What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-06 · 373 added, 147 removed, 838 unchanged (38% of the section changed)

59 unchanged sentences

30,000,000 shares authorized;

20,292,073 and 19,859,650 shares issued as of March 31, 2022, and December 31, 2021, respectively

Treasury stock, at cost, 273,937 shares as of March 31, 2022 and December 31, 2021

20,744,988 and 19,859,650 shares issued as of June 30, 2022, and December 31, 2021, respectively

Treasury stock, at cost, 273,937 shares as of June 30, 2022 and December 31, 2021

( 1,842 )  

15 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

$ 50,012  

$ 46,491  

$ 91,856  

$ 79,219  

Cost of sales

1 unchanged sentence

44,293  

87,450  

76,739  

OPERATING EXPENSES:

4 unchanged sentences

( 1,912 )  

( 2,311 )  

( 3,985 )  

OTHER (EXPENSE) INCOME, net:

Paycheck Protection Program loan forgiveness

Interest expense, net

( 776 )  

( 318 )  

( 1,121 )  

Total other (expense) income, net

( 776 )  

Net loss before provision for income taxes

12,608  

( 1,100 )  

15,741  

Net (loss) income before provision for income taxes

( 2,688 )  

10,297  

( 5,085 )  

Provision for income taxes

NET (LOSS) INCOME

( 2,703 )  

NET LOSS PER COMMON SHARE—BASIC:

10,252  

( 5,107 )  

NET (LOSS) INCOME PER COMMON SHARE—BASIC:

Net (loss) income

$ ( 0.13 )  

$ 0.55  

$ ( 0.26 )  

$ 0.50  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

1 unchanged sentence

18,761  

NET LOSS PER COMMON SHARE—DILUTED:

19,977  

17,974  

NET (LOSS) INCOME PER COMMON SHARE—DILUTED:

Net (loss) income

$ ( 0.13 )  

$ 0.53  

$ ( 0.26 )  

$ 0.48  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

1 unchanged sentence

19,400  

19,977  

18,864  

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

29 unchanged sentences

$ 45,182  

Stock issued for restricted stock

440,611  

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

71,334  

Share-based compensation

Shares withheld for taxes in connection with issuance of restricted stock

( 124,814 )  

( 644 )  

Sale of common stock, net

797,697  

10,252  

BALANCE, June 30, 2021

19,658,998  

( 273,937 )  

( 1,842 )  

393,839  

( 333,221 )  

58,796  

BALANCE, December 31, 2021

21 unchanged sentences

$ 51,793  

Stock issued for restricted stock

328,139  

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

207,722  

Share-based compensation

Shares withheld for taxes in connection with issuance of restricted stock

( 82,946 )  

( 133 )  

( 2,703 )  

BALANCE, June 30, 2022

20,744,988  

( 273,937 )  

$ ( 1,842 )  

$ 396,021  

$ ( 344,523 )  

$ 49,676  

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

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

$ ( 5,107 )  

$ 9,042  

Adjustments to reconcile net cash used in operating activities:

Depreciation and amortization expense

Paycheck Protection Program loan forgiveness

Deferred income taxes

2 unchanged sentences

Allowance for doubtful accounts

( 23 )  

Common stock issued under defined contribution 401(k) plan

9 unchanged sentences

Accounts payable

10,538  

Accrued liabilities

( 254 )  

Customer deposits

1 unchanged sentence

Other non-current assets and liabilities

( 45 )  

Net cash used in operating activities

8 unchanged sentences

Proceeds from line of credit, net

10,687  

Proceeds from long-term debt

Payments on long-term debt

( 107 )  

Principal payments on finance leases

4 unchanged sentences

Net cash provided by financing activities

NET DECREASE IN CASH

12,114  

NET (DECREASE) INCREASE IN CASH

( 803 )  

CASH beginning of the period

17 unchanged sentences

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 .

three and six months ended June 30, 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.

1 unchanged sentence

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 .

six months ended June 30, 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   

5 unchanged sentences

wind energy industry, which accounted for 53 % and 68 % of the Company’s revenue during the first  

three months of 2022  and 2021, respectively. 

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).

six months of 2022  and 2021, respectively. 

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the 2016 Credit Facility and the 2022 Credit Facility, as applicable (each, as defined in Note 7, “Debt and Credit Agreements,”

of these condensed consolidated financial statements below), equipment financing, and access to the public or private debt and/or equity markets, including the option to raise capital from the sale of our securities under the Form S- 3  (as discussed below).

See Note 7, “Debt and Credit Agreements,”

of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt. 

of these condensed consolidated financial statements for a description of the 2016 Credit Facility, the 2022 Credit Facility and the Company’s other debt. 

Total debt and finance lease obligations at 

March 31, 2022 totaled $ 19,988 , which includes current outstanding debt and finance leases totaling $ 16,105 .

June 30, 2022 totaled $ 22,975 , which includes current outstanding debt and finance leases totaling $ 19,348 .

The Company's revolving line of credit balance is included in the “Line of credit and other notes payable”

3 unchanged sentences

) 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.

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

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

15 unchanged sentences

The remaining $ 497 for the uncollected ERC benefit was collected during January 2022.

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

Under these agreements, the Company has agreed to sell certain of its accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements.

The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse.

Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the Company's consolidated statements of cash flows.

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

During the three  and six months ended June 30, 2022, the Company sold account receivables totaling $ 30,133  

and $ 45,493 , respectively, related to supply chain financing arrangements, of which customers’

financial institutions applied discount fees totaling $ 414  and $ 490 , respectively.

During the three and six months ended June 30, 2021, the Company sold account receivables totaling $ 32,694  and $ 54,011 , respectively, related to supply chain financing arrangements, of which customers’

financial institutions applied discount fees totaling $ 79  and $ 133 , respectively.

The Company anticipates that current cash resources, amounts available under the 2022 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.

10 unchanged sentences

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,

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

Three Months Ended June 30,

Six Months Ended June 30,

Heavy Fabrications

2 unchanged sentences

$ 62,847  

$ 58,607  

10,115  

20,700  

12,753  

Industrial Solutions

2 unchanged sentences

( 812 )  

$ 50,012  

$ 46,491  

$ 91,856  

$ 79,219  

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.

5 unchanged sentences

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.

Within the Gearing segment, the Company recognized revenue over time of $ 975  

and $ 1,532  

for the three and six  months ended June 30, 

2021, respectively, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Since the Company's projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts.

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

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.

During the six  months ended June 30, 

Within the Heavy Fabrications segment, the Company recognized revenue over time of $ 4,182  and $ 7,409  for the three and six months ended June 30, 2022, respectively. Within the Heavy Fabrications segment, the Company recognized revenue over time of $ 1,276  and $ 2,429  for the three and six months ended June 30, 2021, respectively. Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment.

Contract assets represent the Company’s rights to consideration for work completed but not billed at the end of the period. 

6 unchanged sentences

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: 

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

Three Months Ended

Six Months Ended

Basic earnings per share calculation:

Net (loss) income

$ ( 2,703 )  

$ 10,252  

$ ( 5,107 )  

$ 9,042  

Weighted average number of common shares outstanding

1 unchanged sentence

18,760,910  

Basic net loss per share

19,977,477  

17,973,896  

Basic net (loss) income per share

$ ( 0.13 )  

$ 0.55  

$ ( 0.26 )  

$ 0.50  

Diluted earnings per share calculation:

Net (loss) income

$ ( 2,703 )  

$ 10,252  

$ ( 5,107 )  

$ 9,042  

Weighted average number of common shares outstanding

1 unchanged sentence

18,760,910  

19,977,477  

17,973,896  

Common stock equivalents:

Non-vested stock awards (1)

639,150  

889,874  

Weighted average number of common shares outstanding

1 unchanged sentence

19,400,060  

Diluted net loss per share

19,977,477  

( 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.

18,863,770  

Diluted net (loss) income per share

$ ( 0.13 )  

$ 0.53  

$ ( 0.26 )  

$ 0.48  

( 1 ) Restricted stock units granted and outstanding of 829,890  as of June 30, 2022, 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 and six months ended June 30, 2022.

NOTE 4 —

INVENTORIES  

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

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

Raw materials

16 unchanged sentences

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

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

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

June 30, 2022

December 31, 2021

21 unchanged sentences

$ 3,453  

As of March 31, 2022 , estimated future amortization expense was as follows:

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

2027 and thereafter

3 unchanged sentences

ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2022 and December 31, 2021 consisted of the following: 

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

Accrued payroll and benefits

13 unchanged sentences

DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of March 31, 2022 and December 31, 2021 consisted of the following:

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

Line of credit

25 unchanged sentences

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 .

1 unchanged sentence

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.

On August 4, 2022, the Company entered into a credit agreement (the “

Wells Fargo Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $ 35,000  senior secured revolving credit facility (which may be further increased by up to an additional $ 10,000  upon the request of the Company and at the sole discretion of Wells Fargo) and a $ 7,578 senior secured term loan (collectively, the “2022 Credit Facility”).

The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities.

The 2022 Credit Facility replaces the 2016 Credit Facility.

All obligations outstanding under the 2016 Credit Facility were refinanced by the 2022 Credit Facility on August 5, 2022.

The 2022 Credit Facility contains customary covenants limiting the Company’s and its subsidiaries’

ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with others or dispose of assets, change the nature of its business, and enter into transactions with affiliates. 

In addition, the 2022 Credit Facility contains financial covenants requiring the Company to have a Fixed Charge Coverage Ratio (as defined in the 2022 Credit Facility) (i) as of the twelve -month period ending July 31, 2023 through and including December 31, 2023 of 1.0 to 1.0;

and (ii) as of each twelve -month period thereafter to be greater than 1.1 to 1.0 and minimum EBITDA (as defined in the 2022 Credit Facility) on a month-end basis of $ 0 for the six month period ending June 30, 2022, $ 1,500  for the nine -month period ending September 30, 2022, $ 2,500  for the twelve -month period ending December 31, 2022, $ 3,600  for the twelve -month period ending March 31, 2023, and $ 5,100  for the twelve -month period ending June 30, 2023.

The initial term of the revolving credit facility matures August 4, 2027 and the term loan also matures on August 4, 2027, with monthly payments based on an 84 -month amortization.

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

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

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

The 2022 Credit Agreement also contains customary events of default including, without limitation, non-payment of obligations, non-performance of covenants and obligations, material judgments, bankruptcy or insolvency, change of control, breaches of representations and warranties, limitation or termination of any guarantee with respect to the 2022 Credit Agreement or unenforceability of documentation related to the 2022 Credit Agreement.

The Company is allowed to prepay in whole or in part advances under the 2022 Credit Facility without penalty or premium.

The obligations under the 2022 Credit Agreement are secured by, subject to certain exclusions, (i) a 

first  priority security interest in all accounts, inventory, equipment, general intangibles, intellectual property, money and investment property, and (ii) a deed of trust, assignment of leases and rents and security agreement and fixture filing on the Abilene, Texas facility.

In connection with the 2022 Credit Facility, on August 4, 2022, the Company, its subsidiaries and 5100 Neville Road, LLC (collectively, the “Guarantors”) entered into a guaranty (the “Guaranty”) in favor of Wells Fargo, whereby the Guarantors guaranteed the full payment of all the obligations of the Company and its subsidiaries under the 2022 Credit Facility.

Each of the Company’s additional subsidiaries, upon it becoming a direct or indirect subsidiary, will be required to become a party to the Guaranty.

As of June 30, 2022 , there was $ 17,037  

of outstanding indebtedness under the 2016 Credit Facility, with the ability to borrow an additional $ 10,178 . The Company was in compliance with all financial covenants under the 2016 Credit Facility as of June 30, 2022.

In 2016, the Company entered into a $ 570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, net of current maturities”

line item of the Company’s condensed consolidated financial statements as of March 31, 2022 and December 31, 2021 .

line item of the Company’s condensed consolidated financial statements as of June 30, 2022 and December 31, 2021 .

The loan is forgivable upon the Company meeting and maintaining specific employment thresholds.

During each of the years 2021, 2020, 2019, and 2018, $ 114 of the loan was forgiven.

As of 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 .

As of June 30, 2022 , the loan balance was $ 114 .

In addition, the Company has outstanding notes payable for capital expenditures in the amount of $ 714  and $ 363  as of June 30, 2022 and December 31, 2021 , respectively, with $ 27  and $ 186  included in the “Line of credit and other notes payable”

line item of the Company’s condensed consolidated financial statements as of June 30, 2022 and December 31, 2021 .

The notes payable have monthly payments that range from $ 3  to $ 16  and an interest rate of approximately 4 %.

7 unchanged sentences

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.

During the six months ended June 30, 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  

six months ended June 30, 2022  and 2021, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of $ 1,773  

and $ 1,896 , respectively. 

3 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Components of lease cost

9 unchanged sentences

( 31 )  

( 46 )  

( 79 )  

Total operating lease costs

2 unchanged sentences

$ 1,448  

Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2022 and 2021:

$ 2,824  

$ 2,841  

Supplemental cash flow information related to our operating leases is as follows for the six months ended June 30, 2022 and 2021:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflow from operating leases

$ 1,736  

$ 1,800  

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

3 unchanged sentences

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:

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

$ 1,358  

45 unchanged sentences

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

The following tables represent the fair values of the Company’s financial liabilities as of June 30, 2022 and December 31, 2021 :

June 30, 2022

Liabilities measured on a recurring basis:

8 unchanged sentences

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 . 

As of June 30, 2022 , the Company has a full valuation allowance recorded against deferred tax assets.

During the six months ended June 30, 2022 , the Company recorded a provision for income taxes of $ 22 , compared to a provision for income taxes of $ 77  during the six months ended June 30, 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’

As of June 30, 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.

14 unchanged sentences

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.

On February 3, 2022, the Board approved an amendment which included an extension of the Rights Plan for an additional three years, which was subsequently approved at the 

2022 Annual Meeting of Stockholders held on 

April 26, 2022. 

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.

4 unchanged sentences

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.

As of June 30, 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 .

The Company had no accrued interest and penalties as of June 30, 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 : 

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

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

Weighted Average

9 unchanged sentences

$ 2.82  

Unvested as of March 31, 2022

Unvested as of June 30, 2022

829,890  

1 unchanged sentence

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 

For the six  months ended June 

30, 2022, 277,908  shares were withheld to cover $ 544  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,

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

Six Months Ended June 30,

Share-based compensation expense:

37 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 

6 unchanged sentences

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:

Summary financial information by reportable segment for the three and six months ended June 30, 2022 and 2021 is as follows:

Heavy Fabrications

Industrial Solutions

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

Revenues from external customers

9 unchanged sentences

50,012  

Operating income (loss)

( 585 )  

( 1,437 )  

Depreciation and amortization

Capital expenditures

Heavy Fabrications

Industrial Solutions

For the Three Months Ended June 30, 2021

Revenues from external customers

$ 35,825  

$ 7,404  

$ 3,262  

$ 46,491  

Intersegment revenues

( 284 )  

35,830  

( 284 )  

46,491  

Operating income (loss)

( 882 )  

( 47 )  

( 1,631 )  

( 22 )  

Depreciation and amortization

Capital expenditures

Heavy Fabrications

Industrial Solutions

For the Six Months Ended June 30, 2022

Revenues from external customers

$ 62,847  

$ 20,684  

$ 8,325  

$ 91,856  

Intersegment revenues

( 812 )  

62,847  

20,700  

( 812 )  

91,856  

Operating loss

7 unchanged sentences

Industrial Solutions

For the Three Months Ended March 31, 2021

For the Six Months Ended June 30, 2021

Revenues from external customers

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58,607  

12,753  

( 286 )  

79,219  

Operating loss

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( 3,239 )  

( 22 )  

Depreciation and amortization

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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,

The activity in the accounts receivable allowance liability for the six months ended June 30, 2022 and 2021 consisted of the following: 

For the Six Months Ended June 30,

Balance at beginning of period

Bad debt expense

( 23 )  

Other adjustments

( 10 )  

Balance at end of period

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There was no reserve for liquidated damages as of 

March 31, 2022 or December 31, 2021. 

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 

$ 154,735  

Cost of sales

147,494  

Operating expenses

17,597  

Operating loss

Other income (expense), net

12,008  

Net income before benefit for income taxes

Benefit for income taxes

$ 1,653  

Net income per common share-basic

$ 0.09  

Net income per common share-diluted

$ 0.08  

June 30, 2022 or December 31, 2021. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations  

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Three Months Ended

Six Months Ended

Net (loss) income

Adjusted EBITDA (1)

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We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.

Our backlog at March 31, 2022 and 2021 is net of revenue recognized over time. 

Our backlog at June 30, 2022 and 2021 is net of revenue recognized over time. 

We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period.

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Three Months Ended

Six Months Ended

Net (loss) income

Interest expense

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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. 

Second Quarter Overview  

We booked $26,046 in new orders in the second quarter of 2022, slightly down from $26,441 in the second quarter of 2021.

Within our Heavy Fabrications segment, wind tower orders decreased 82% compared to the prior year quarter as wind customers continued to pause and delay orders due to uncertainty regarding the timing and likelihood of potential wind energy incentives provided by the federal government and elevated steel prices.

Industrial fabrications product line orders, within the Heavy Fabrications segment, increased 242% primarily due to improved industrial demand and increasing order volume for Pressure Reducing Systems (“PRS”) units.

Gearing segment orders increased 14% compared to the prior year quarter primarily due to higher demand from industrial customers partially offset by decreased demand from oil and gas (“O&G”) customers. Orders within our Industrial Solutions segment increased by 8% as compared to the prior year quarter, primarily due to the timing of orders associated with aftermarket projects and projects from other diverse customers partially offset by a decrease in new gas turbine orders.

We recognized revenue of $50,012 in the second quarter of 2022, up 8% compared to the second quarter of 2021, primarily due to a 154% increase in industrial fabrications product line revenue within the Heavy Fabrications segment. The increase in industrial fabrication revenue is attributable to strong recent order intake from industrial and mining customers, in addition to revenue recognized on our PRS units. Overall Heavy Fabrications segment revenues were flat compared to the prior year quarter as the industrial fabrications product line increase was offset by a 47% decrease in tower sections sold. Gearing revenue increased by 37%, primarily driven by strong order intake in recent quarters from O&G and industrial customers, partially offset by a decrease in aftermarket wind revenue. Industrial Solutions segment revenue increased 43% compared to the prior year quarter, primarily due to the timing of new gas turbine and aftermarket projects. 

We recorded a net loss of $2,703 or $0.13 per share in the second quarter of 2022, compared to net income of $10,252 or $0.55 per share in the second quarter of 2021 primarily due to the absence of $3,593 of other income related to the employee retention credit recorded under the CARES Act and the $9,151 recognized as a result of forgiveness of the Paycheck Protection Program (“PPP”) loan during the second quarter of 2021. 

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. 

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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.

Through June 30, 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.

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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,

Three months ended June 30, 2022, Compared to Three months ended June 30, 2021  

The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Three Months Ended June 30,

Cost of sales

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Other (expense) income, net

Paycheck Protection Program loan forgiveness

Interest expense, net

Total other (expense) income, net

Net loss before provision for income taxes

Net (loss) income before provision for income taxes

Provision for income taxes

Net (loss) income

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.

Revenues increased by $3,521 versus the prior year quarter.

This increase was primarily due to a 154% increase in industrial fabrications product line revenue within the Heavy Fabrications segment.

The increase in industrial fabrication revenue is attributable to strong recent order intake from industrial and mining customers, in addition to revenue recognized on our PRS units.

Overall the Heavy Fabrications segment revenues were flat compared to the prior year quarter as the industrial fabrications product line increase was offset by a 47% decrease in tower sections sold. Gearing segment revenue was up 37% from the second quarter of 2021, primarily driven by higher recent order intake from O&G and industrial customers, partially offset by a decrease in aftermarket wind revenue.

Industrial Solutions segment revenue increased by 43%, primarily due to the timing of new gas turbine customer and aftermarket projects.  

Gross profit increased marginally by $196 when compared to the prior year quarter as higher sales volumes within the Gearing and Industrial Solutions segments were largely offset by lower sales volumes in the Heavy Fabrications segment.

Due to higher revenue levels, lower legal expenses, and reduced salaries and benefits, operating expenses as a percentage of sales decreased to 8.6% in the current-year quarter from 9.7% 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. 

Net loss was $2,703 during the three months ended June 30, 2022, compared to net income of $10,252 during the three months ended June 30, 2021 primarily due to the factors described above, the absence of the $3,593 ERC benefit, and the $9,151 PPP loan forgiveness recorded in the prior year quarter. 

Heavy Fabrications Segment  

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Tower sections sold

Operating loss

Operating income

Operating margin

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.

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.

Wind tower orders decreased 82% versus the prior year quarter as wind customers continue to pause and delay orders due to uncertainty regarding the timing and likelihood of potential wind energy incentives provided by the federal government and elevated steel prices.

Industrial fabrications product line orders, also within the Heavy Fabrications segment, increased 242% from the prior year quarter primarily due to improved industrial demand and increasing order volume for PRS units. Heavy Fabrications segment revenues were flat compared to the prior year as a 154% increase in industrial fabrication line revenues was offset by a 47% decrease in tower sections sold. 

Heavy Fabrications segment operating income decreased by $193 compared to the prior year quarter.

The quarter-over-quarter decrease in operating performance is primarily a result of lower sales volumes and costs associated with transitioning the workforce to support growth in the industrial fabrications product line.

Operating margin was 0.2% during the three months ended June 30, 2022, a decrease from 0.8% during the three months ended June 30, 2021.

Gearing Segment

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Operating margin

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 orders increased 14% from the prior year period primarily due to increased demand from industrial customers, partially offset by reduced demand from O&G customers.

Gearing revenue was up 37% relative to the comparable prior year period due to higher order intake in recent quarters from O&G and industrial customers, partially offset by a decrease in aftermarket wind revenue.

Gearing segment operating loss decreased $297 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.

This was primarily attributable to higher sales partially offset by higher material costs, ramp-up costs, and increased fixed costs to support volumes.

Operating margin was (5.8%) during the three months ended June 30, 2022, an improvement from (11.9)% during the three months ended June 30, 2021, driven primarily by the items identified above.

Industrial Solutions Segment  

Three Months Ended

Operating income (loss)

Operating margin

Industrial Solutions segment orders increased by 8% from the prior year period primarily due to the timing of orders associated with aftermarket projects and projects from other diverse customers, partially offset by a decrease in new gas turbine orders.

Segment revenue increased by 43% from the prior year period primarily due to the timing of new gas turbine and aftermarket projects.

The improved operating income versus the prior-year quarter was primarily a result of a higher sales, partially offset by increased variable expenses such as freight costs. 

Corporate and Other  

Corporate and Other expenses during the three months ended June 30, 2022 decreased from the prior year period primarily due to lower salaries and benefits. 

Six months ended June 30, 2022, Compared to Six months ended June 30, 2021  

The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Six Months Ended June 30,

Cost of sales

Operating expenses

Selling, general and administrative expenses

Intangible amortization

Total operating expenses

Operating loss

Other (expense) income, net

Paycheck Protection Program loan forgiveness

Interest expense, net

Total other (expense) income, net

Net (loss) income before provision for income taxes

Provision for income taxes

Net (loss) income

Consolidated  

Revenues increased by $12,637 versus the prior year. 

Gearing segment revenue was up 62% from the first half of 2021, primarily driven by strong recent order intake from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue.

Heavy Fabrications segment revenues increased by 7% as lower tower demand was more than offset by a 105% increase in industrial fabrications product line revenue attributable to higher recent order intake from industrial customers and revenue recognized on our PRS units.

Industrial Solutions segment revenue increased by 12%, primarily due to the timing of new gas turbine customer and aftermarket projects.

Gross profit increased by $1,926 when compared to the prior year primarily due to higher sales volumes in the Gearing segment, partially offset by higher material costs, ramp-up costs, and increased fixed costs to support volumes. As a result, gross margin increased to 4.8% during the six months ended June 30, 2022, from 3.1% during the six months ended June 30, 2021.

Due to higher revenue levels, lower legal expenses, and reduced salaries and benefits, operating expenses as a percentage of sales decreased to 9.1% in the current-year from 11.5% in the prior year.

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

Heavy Fabrications Segment  

Six Months Ended

Tower sections sold

Operating loss

Operating margin

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. 

Wind tower orders increased 25% versus the prior year as tower customers secured 2022 production capacity to support ongoing wind turbine tower installation projects.

Industrial fabrications product line orders, also within the Heavy Fabrications segment, increased 54% from the prior year primarily due to strong demand for PRS units and strong industrial demand, partially offset by a reduction in mining demand.

Heavy Fabrications segment revenues increased 7% primarily due to a 105% increase in industrial fabrication revenues primarily due to higher recent order intake from industrial customers and revenue recognized from our PRS units in the current year.

Heavy Fabrications segment operating loss decreased by $1,046 compared to the prior year.

The improvement in operating performance is primarily a result of higher sales in the current year and the absence of one-time events that occurred during the prior year such as the weather-related event and a customer driven project delay, partially offset by increased variable costs associated with growth in the industrial fabrications product line. Operating margin was (0.6)% during the six months ended June 30, 2022, an increase from (2.4%) during the six months ended June 30, 2021.

Gearing Segment

Six Months Ended

Operating loss

Operating margin

Gearing segment orders increased 29% from the prior year period primarily due to increased demand from O&G and industrial customers.

Gearing revenue was up 62% relative to the comparable prior year period due to higher order intake in recent quarters from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue.

Gearing segment operating loss decreased $1,174 from the prior year period.

This was primarily attributable to higher sales partially offset by higher material costs, ramp-up costs, and increased fixed costs to support higher volumes.

Operating margin was (3.4%) during the six months ended June 30, 2022, an improvement from (14.7)% during the six months ended June 30, 2021, driven primarily by the items identified above.

Industrial Solutions Segment  

Six Months Ended

Operating loss

Operating margin

Industrial Solutions segment orders increased by 17% from the prior year period primarily due to the timing of orders associated with aftermarket projects. Segment revenue increased 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 was primarily a result of higher variable expenses including freight costs. 

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. 

Corporate and Other expenses during the six months ended June 30, 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  

As of June 30, 2022, cash totaled $49, a decrease of $803  

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.

Cash balances remain limited in the second quarter as operating receipts and disbursements flowed through our 2016 Credit Facility (as defined in Note 7, “Debt and Credit Agreements,”

in the notes to our condensed consolidated financial statements), which was in a drawn position as of June 30, 2022.

Debt and finance lease obligations at June 30, 2022 totaled $22,975.

As of June 30, 2022, we had the ability to borrow up to an additional $10,178 un der the 2016 Credit Facility. In addition to the Credit Facility, we also utilize supply chain financing arrangements as a component of our funding for working capital, which accelerates receivable collections and helps to better manage cash flow.

Under these agreements, we have agreed to sell certain of our accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements.

The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse.

Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the consolidated statements of cash flows.

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

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

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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.

On August 4, 2022, we executed the Wells Fargo Credit Agreement (as defined in Note 7, “Debt and Credit Agreements”

in the notes to our condensed consolidated financial statements) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing us with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon our request and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”).

The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities.

The 2022 Credit Facility replaces the 2016 Credit Facility.

All obligations outstanding under the 2016 Credit Facility were refinanced by the 2022 Credit Facility on August 5, 2022.

For more information on the 2022 Credit Facility, please see Note 7, “Debt and Credit Agreement”

in the notes to our condensed consolidated financial statements.

We anticipate that current cash resources, amounts available under the 2022 Credit Facility, cash to be generated from operations and equipment financing, 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.

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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

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

Six Months Ended

Total cash (used in) provided by:

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Financing activities

Net decrease in cash

Net (decrease) increase in cash

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.

During the six months ended June 30, 2022, net cash used in operating activities totale d $8,264 com pared to net cash used in operating activities of $9,987 during the prior year period. The decrease in net cash used was primarily due to improved operating performance in the current year and less operating working capital build, partially offset by the ERC benefits which were 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.

During the six months ended June 30, 2022, net cash used in investing activities tot aled $1,697, comp ared to net cash used in investing activities of $742 during the prior year period.

The increase in net cash used in investing activities as compared to the prior-year period was primarily due to an increase in net purchases of property and equipment.

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.

During the six months ended June 30, 2022, net cash provided by financing activities tot aled $9,158, co mpared to net cash provided by financing activities of $12,114 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 2016 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.

line item of our condensed consolidated financial statements as of June 30, 2022 and December 31, 2021.

The loan is forgivable upon the Company meeting and maintaining specific employment thresholds.

During each of the years 2021, 2020, 2019 and 2018, $114 of the loan was forgiven.

As of March 31, 2022, the loan balance was $114.

As of June 30, 2022, the loan balance was $114.

In addition, we have outstanding notes payable for capital expenditures in the amount of $714  

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.

and $363 as of June 30, 2022 and December 31, 2021, respectively, with $27  

and $186 included in the “Line of Credit and other notes payable”

line item of our condensed consolidated financial statements as of June 30, 2022 and December 31, 2021.

The notes payable have monthly payments that range from $3 to $16 and an interest rate of approximately 4%.

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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-Q

Item 1. Financial Statements