What changed in this filing

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Item 1A. Risk Factors

2023-05-11 compared with 2022-11-08 · 54 added, 1 removed, 4 unchanged (93% of the section changed)

The Risk Factors identified in our Annual Report on Form 10-K for the year ended December 31, 2021 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, without further modification or amendment. 

The Risk Factors identified in our Annual Report on Form 10-K for the year ended December 31, 2022 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, except as set forth below.  

wind energy industry is significantly impacted by tax and other economic incentives.

A significant change in these incentives could significantly impact our business, results of operations, financial performance and future development efforts and growth.

We sell towers to wind turbine manufacturers who supply wind energy generation facilities.

wind energy industry is significantly impacted by federal tax incentives and state Renewable Portfolio Standards (“RPSs”).

Despite recent reductions in the cost of wind energy, due to variability in wind quality and consistency, and other regional differences, wind energy may not be economically viable in certain parts of the country absent such incentives.

These programs have provided material incentives to develop wind energy generation facilities and thereby impact the demand for our products.

The increased demand for our products that generally results from the credits and incentives could be impacted by the expiration or curtailment of these programs.

One such federal government program, the production tax credit (“PTC”), provides a supplemental payment based on electricity produced from each qualifying wind turbine.

Legislative support for the PTC has been intermittent since its introduction in 1992, which has caused volatility in the demand for new wind energy projects.

In 2015, the PTC was extended for a five-year period, with a time-based phase-out depending on the year the wind project is commenced.

The phase-out schedule legislated in 2015 provided for:

100% extension of the credit for projects commenced before the end of 2016, 80% extension of the credit for projects commenced in 2017, 60% extension of the credit for projects commenced in 2018 and 40% extension of the credit for projects commenced in 2019.

As part of a year-end tax extenders bill in 2019, the PTC was extended for an additional year, allowing for a 60% extension of the credit for projects commenced before the end of 2020.

On December 27, 2020, the Consolidated Appropriations Act of 2021 (“COVID IV”) was signed into law.

As part of COVID IV, the PTC was extended for an additional year, allowing for a 60% credit for projects that start construction by the end of 2021. 

In order to benefit from the PTC, qualifying projects must either be completed within four years from their start of construction, or the developer must demonstrate that its projects are in continuous construction between start of construction and completion.

As a result of COVID IV, the PTC will subsidize wind projects commenced as late as 2021 and completed by 2025, or later if continuous construction can be demonstrated.

The PTC tax benefits are available for the first ten years of operation of a wind energy facility, and also applies to significant redevelopment of existing wind energy facilities.

Included in COVID IV is the addition of a new 30% ITC created for offshore wind projects that start construction by the end of 2025.

The provision will be retroactively applied to projects that started production in 2016.

On August 16, 2022, the IRA was enacted to reduce inflation and promote clean energy in the United States.

The IRA modifies and extends the PTC until the later of 2032 or when greenhouse gas emissions have been reduced by 75% compared to 2022.

It provides for tax credits up to a maximum of 30%, adjusted for inflation annually, for electricity generated from qualified renewable energy sources where taxpayers meet prevailing wage standards and employ a sufficient proportion of qualified apprentices from registered apprenticeship programs.

It also provides a bonus credit for qualifying clean energy production in energy communities. 

The IRA also includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components (“AMP credits”).

Manufacturers qualify for the AMP credits based on the electricity output for each component produced and sold in the U.S.

starting in 2023 through 2032. The credit amount varies based on the eligible component, which includes solar components, wind energy components, inverters, qualifying battery components, and critical minerals. Tower manufacturers are eligible for credits of $0.03 per watt for applicable components produced.

Manufacturers can apply to the Internal Revenue Service for cash refunds of the AMP credits for up to five years. After the first five years, the AMP credits are transferable and can be sold to third parties for cash.

There are currently several critical and complex aspects of the IRA pending technical guidance and regulations from the Internal Revenue Service and the U.S.

Treasury Department.

Any modifications to the law or its effects arising, for example, through technical guidance and regulations from the Internal Revenue Service and the U.S.

Treasury Department could result in changes to the expected and/or actual benefits in the future, which could have a material adverse effect on our business, results of operations, financial performance and future development efforts.

RPSs generally require or encourage state regulated electric utilities to supply a certain proportion of electricity from renewable energy sources or to devote a certain portion of their plant capacity to renewable energy generation.

Typically, utilities comply with such standards by qualifying for renewable energy credits evidencing the share of electricity that was produced from renewable sources.

Under many state standards, these renewable energy credits can be unbundled from their associated energy and traded in a market system, allowing generators with insufficient credits to meet their applicable state mandate.

These standards have spurred significant growth in the wind energy industry and a corresponding increase in the demand for our products.

Currently, the majority of states have RPSs in place and certain states have voluntary utility commitments to supply a specific percentage of their electricity from renewable sources.

The enactment of RPSs in additional states or any changes to existing RPSs (including changes due to the failure to extend or renew the federal incentives described above), or the enactment of a federal RPS or imposition of other greenhouse gas regulations, may impact the demand for our products.

We cannot assure that government support for renewable energy will continue.

The elimination of, or reduction in, state or federal government policies that support renewable energy could have a material adverse impact on our business, results of operations, financial performance and future development efforts.

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

We are exposed to fluctuations in inflation and interest rates, which could negatively affect our business, financial condition and results of operations.

The United States and other jurisdictions have recently experienced high levels of inflation.

If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation and labor expenses and increased costs for supplies, and we may not be successful in offsetting such cost increases. In addition, historically we have carried a significant amount of variable rate debt which is subject to fluctuations in interest rates.

Recent increases in interest rates will result in increased interest expense to the extent we cannot limit our debt balances.

Further, recent and potential future disruptions in access to bank deposits or lending commitments due to bank failure, could materially and adversely affect our liquidity, our business, financial condition and results of operations.

The recent closures of Silicon Valley Bank and Signature Bank and their placement into receivership with the Federal Deposit Insurance Corporation (“FDIC”) created bank-specific and broader financial institution liquidity risk and concerns.

Although the Department of the Treasury, the Federal Reserve, and the FDIC jointly released a statement that depositors at Silicon Valley Band and Signature Bank would have access to their funds, even those in excess of the standard FDIC insurance limits, future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages.

The failure of any bank with which we do business or with which our customers do business could reduce the amount of cash we have available for our operations or delay our ability to access such funds.

Any such failure may increase the possibility of a sustained deterioration of financial market liquidity, or illiquidity at clearing, cash management and/or custodial financial institutions.

In the event we have a commercial relationship with a bank that has failed or is otherwise distressed, we may experience delays or other issues in meeting our financial obligations.

If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability and our customers’

ability to access our cash and cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition or results of operations.

Unregistered Sales of Equity Securities and Use of Proceeds

3 unchanged sentences

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 1A. Risk Factors