The following tables represent the fair values of the Company’s financial liabilities as of March 31, 2022 and December 31, 2021 :       March 31, 2022       Level 1     Level 2     Level 3     Total   Liabilities measured on a recurring basis:                                 Interest rate swap   $ —     $ —     $ —     $ —   Total liabilities at fair value   $ —     $ —     $ —     $ —         December 31, 2021       Level 1     Level 2     Level 3     Total   Liabilities measured on a recurring basis:                                 Interest rate swap   $ —     $ 27     $ —     $ 27   Total liabilities at fair value   $ —     $ 27     $ —     $ 27       NOTE 10 — INCOME TAXES     Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of March 31, 2022 , the Company has a full valuation allowance recorded against deferred tax assets. During the three months ended March 31, 2022 , the Company recorded a provision for income taxes of $ 7 , compared to a provision for income taxes of $ 32  during the three months ended March 31, 2021 .    The Company files income tax returns in U.S. federal and state jurisdictions. As of March 31, 2022 , open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2021 , the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of $ 277,310  of which $ 227,781 will generally begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire.   Since the Company has no unrecognized tax benefits, they will not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next twelve months. In addition, Section  382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under Section 382 of the IRC or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of  Section  382 of the IRC in 2010, the Company determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to $ 14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company’s income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.    12 Table of Contents   In February 2013, the Company adopted a Stockholder Rights Plan, which was amended in February 2016 and approved by the Company’s stockholders (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under Section  382 of the IRC. On February 7, 2019, 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”). On February 3, 2022, the Board approved an amendment which included an extension of the Rights Plan for an additional three years, which was subsequently approved at the  2022 Annual Meeting of Stockholders.   The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, becoming the beneficial owner of 4.9 % or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February  22, 2013. Each Right entitles its holder to purchase from the Company one one -thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $ 7.26  per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9 % or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9 % or more of the outstanding shares of the Company’s common stock as of February  12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date.    As of March 31, 2022 , the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had no accrued interest and penalties as of March 31, 2022 .     NOTE 11 — SHARE-BASED COMPENSATION   ​ There was no  stock option activity during the three months ended March 31, 2022  and no  stock options were outstanding as of March 31, 2022 .    The following table summarizes the Company’s restricted stock unit and performance award activity during the three months ended March 31, 2022 :                Weighted Average       Number of     Grant-Date Fair Value       Shares     Per Share   Unvested as of December 31, 2021     918,448     $ 2.73   Granted     187,005     $ 1.92   Vested     ( 480,595 )   $ 1.92   Forfeited     ( 1,667 )   $ 1.91   Unvested as of March 31, 2022     623,191     $ 3.10     Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards. For the three months ended March  31, 2022, 194,962  shares were withheld to cover $ 411  of tax obligations.    The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021 , as follows:        Three Months Ended March 31,       2022     2021   Share-based compensation expense:                 Cost of sales   $ 24     $ 26   Selling, general and administrative     168       193   Net effect of share-based compensation expense on net income   $ 192     $ 219   Reduction in earnings per share:                 Basic earnings per share   $ 0.01     $ 0.01   Diluted earnings per share   $ 0.01     $ 0.01     13 Table of Contents     NOTE 12 — LEGAL PROCEEDINGS   The Company is party to a variety of legal proceedings that arise in the normal course of its business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial condition or cash flows. It is possible that if one or more of such matters were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability.     NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS     The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its condensed consolidated financial statements.     NOTE 14— 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.   The Company’s segments and their product and service 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. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentration, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and tower adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers ( 1,650 tower sections), sufficient to support turbines generating more than 1,100  megawatts of power. The Company has expanded production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, oil and gas (“O&G”) and other infrastructure markets.   Gearing    The Company provides gearing and gearboxes to a broad set of customers in diverse markets including; onshore and offshore O&G fracking and drilling, surface and underground mining, wind energy, steel, material handling and other infrastructure markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for nearly a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.   Industrial Solutions    The Company provides supply chain solutions, light fabrication, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market, as well as other clean technology markets.   14 Table of Contents   Corporate   “Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results.    The accounting policies of the reportable segments are the same as those referenced in Note 1, “Basis of Presentation” of these condensed consolidated financial statements. Summary financial information by reportable segment for the three months ended March 31, 2022 and 2021 is as follows:       Heavy Fabrications     Gearing     Industrial Solutions     Corporate     Eliminations     Consolidated   For the Three Months Ended March 31, 2022                                                 Revenues from external customers   $ 27,272     $ 10,576     $ 3,996     $ —     $ —     $ 41,844   Intersegment revenues     —       8       77       —       ( 85 )     —   Net revenues     27,272       10,584       4,073       —       ( 85 )     41,844   Operating loss     ( 461 )     ( 112 )     ( 209 )     ( 1,291 )     —       ( 2,073 ) Depreciation and amortization     879       476       103       61       —       1,519   Capital expenditures     482       —       9       1       —       492         Heavy Fabrications     Gearing     Industrial Solutions     Corporate     Eliminations     Consolidated   For the Three Months Ended March 31, 2021                                                 Revenues from external customers   $ 22,777     $ 5,349     $ 4,602     $ —     $ —     $ 32,728   Intersegment revenues     —       —       2       —       ( 2 )     —   Net revenues     22,777       5,349       4,604       —       ( 2 )     32,728   Operating loss     ( 1,700 )     ( 989 )     ( 14 )     ( 1,608 )     —       ( 4,311 ) Depreciation and amortization     945       458       106       44       —       1,553   Capital expenditures     563       —       20       29       —       612     15 Table of Contents       Total Assets as of       March 31,     December 31,   Segments:   2022     2021   Heavy Fabrications   $ 46,026     $ 37,131   Gearing     50,529       46,219   Industrial Solutions     11,004       10,825   Corporate     234,481       228,219   Eliminations     ( 211,585 )     ( 204,347 )     $ 130,455     $ 118,047       NOTE 15 — COMMITMENTS AND CONTINGENCIES     Environmental Compliance and Remediation Liabilities     The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Certain environmental laws may impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.    Allowance for Doubtful Accounts     Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due and other relevant criteria.    The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the collectability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the three months ended March 31, 2022 and 2021 consisted of the following:        For the Three Months Ended March 31,       2022     2021   Balance at beginning of period   $ 47     $ 473   Bad debt expense     —       5   Write-offs     ( 23 )     ( 222 ) Other adjustments     —       ( 1 ) Balance at end of period   $ 24     $ 255     Collateral     In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations.    Liquidated Damages     In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and/or are dependent on actual losses sustained by the customer. The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of  March 31, 2022 or December 31, 2021.    16 Table of Contents       NOTE 16 — 12 -MONTH EARNINGS STATEMENT   Pursuant to Section 11 of the Securities Act of 1933, as amended and Rule 158 promulgated thereunder, the following is an unaudited earnings statement for the twelve months ended March  31, 2022.         In thousands   Revenues   $ 154,735   Cost of sales     147,494   Gross profit     7,241   Operating expenses     17,597   Operating loss     ( 10,356 ) Other income (expense), net     12,008   Net income before benefit for income taxes     1,652   Benefit for income taxes     ( 1 ) Net income   $ 1,653   Net income per common share-basic   $ 0.09   Net income per common share-diluted   $ 0.08         Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations     The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2021. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties including those arising as a result of, or amplified by, the COVID-19 pandemic. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries, as appropriate.    (Dollars are presented in thousands except share, per share and per employee data or unless otherwise stated)     KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE   In addition to measures of financial performance presented in our consolidated financial statements in accordance with GAAP, we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (as defined below) and free cash flow which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance.   Key Financial Measures       Three Months Ended       March 31,       2022     2021   Net revenues   $ 41,844     $ 32,728   Net loss   $ (2,404 )   $ (1,210 ) Adjusted EBITDA (1)   $ (8 )   $ 1,217   Capital expenditures   $ 492     $ 612   Free cash flow (2)   $ (4,487 )   $ (9,393 ) Operating working capital (3)   $ 22,622     $ 11,711   Total debt   $ 14,025     $ 14,456   Total orders   $ 52,693     $ 34,214   Backlog at end of period (4)   $ 117,133     $ 94,400   Book-to-bill (5)     1.3       1.0     (1) We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, and other non-cash gains and losses) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when they internally evaluate the performance of our business, review financial trends and make operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.   (2) We define free cash flow as adjusted EBITDA plus or minus changes in operating working capital less capital expenditures net of any proceeds from disposals of property and equipment. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding future investments.   (3) We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.   (4) Our backlog at March 31, 2022 and 2021 is net of revenue recognized over time.    (5) We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period.   The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measure:       Three Months Ended       March 31,       2022     2021   Net loss   $ (2,404 )   $ (1,210 ) Interest expense     345       229   Income tax provision     7       32   Depreciation and amortization     1,519       1,553   Share-based compensation and other stock payments     525       613   Adjusted EBITDA     (8 )     1,217   Changes in operating working capital     (3,987 )     (6,649 ) Employee retention credit receivable     —       (3,372 ) Capital expenditures     (492 )     (612 ) Proceeds from disposal of property and equipment     —       23   Free Cash Flow   $ (4,487 )   $ (9,393 )   17 Table of Contents   OUR BUSINESS     First Quarter Overview     We booked $52,693 in new orders in the first quarter of 2022, up from $34,214 in the first quarter of 2021. Within our Heavy Fabrications segment, wind tower orders increased 112% compared to the prior year quarter as tower customers secured 2022 production capacity to support ongoing wind turbine tower installation projects.   Industrial fabrications product line orders, also within the Heavy Fabrications segment, decreased 36% primarily due to weaker mining demand, which is largely driven by the timing of projects. Gearing segment orders increased 42% compared to the prior year quarter primarily due to higher demand from oil and gas (“O&G”) and mining customers, partially offset by reduced demand from steel customers. Orders within our Industrial Solutions segment increased by 28% as compared to the prior year quarter, primarily due to the timing of orders associated with aftermarket projects partially offset by a decrease in new gas turbine orders.   We recognized revenue of $41,844 in the first quarter of 2022, up 28% compared to the first quarter of 2021, primarily due to a 98% increase in Gearing revenue. Gearing revenue was driven higher by strong order intake in recent quarters from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue. Heavy Fabrications segment revenues increased by 20% from the prior year quarter primarily due an increase in revenue associated with wind repowering projects in the current year combined with the absence of one-time adverse events that occurred during the prior year quarter such as the temporary shut-down of our Abilene, Texas plant due to a weather-related event and a customer driven project delay. Additionally, the industrial fabrications product line revenue within the Heavy Fabrications segment, increased 57% from the prior year quarter primarily due to higher recent order intake from industrial customers and revenue recognized on our Pressure Reducing Systems (“PRS”) units. Partially offsetting this was a decrease in revenue within our Industrial Solutions segment of $531, representing a 12% decrease compared to the prior year quarter, primarily due to the timing of new gas turbine and aftermarket projects.   We recorded a net loss of $2,404 or $0.12 per share in the first quarter of 2022, compared to a net loss of $1,210 or $0.07 per share in the first quarter of 2021 primarily due to the absence of $3,372 of other income related to the employee retention credit recorded during the first quarter of 2021 under the CARES Act, partially offset by the higher sales volumes discussed above.    On March 27, 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes.  The ERC is available for wages paid through September 30, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. The maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in our condensed consolidated statement of operations. We did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019. The receivable for the remaining uncollected ERC benefit was $497 as of December 31, 2021 and was included in the “Employee retention credit receivable” line item in the Company’s condensed consolidated balance sheet at December 31, 2021. The remaining of $497 for the uncollected ERC benefit was collected during January 2022.   COVID-19 Pandemic   The COVID-19 pandemic has disrupted business, trade, commerce and financial markets in the U.S. and globally. Through March 31, 2022, we experienced an adverse impact to our business, operations and financial results as a result of the COVID-19 pandemic due in part to a decline in order activity levels, manufacturing inefficiencies associated with supply chain disruptions and employee staffing constraints due to the spread of the COVID-19 pandemic. In response to the pandemic, we continue to right-size our workforce and delay certain capital expenditures. In future periods, we may experience weaker customer demand, requests for extended payment terms, customer bankruptcies, additional supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors that could negatively impact the Company and its business, operations and financial results. As we cannot predict the duration or scope of the pandemic, including in light of the emerging variants, or its impact on economic and financial markets, any negative impact to our results cannot be reasonably estimated, but it could be material.   We continue to monitor closely the Company’s financial health and liquidity and the impact of the pandemic on the Company, including emerging variants. We have been able to serve the needs of our customers while taking steps to protect the health and safety of our employees, customers, partners, and communities. Among these steps, we follow the guidance provided by the U.S. Centers for Disease Control and Prevention.   18 Table of Contents   RESULTS OF OPERATIONS     Three months ended March 31, 2022, Compared to Three months ended March 31, 2021     The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended March 31, 2022, compared to the three months ended March 31, 2021.       Three Months Ended March 31,     2022 vs. 2021               % of Total             % of Total                       2022     Revenue     2021     Revenue     $ Change     % Change   Revenues   $ 41,844       100.0 %   $ 32,728       100.0 %   $ 9,116       27.9 % Cost of sales     39,832       95.2 %     32,446       99.1 %     7,386       22.8 % Gross profit     2,012       4.8 %     282       0.9 %     1,730       613.5 % Operating expenses                                                 Selling, general and administrative expenses     3,902       9.3 %     4,410       13.5 %     (508 )     (11.5 )% Intangible amortization     183       0.4 %     183       0.6 %     —       0.0 % Total operating expenses     4,085       9.8 %     4,593       14.0 %     (508 )     (11.1 )% Operating loss     (2,073 )     (5.0 )%     (4,311 )     (13.2 )%     2,238       51.9 % Other (expense) income, net                                                 Interest expense, net     (345 )     (0.8 )%     (229 )     (0.7 )%     (116 )     (50.7 )% Other, net     21       0.1 %     3,362       10.3 %     (3,341 )     (99.4 )% Total other (expense) income, net     (324 )     (0.8 )%     3,133       9.6 %     (3,457 )     (110.3 )% Net loss before provision for income taxes     (2,397 )     (5.7 )%     (1,178 )     (3.6 )%     (1,219 )     (103.5 )% Provision for income taxes     7       0.0 %     32       0.1 %     (25 )     (78.1 )% Net loss   $ (2,404 )     (5.7 )%   $ (1,210 )     (3.7 )%   $ (1,194 )     (98.7 )%   Consolidated     Revenues increased by $9,116 versus the prior year quarter.  Gearing segment revenue was up $5,235 from the first quarter of 2021, primarily driven by higher recent order intake from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue. Heavy Fabrications segment revenues increased by 20% primarily due to an increase in revenue associated with wind repowering projects in the current year combined with the absence of one-time adverse events that occurred during the prior year quarter such as the temporary shut-down of our Abilene, Texas plant due to a weather-related event and a customer driven project delay. Additionally, the industrial fabrications product line revenue within the Heavy Fabrications segment increased 57% from the prior year quarter primarily due to higher recent order intake from industrial customers and revenue recognized on our PRS units. Industrial Solutions segment revenue decreased by 12%, primarily due to the timing of new gas turbine customer and aftermarket projects.   Gross profit increased by $1,730 when compared to the prior year quarter primarily due to higher sales volumes and the absence of one-time events that occurred in the prior year quarter in the Heavy Fabrications segment. This was partially offset by higher material and ramp-up costs in the Gearing segment and supply chain disruptions in the Heavy Fabrications segment. As a result, gross margin increased to 4.8% during the three months ended March 31, 2022, from 0.9% during the three months ended March 31, 2021.   Due to higher revenue levels, lower legal expenses, and reduced salaries and benefits, operating expenses as a percentage of sales decreased to 9.8% in the current-year quarter from 14.0% in the prior year quarter.   Net loss was $2,404 during the three months ended March 31, 2022, compared to $1,210 during the three months ended March 31, 2021 primarily due to the factors described above and the absence of the $3,372 ERC benefit recorded in the prior year quarter.    Heavy Fabrications Segment         Three Months Ended       March 31,       2022     2021   Orders   $ 34,161     $ 20,797   Tower sections sold     169       169   Revenues     27,272       22,777   Operating loss     (461 )     (1,700 ) Operating margin     (1.7 )%     (7.5 )%   Wind tower orders, which are within the Heavy Fabrications segment, increased 112% versus the prior year quarter as tower customers secured 2022 production capacity to support ongoing wind turbine tower installation projects. Industrial fabrications product line orders, also within the Heavy Fabrications segment, decreased 36% from the prior year quarter primarily due to weaker mining demand, which is largely driven by the timing of projects. Heavy Fabrications segment revenues increased 20% primarily due to an increase in revenue associated with wind repowering projects in the current year combined with the absence of one-time adverse events that occurred during the prior year quarter such as the temporary shut-down of our Abilene, Texas plant due to a weather-related event and a customer driven project delay. Additionally, industrial fabrication revenues increased 57% from the first quarter of 2021 primarily due to higher recent order intake from industrial customers and revenue recognized from our PRS units in the current year quarter.   19 Table of Contents   Heavy Fabrications segment operating loss decreased by $1,239 compared to the prior year quarter. The quarter-over-quarter improvement in operating performance is primarily a result of higher sales in the current year quarter, and the absence of one-time events that occurred during the prior year quarter such as the weather-related event and a customer driven project delay, partially offset by ongoing supply chain disruptions. Operating margin was (1.7)% during the three months ended March 31, 2022, a decrease from (7.5%) during the three months ended March 31, 2021.   Gearing Segment       Three Months Ended       March 31,       2022     2021   Orders   $ 14,061     $ 9,921   Revenues     10,584       5,349   Operating loss     (112 )     (989 ) Operating margin     (1.1 )%     (18.5 )%   Gearing segment orders increased 42% from the prior year period primarily due to increased demand from O&G and mining customers, partially offset by reduced demand from steel customers. Gearing revenue was up 98% relative to the comparable prior year period due to higher order intake in recent quarters from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue.   Gearing segment operating loss decreased $877 from the prior year period. This was primarily attributable to higher sales partially offset by increased material and ramp-up costs. Operating margin was (1.1%) during the three months ended March 31, 2022, an improvement from (18.5)% during the three months ended March 31, 2021, driven primarily by the items identified above.   Industrial Solutions Segment         Three Months Ended       March 31,       2022     2021   Orders   $ 4,471     $ 3,496   Revenues     4,073       4,604   Operating loss     (209 )     (14 ) Operating margin     (5.1 )%     (0.3 )%   20 Table of Contents   Industrial Solutions segment orders increased by 28% from the prior year period primarily due to the timing of orders associated with aftermarket projects. Segment revenue decreased by 12% from the prior year period primarily due to the timing of new gas turbine and aftermarket projects. The increased operating loss versus the prior-year quarter was primarily a result of a lower margin sales mix sold.    Corporate and Other     Corporate and Other expenses during the three months ended March 31, 2022 decreased from the prior year period primarily due to lower salaries and benefits.        LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES     As of March 31, 2022, cash totaled $773, a decrease of $79   from December 31, 2021. Cash balances remain limited as operating receipts and disbursements flow through our Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to our condensed consolidated financial statements), which is in a drawn position. Debt and finance lease obligations at March 31, 2022 totaled $19,988. As of March 31, 2022, we had the ability to borrow up to an additional $13,944 un der the Credit Facility.   On March 9, 2021, we entered into a $10,000 Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the “Manager”). Pursuant to the terms of the Equity Distribution Agreement, we issued 1,897,697 shares of the Company's common stock thereunder during the first two quarters of 2021. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately $9,725 after deducting commissions paid of approximately $275   and before deducting other expense of $411.    On February 28, 2022, we 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 existing liquidity reserve to $2,500 and amended certain other provisions in connection with the discontinuation of LIBOR and replacement with the forward-looking term Secured Overnight Financing Rate (Term SOFR) administered by CME Group, Inc.   We anticipate 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 securities under the Form S-3 will be adequate to meet our liquidity needs for at least the next twelve months.   21 Table of Contents   If assumptions regarding our production, sales and subsequent collections from certain of our large customers, as well as receipt of customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic, and emerging variants, and its effects on domestic and global economies, we may encounter cash flow and liquidity issues. ​ If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit our operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on our stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity linked financing, if available, will be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on us. While we believe that we will continue to have sufficient cash available to operate our businesses and to meet our financial obligations and debt covenants, there can be no assurances that our operations will generate sufficient cash or that existing or new credit facilities or equity or equity linked financings will be available in an amount sufficient to enable us to meet these financial obligations.   Sources and Uses of Cash     The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2022 and 2021:       Three Months Ended       March 31,       2022     2021   Total cash (used in) provided by:                 Operating activities   $ (6,005 )   $ (8,437 ) Investing activities     (492 )     (589 ) Financing activities     6,418       8,583   Net decrease in cash   $ (79 )   $ (443 )   Operating Cash Flows     During the three months ended March 31, 2022, net cash used in operating activities totale d $6,005   com pared to net cash used in operating activities of $8,437 during the prior year period. The decrease in net cash used was primarily due to our operating performance and less operating working capital build, partially offset by the absence of ERC benefits recognized in the prior year period.   Investing Cash Flows     During the three months ended March 31, 2022, net cash used in investing activities tot aled $492, comp ared to net cash used in investing activities of $589 during the prior year period. The decrease in net cash used in investing activities as compared to the prior-year period was primarily due to a decrease in net purchases of property and equipment.   Financing Cash Flows     During the three months ended March 31, 2022, net cash provided by financing activities tot aled $6,418, co mpared to net cash provided by financing activities of $8,583 during the prior year period. The decrease was primarily due to the absence of proceeds from the sale of securities under the Equity Distribution Agreement in the current year, partially offset by increased net borrowings under our Credit Facility in the current year.    In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, net of current maturities” line item of our condensed consolidated financial statements as of March 31, 2022 and December 31, 2021. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021, 2020, 2019 and 2018, $114 of the loan was forgiven. As of March 31, 2022, the loan balance was $114. In addition, we have outstanding notes payable for capital expenditures in the amount of $355   and $363 as of March 31, 2022 and December 31, 2021, respectively, with $185 and $186 included in the “Line of Credit and other notes payable” line item of our condensed consolidated financial statements as of March 31, 2022 and December 31, 2021. The notes payable have monthly payments that range from $3 to $16 and an interest rate of approximately 4%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature in September 2028.   The CARES Act provided for the ERC,  which is a refundable tax credit against certain employment taxes.  The ERC is available for wages paid through September 30, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. The maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in our condensed consolidated statement of operations. We did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019. The receivable for the remaining uncollected ERC benefit is $497 as of December 31, 2021 and is included in the “Employee retention credit receivable” line item in our condensed consolidated balance sheet at December 31, 2021. The remaining of $497 for the uncollected ERC benefit was collected during January 2022.   22 Table of Contents   CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS     The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2021. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID-19 pandemic: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the CARES Act; (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.   23 Table of Contents   Item 3. Quantitative and Qualitative Disclosures About Market Risk     We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K under the Securities Act and as such are not required to provide information under this Item pursuant to Item 305I of Regulation S-K.