What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-05 compared with 2023-03-09 · 622 added, 807 removed, 680 unchanged (68% of the section changed)

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Evaluation of Disclosure Controls and Procedures

We seek to maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

This information is also accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal year reported on herein.

Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective as of December 31, 2022.

Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2023.

Changes in Internal Control over Financial Reporting

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Our management, including our CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.

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

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

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

Based on this assessment, management determined that our internal control over financial reporting was effective as of December 31, 2023.

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OTHER INFORMATION

Rule 10b5 - 1 Trading Arrangements

None of our directors or executive officers adopted or terminated a Rule 10b5 - 1 trading arrangement or a non-Rule 10b5 - 1 trading arrangement (as defined in Item 408 (c) of Regulation S-K) during the fourth quarter of 2023.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

“Corporate Governance,”

and “Executive Officers” in our definitive Proxy Statement to be filed in connection with our 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”).

With the exception of the description of our Code of Ethics and Business Conduct below, the information required by this item is incorporated herein by reference from the discussion under the headings “Directors and Director Compensation,” “Corporate Governance,” and “Executive Officers” in our definitive Proxy Statement to be filed in connection with our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”).

Code of Ethics and Business Conduct

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

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

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

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

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

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

EXECUTIVE COMPENSATION

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

“Executive Officers”

and “Compensation Discussion and Analysis”

in the 2023 Proxy Statement.

Information regarding director and executive compensation is incorporated by reference from the discussion under the headings “Directors and Director Compensation,” “Executive Officers” and “Compensation Discussion and Analysis” in the 2024 Proxy Statement.

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

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

in the 2023 Proxy Statement.

Certain of the information required by this item is incorporated herein by reference from the discussion under the heading “Security Ownership of Certain Beneficial Holders and Management” in the 2024 Proxy Statement.

The following table provides information as of December 31, 2023, with respect to shares of our common stock that may be issued under our existing equity compensation plans:

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to be issued upon

Weighted‑average

equity compensation

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Equity compensation plans approved by stockholders

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

2015 Equity Incentive Plan, as amended.

This plan has been approved by our stockholders.

Includes outstanding restricted stock awards pursuant to the 2015 EIP.

This plan has been approved by our stockholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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

and “Corporate Governance”

in the 2023 Proxy Statement.

The information required by this item is incorporated herein by reference from the discussion under the headings “Certain Transactions and Business Relationships” and “Corporate Governance” in the 2024 Proxy Statement.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

in the 2023 Proxy Statement.

The information required by this item is incorporated herein by reference from the discussion under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm” in the 2024 Proxy Statement.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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INDEX TO FINANCIAL STATEMENTS

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

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’

Equity for the Years Ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

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

and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’

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

and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

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

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

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

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

Accordingly, we express no such opinion.

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

Critical Audit  

Critical Audit Matter

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

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

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

Long-Lived Assets

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

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

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

The Company’s Heavy Fabrications asset group has experienced recurring operating losses in consecutive years ending December 31, 2022.

Company management determined that the carrying amount of the Heavy Fabrications asset group may not be recoverable based on the operating performance of the asset group.

Accordingly, the Company performed an impairment assessment of the asset group as of November 30, 2022.

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

Additionally, there were no changes in facts or circumstances following the November 30, 2022 assessment through December 31, 2022, which would alter the asset group’s initial undiscounted future cash flows or carrying value estimates.

As a result, no impairment charge was recorded in the consolidated statement of operations for the year ended December 31, 2022, for the Heavy Fabrications asset group.

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

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

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

Advanced Manufacturing Production Tax Credits

As described in Note 7 of the financial statements, in 2023, the Company recognized gross Advanced Manufacturing Production tax credits (AMP Credits) totaling $14,493, within the Heavy Fabrications segment.

These AMP Credits were introduced as part of the Inflation Reduction Act (IRA), which was enacted on August 16, 2022.

Eligible manufacturers of wind components qualify for the AMP Credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed.

The credit applies to each component produced and sold in the U.S.

beginning in 2023 through 2032.

Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $0.03 per watt for each wind tower produced.

In calculating the eligible credit, the Company relied on the megawatt rating provided by the customer.

Manufacturers who qualify for the AMP Credits can apply to the Internal Revenue Service for cash refunds of the AMP Credits, sell the AMP Credits to third parties for cash, or apply the AMP Credits against taxable income.

The Company recognized the AMP Credits as a reduction to cost of sales in the Company’s consolidated statement of operations for the year ended December 31, 2023.

The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in the Company’s consolidated balance sheet as of December 31, 2023.

On December 21, 2023, the Company entered into an agreement to sell 2023 and 2024 AMP Credits to a third party.

At that time, the Company sold a portion of the gross 2023 credits in the amount of $6,952 and recognized a 6.5% discount on the sale in the amount of $452, which was recognized in cost of sales.

In addition, the Company wrote down the remaining receivable of $7,541 to net realizable value and recorded the expected loss on sale of $490 in cost of sales.

The remaining 2023 AMP credit receivable was collected during the first quarter of 2024.

The Company also incurred other miscellaneous administrative costs related to selling the credits in the amount of $254, $197 of which has been recorded as cost of sales, with the remaining capitalized and included in the “Prepaid expenses and other current assets” line item of the Company's consolidated financial statements at December 31, 2023.

The evaluation of the initial accounting, and subsequent sale of the AMP Credits involves judgement as there is no direct authoritative guidance under accounting principles generally accepted in the United States of America (US GAAP).

Additionally, current IRS and Department of the Treasury regulations are in the proposed stages.

Changes in IRS and Department of the Treasury, or US GAAP guidance could have a significant impact on the accounting and presentation of AMP Credits in future periods.

We identified accounting for the AMP Credits as a critical audit matter because of the high degree of judgement and subjectivity involved in auditing management’s assertions related to the initial accounting for the AMP Credits, the subsequent sale of the AMP Credits, and the presentation and disclosure of the transactions related to the AMP Credits in the consolidated financial statements.

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

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

The audit procedures performed related to the evaluation of Company management’s assertions regarding the initial accounting for the AMP Credits, the subsequent sale of the AMP Credits, and the presentation and disclosure the AMP Credits, included the following, among others:

Evaluated the reasonableness of management’s application of IRS and Department of the Treasury regulations and proposed regulations in determining the Company’s eligibility for the AMP Credits, and in calculating the AMP Credit’s impact on the consolidated financial statements, by consulting with tax specialists along with reviewing and applying the regulations in recalculating the value of the AMP Credits recognized.

We evaluated the reasonableness of management’s conclusions regarding the accounting for AMP Credits by reading and evaluating management’s documentation, including relevant accounting policies.

Evaluated the reasonableness of management’s conclusion that the AMP Credits are not taxable, by consulting with tax specialists.

Evaluated the completeness of the disclosures in the consolidated financial statements, by consulting with tax specialists.

/S/ RSM US LLP

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March 5, 2024

BROADWIND , INC.

BROADWIND , INC.

AND SUBSIDIARIES

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CURRENT ASSETS:

$ 12,732  

$ 1,099 $ 12,732

Accounts receivable, net

17,018  

13,802  

Employee retention credit receivable

19,231 17,018

AMP credit receivable

Contract assets

Inventories, net

44,262  

33,377  

37,405 44,262

Prepaid expenses and other current assets

Total current assets

79,258  

52,325  

69,746 79,258

LONG-TERM ASSETS:

Property and equipment, net

45,319  

43,655  

47,123 45,319

Operating lease right-of-use assets

16,396  

18,029  

15,593 16,396

Intangible assets, net

$ 144,540  

$ 118,047  

LIABILITIES AND STOCKHOLDERS’

$ 135,156 $ 144,540

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Line of credit and current portion of long-term debt

$ 1,170  

$ 6,650  

Line of credit and current maturities of long-term debt

$ 5,903 $ 1,170

Current portion of finance lease obligations

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Accounts payable

26,255  

16,462  

20,728 26,255

Accrued liabilities

Customer deposits

34,550  

12,082  

16,500 34,550

Total current liabilities

70,178  

42,683  

53,612 70,178

LONG-TERM LIABILITIES:

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Long-term operating lease obligations, net of current portion

16,696  

18,405  

15,888 16,696

Total long-term liabilities

28,089  

21,230  

25,525 28,089

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’

STOCKHOLDERS’ EQUITY:

Preferred stock, $ 0.001 par value;

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Treasury stock, at cost, 273,937 shares as of December 31, 2023 and December 31, 2022

( 1,842 )  

( 1,842 ) ( 1,842 )

Additional paid-in capital

397,240  

395,372  

399,336 397,240

Accumulated deficit

( 349,146 )  

Total stockholders’

46,273  

54,134  

TOTAL LIABILITIES AND STOCKHOLDERS’

$ 144,540  

$ 118,047  

( 341,497 ) ( 349,146 )

Total stockholders’ equity

56,019 46,273

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 135,156 $ 144,540

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

BROADWIND , INC.

BROADWIND , INC.

AND SUBSIDIARIES

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For the Years Ended December 31,

$ 203,477 $ 176,759

Cost of sales

170,969 166,049

32,508 10,710

OPERATING EXPENSES:

Selling, general and administrative

20,705 16,592

Intangible amortization

Total operating expenses

Operating loss

OTHER INCOME (EXPENSE), net:

Paycheck Protection Program loan forgiveness

21,369 17,317

Operating income (loss)

11,139 ( 6,607 )

OTHER EXPENSE, net:

Interest expense, net

Total other (expense) income, net

Net (loss) income before provision for income taxes

( 3,201 ) ( 3,218 )

Total other expense, net

( 3,249 ) ( 3,088 )

Net income (loss) before provision for income taxes

7,890 ( 9,695 )

Provision for income taxes

NET (LOSS) INCOME

NET (LOSS) INCOME PER COMMON SHARE—BASIC:

Net (loss) income

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

NET (LOSS) INCOME PER COMMON SHARE—DILUTED:

Net (loss) income

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

NET INCOME (LOSS)

7,649 ( 9,730 )

NET INCOME (LOSS) PER COMMON SHARE—BASIC:

Net income (loss)

$ 0.36 $ ( 0.48 )

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

21,189 20,299

NET INCOME (LOSS) PER COMMON SHARE—DILUTED:

Net income (loss)

$ 0.36 $ ( 0.48 )

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

21,491 20,299

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

BROADWIND , INC.

BROADWIND , INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

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BALANCE, December 31, 2021

19,859,650 $ 20 ( 273,937 ) $ ( 1,842 ) $ 395,372 $ ( 339,416 ) $ 54,134

Stock issued for restricted stock

818,956 — — — — — —

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

629,213 — — — 1,244 — 1,244

Share-based compensation

— — — — 944 — 944

Shares withheld for taxes in connection with issuance of restricted stock

( 281,068 ) — — — ( 549 ) — ( 549 )

Sale of common stock, net

100,379 1 — — 229 — 230

— — — — — ( 9,730 ) ( 9,730 )

BALANCE, December 31, 2022

21,127,130 $ 21 ( 273,937 ) $ ( 1,842 ) $ 397,240 $ ( 349,146 ) $ 46,273

Stock issued for restricted stock

493,327 1 — — 618 — 619

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

380,247 — — — 1,336 — 1,336

Share-based compensation

— — — — 877 — 877

Shares withheld for taxes in connection with issuance of restricted stock

Sale of common stock, net

( 160,403 ) — — — ( 735 ) — ( 735 )

— — — — — 7,649 7,649

BALANCE, December 31, 2023

21,840,301 $ 22 ( 273,937 ) $ ( 1,842 ) $ 399,336 $ ( 341,497 ) $ 56,019

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

BROADWIND , INC.

BROADWIND , INC.

AND SUBSIDIARIES

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

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

Net income (loss)

$ 7,649 $ ( 9,730 )

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

Depreciation and amortization expense

Paycheck Protection Program loan forgiveness

Deferred income taxes

( 10 ) ( 13 )

Change in fair value of interest rate swap agreements

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Common stock issued under defined contribution 401(k) plan

Loss (gain) on disposal of assets

Loss on disposal of assets

Changes in operating assets and liabilities:

Accounts receivable

( 2,295 ) ( 3,186 )

AMP credit receivable

Employee retention credit receivable

Contract assets

6,857 ( 10,885 )

Prepaid expenses and other current assets

( 210 ) ( 629 )

Accounts payable

( 6,008 ) 9,926

Accrued liabilities

Customer deposits

( 18,050 ) 22,468

Other non-current assets and liabilities

Net cash provided by (used in) provided by operating activities

Net cash (used in) provided by operating activities

( 6,946 ) 16,643

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

( 6,405 ) ( 3,098 )

Proceeds from disposals of property and equipment

Net cash used in investing activities

( 6,384 ) ( 3,098 )

CASH FLOWS FROM FINANCING ACTIVITIES:

(Payments on) proceeds from line of credit, net

Proceeds from (payments on) line of credit, net

4,705 ( 6,368 )

Payments for deferred financing costs

( 48 ) ( 452 )

Proceeds from long-term debt

Payments on long-term debt

( 1,872 ) ( 863 )

Principal payments on finance leases

( 1,409 ) ( 1,776 )

Shares withheld for taxes in connection with issuance of restricted stock

( 735 ) ( 549 )

Proceeds from sale of common stock, net

Net cash (used in) provided by financing activities

NET INCREASE (DECREASE) IN CASH

Net cash provided by (used in) financing activities

1,697 ( 1,665 )

NET (DECREASE) INCREASE IN CASH

( 11,633 ) 11,880

CASH beginning of the period

CASH end of the period

$ 1,099 $ 12,732

Supplemental cash flow information:

Interest paid

$ 2,073 $ 1,638

Income taxes paid

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Equipment additions via finance lease

$ 719 $ 3,882

Non-cash purchases of property and equipment

Settlement of incentive compensation liability with stock

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

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Description of Business

Broadwind, Inc.

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

The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”).

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

Broadwind, Inc.

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

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

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

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

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

The Company has three reportable operating segments:

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The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets.

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

wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S.

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

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

BROADWIND, INC.

The Company has expanded its 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, O&G and other infrastructure markets.

The Company has designed and manufactures a mobile, modular pressure reducing system for the compressed natural gas virtual pipeline market.

The Company manufactures components for buckets, shovels, car bodies, drill masts and other products that support mining and construction markets.

In other industrial markets, the Company provides crane components, pressure vessels, frames and other structures.

BROADWIND, INC.

AND SUBSIDIARIES

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(in thousands, except share and per share data)

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 addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair in Neville Island, Pennsylvania.

The Company provides gearing, gearboxes and precision machined components to a broad set of customers in diverse markets including;

surface and underground mining, wind energy, steel, material handling, infrastructure, onshore and offshore O&G fracking and drilling, marine, and other industrial markets.

The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for a century.

The Company uses an integrated manufacturing process, which includes machining and finishing processes in addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair 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.

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

The Company has recently expanded into the U.S.

wind power generation market, by providing tower internals kitting solutions for on-site installations, as OEMs domesticate their supply chain due to lead time and reliability issues.

The Company leverages a global supply chain to provide instrumentation & controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes & wiring, energy storage services and electromechanical devices.

The Company also provides packaging solutions and fabricates panels and sub-assemblies to reduce customers’ costs, improve manufacturing velocity and reliability.

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, through its 2022 Credit Facility (as defined and further discussed in Note 10 “Debt and Credit Agreements” of these consolidated financial statements), equipment financing, access to the public and private debt and/or equity markets, and has the option to raise capital under the Company’s registration statement on Form S- 3 (as discussed below), and proceeds from sales of Advanced Manufacturing Production tax credits (“AMP credits”) (discussed in Note 7 “AMP Credits” of these consolidated financial statements).

The Company uses the 2022 Credit Facility to fund working capital requirements.

Under the 2022 Credit Facility, borrowings are continuous and all cash receipts are usually applied to the outstanding borrowed balance.

As of December 31, 2022 , cash totaled $ 12,732 , an increase of $ 11,880  from December 31, 2021 .

The Company had the ability to borrow up to $ 27,351  under the 2022 Credit Facility as of December 31, 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.

As of December 31, 2023 , cash totaled $ 1,099 , a decrease of $ 11,633 from December 31, 2022 .

The Company had the ability to borrow up to $ 21,714 under the 2022 Credit Facility as of December 31, 2023 .

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

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

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

During the years ended December 

31, 2022 and December 31, 2021, the Company sold account receivables totaling $ 93,245  and $ 99,130 , respectively, related to supply chain financing arrangements, of which customers’

financial institutions applied discount fees totaling $ 1,431  and $ 251 , respectively. 

BROADWIND, INC.

During the years ended December 31, 2023 and December 31, 2022, the Company sold account receivables totaling $ 40,343 and $ 93,245 , respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $ 858 and $ 1,431 , respectively.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

Debt and finance lease obligations at December 31, 2022 totaled $ 14,545 , which includes current outstanding debt and finance lease obligations totaling $ 3,178 , due over the next twelve months.

The Company's outstanding debt includes $ 7,217  

outstanding from the senior secured term loan under the 2022 Credit Facility.

The Company had $ 0 drawn on the senior secured revolving credit facility as of December 31, 2022. 

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 

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 September 12, 2022, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”).

Pursuant to the terms of the Sales Agreement, the Company may sell from time to time through the Agents shares of the Company’s common stock, par value $ 0.001 per share with an aggregate sales price of up to $ 12,000 .

Any shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S- 3 and the 424 (b) prospectus supplement relating to the offering dated September 12, 2022.

Debt and finance lease obligations at December 31, 2023 totaled $ 17,678 , which includes current outstanding debt and finance lease obligations totaling $ 8,056 .

The Company's outstanding debt includes $ 6,135 outstanding from the senior secured term loan under the 2022 Credit Facility.

The Company had $ 4,657 drawn on the senior secured revolving credit facility as of December 31, 2023.

On September 22, 2023, 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 12, 2023 ( the “Form S- 3” ), replacing a prior shelf registration statement which expired on October 12, 2023.

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.

On September 12, 2022, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”).

The Company will pay a commission to the Agents of 2.75 % of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement.

During the year ended December 31, 2022, the Company issued 100,379 shares of the Company’s common stock under the Sales Agreement and the net proceeds (before upfront costs) to the Company from the sale of the Company’s common stock were approximately $ 323 after deducting commissions paid of approximately $ 9 and before deducting other expenses of $ 93 .

As of December 31, 2022, shares of the Company’s common stock having a value of approximately $ 11,667  remained available for issuance under the Sales Agreement.

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

As amended, the ERC is available for wages paid through September 

30, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees.

During each quarter of 

2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC.

Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter.

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

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

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

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

As a result of the Company averaging 

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

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

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

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

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

 The $ 497 receivable balance was collected during 

January 2022.  

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

During the year ended December 31, 2022, the Company issued 100,379 shares of the Company’s common stock under the Sales Agreement and the net proceeds (before upfront costs) to the Company from the sale of the Company’s common stock were approximately $ 323 after deducting commissions paid of approximately $ 9 and before deducting other expenses of $ 93 .

No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December 31, 2023.

As of December 31, 2023, shares of the Company’s common stock having a value of approximately $ 11,667 remained available for issuance under the Sales Agreement.

Any additional shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S- 3 and a 424 (b) prospectus supplement.

In January 2023, the Company announced that it had entered into a supply agreement for wind tower purchases valued at approximately $ 175 million with a leading global wind turbine manufacturer.

Under the terms of the supply agreement, order fulfillment is to occur beginning in 2023 through year-end 2024.

In early November 2023, the parties discussed their joint intent to shift approximately half of the contracted tower section orders initially planned for 2024 into 2025, while maintaining the total number of tower sections stipulated under the supply agreement.

The Company anticipates that current cash resources, amounts available under the 2022 Credit Facility, sales of shares under the Sales Agreement, cash to be generated from operations and equipment financing, any potential proceeds from the sale of further Company securities under the Form S- 3, and proceeds from sales of AMP credits will be adequate to meet the Company’s liquidity needs for at least the next twelve months.

Reclassifications

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

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

Summary of Significant Accounting Policies

Management’s Use of Estimates

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

(“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period.

Significant estimates, among others, include inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, and valuation allowances on deferred taxes.

Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates. 

BROADWIND, INC.

Significant estimates, among others, include inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, and valuation allowances on deferred taxes.

Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

As of December 31, 2022 and December 31, 2021 , cash totaled $ 12,732  and $ 852 , respectively.

For the years ended December 31, 2022 and 2021 , interest income was $ 0  

and $ 1 , respectively.

As of December 31, 2023 and December 31, 2022 , cash totaled $ 1,099 and $ 12,732 , respectively.

For the years ended December 31, 2023 and 2022 , interest income was $ 8 and $ 0 , respectively.

Revenue Recognition

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

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

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

For many tower sales within the Company’s Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment.

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

For substantially all tower sales within the Company’s Heavy Fabrications segment, as well as certain 2023 sales within our Gearing segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment.

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 2022  and 2021, the Company also recognized revenue over time, versus point in time, when products in the Gearing and Heavy Fabrications segments had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contract by the customer.

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

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

not yet entitled to payment.

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

During 2023 and 2022, the Company also recognized revenue over time, versus point in time, when products in the Heavy Fabrications segments had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contract by the customer.

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

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

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

Cost of Sales

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

AMP credits and related discounts and administrative fees are also recognized in cost of sales.

See “AMP Credits” discussion below in this “Summary of Significant Accounting Policies” for further details.

Selling, General and Administrative Expenses

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

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

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

3 unchanged sentences

Accounts Receivable (A/R)

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

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

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

During the year ended December 31, 2022 , the Company’s five largest customers accounted for  

69 % of its consolidated revenues and 43 % of outstanding A/R balances, compared to the year ended December 31, 2021 when the Company’s five largest customers accounted for 71 % of its consolidated revenues and 25 % of its outstanding A/R balances.

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

During the year ended December 31, 2023 , the Company’s five largest customers accounted for 65 % of its consolidated revenues and 27 % of outstanding A/R balances, compared to the year ended December 31, 2022 when the Company’s five largest customers accounted for 69 % of its consolidated revenues and 43 % of its outstanding A/R balances.

Allowance for Doubtful Accounts

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

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

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

A/R balances that remain outstanding after the Company has exhausted reasonable collection efforts are written off through a charge to the valuation allowance and a credit to A/R.

Beginning January 1, 2023, the Company assessed and recorded an allowance for credit losses using the current expected credit loss (“CECL”) model.

The adjustment for credit losses to management’s current estimate is recorded in net income as credit loss expense.

All credit losses were on trade receivables and/or contract assets arising from the Company’s contracts with customers.

The Company selected a loss-rate method for the CECL model based on the relationship between historical write-offs of receivables and the underlying sales by major customers.

Utilizing this model, a historical loss-rate is applied against the amortized cost of applicable assets, at the time the asset is established.

The loss rate reflects the Company’s current estimate of the risk of loss (even when that risk is remote) over the expected remaining contractual life of the assets.

The Company’s policy is to deduct write-offs from the allowance for credit losses account in the period in which the financial assets are deemed uncollectible.

The adjustment for credit losses using this CECL model on accounts receivable and contract assets during the year ended December 31, 2023 was not material.

The allowance for credit losses for prior periods was prepared in accordance with legacy GAAP.

Based upon past experience and judgment, the Company established an allowance for doubtful accounts with respect to accounts receivable.

The Company’s standard allowance estimation methodology considered a number of factors that, based on its collections experience, the Company believed would have an impact on its credit risk and the collectability of its accounts receivable.

These factors included individual customer circumstances, history with the Company, the length of the time period during which the account receivable had 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 realizability of its A/R, as noted above, or modifications to the Company’s credit standards, collection practices and other related policies may impact its allowance for doubtful accounts and its financial results.

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 Company accounts for government assistance that is not subject to the scope of ASC 740 using a grant accounting model, by analogy to International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance, and recognizes such grants when it has reasonable assurance that it will comply with the grant’s conditions and that the grant will be received.

Income-based grants are initially recognized as “AMP credit receivable” and as a reduction to cost of sales.

The Company recognizes grants expected to be received directly from a government entity at their stated value.

When the Company expects to transfer grants to a third party, it recognizes the grants at, or adjusts their carrying value to, the amount expected to be received from the transaction.

Proceeds received from income-based grants are presented as cash inflows from operating activities.

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

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

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

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

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

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

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

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

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

2 unchanged sentences

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

5 unchanged sentences

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

Depreciation expense related to property and equipment for the years ended December 31, 2022 and 2021 was $ 5,335  and $ 5,603 , respectively.

Depreciation expense related to property and equipment for the years ended December 31, 2023 and 2022 was $ 5,719 and $ 5,335 , respectively.

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

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

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

Asset recoverability is first measured by comparing the assets’

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

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

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

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

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

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

See Note 7, “Long-Lived Assets”

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

See Note 8, “Long-Lived Assets” of these consolidated financial statements for further discussion of long-lived assets.

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

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

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

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

The Company recognizes operating lease assets and liabilities on the balance sheet.

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

1 unchanged sentence

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

7 unchanged sentences

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

The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2022 

and 2021  were as follows:

The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2023 and 2022 were as follows:

As of December 31,

11 unchanged sentences

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

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

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

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

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

5 unchanged sentences

Share-Based Compensation

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

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

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

Awards that are based on a fixed number of shares are treated as equity while awards that are based on a fixed amount of dollars are treated as liabilities.

See Note 

14 “Share-Based Compensation”

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

Net Income Per Share

Awards that are based on a fixed number of shares are treated as equity while awards that are based on a fixed amount of dollars are treated as liabilities.

See Note 15 “Share-Based Compensation” of these consolidated financial statements for further discussion of the Company’s share-based compensation plans, the nature of share-based awards issued and the Company’s accounting for share-based compensation.

Net Income Per Share

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

2 unchanged sentences

The following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2022 and 2021 :

The following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2023 and 2022 :

Year Ended December 31,

Heavy Fabrications

$ 117,206  

$ 101,994  

42,588  

28,583  

$ 133,368 $ 117,206

45,408 42,588

Industrial Solutions

17,804  

15,402  

( 839 )  

$ 176,759  

$ 145,619  

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

25,159 17,804

( 458 ) ( 839 )

$ 203,477 $ 176,759

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

1 unchanged sentence

If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

For substantially all tower sales within the Company’s Heavy Fabrications segment as well as certain 2023 sales within our Gearing segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment.

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

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

During the years ended December 

2022 and 2021, the Company recognized a portion of revenue within the Gearing and Heavy Fabrications segments over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts.

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

Within the Heavy Fabrications segment, the Company recognized revenue over time of $ 14,298  and $ 5,665  for the years ended December 

30, 2022  and 2021, respectively. Within the Gearing segment, the Company recognized revenue over time of $ 2,444  for the year ended December 

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

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. 

During the year ended December 31, 2023, the Company recognized $ 5,370 of revenue within the Gearing segment under terms included in bill and hold sales arrangements.

During the years ended December 31, 2023 and 2022, the Company recognized a portion of revenue within the Heavy Fabrications segments over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts.

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

Within the Heavy Fabrications segment, the Company recognized revenue for contracts that meet over time criteria of $ 11,033 and $ 15,117 for the years ended December 31, 2023 and 2022, 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.

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

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

The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less.

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Basic earnings per share calculation:

Net (loss) income

$ ( 9,730 )  

$ 2,847  

Net income (loss)

$ 7,649 $ ( 9,730 )

Weighted average number of common shares outstanding

20,298,641  

18,726,459  

Basic net (loss) income per share

$ ( 0.48 )  

$ 0.15  

21,188,669 20,298,641

Basic net income (loss) per share

$ 0.36 $ ( 0.48 )

Diluted earnings per share calculation:

Net (loss) income

$ ( 9,730 )  

$ 2,847  

Net income (loss)

$ 7,649 $ ( 9,730 )

Weighted average number of common shares outstanding

20,298,641  

18,726,459  

21,188,669 20,298,641

Common stock equivalents:

Non-vested stock awards (1)

662,030  

Weighted average number of common shares outstanding

20,298,641  

19,388,489  

Diluted net (loss) income per share

$ ( 0.48 )  

$ 0.15  

 Restricted stock units granted and outstanding of 822,737  

are excluded from the computation of diluted earnings for the year ended December 31, 2022 

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

BROADWIND, INC.

21,491,270 20,298,641

Diluted net income (loss) per share

$ 0.36 $ ( 0.48 )

( 1 ) Restricted stock units granted and outstanding of 822,737 are excluded from the computation of diluted earnings for the year ended December 31, 2022 due to the anti-dilutive effect as a result of the Company’s net loss for that period.

BROADWIND, INC.

AND SUBSIDIARIES

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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 consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016 - 13, “Financial Instruments-Credit Losses (Topic 326 ),”

which replaces the current incurred loss impairment methodology for most financial assets with the current expected credit loss, or CECL, methodology.

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 consolidated financial statements.

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update No.

2016 - 13, “Financial Instruments-Credit Losses (Topic 326 ),” which replaces the current incurred loss impairment methodology for most financial assets with the CECL methodology.

The series of new guidance amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables and contract assets.

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The guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements.

The Company implemented CECL during the year ended December 31, 2023.

The impact on the Company's financial statements was not material.

See Note 1, “Description of Business and Summary of Significant Accounting Policies,” of these consolidated financial statements for a further discussion of CECL.

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.

2023 - 07, “Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures,” which requires additional disclosure of significant segment expenses on an annual and interim basis.

This guidance will be applied retrospectively and will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.

2023 - 09, “Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures,” which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

This guidance will be effective for the annual periods beginning the year ended December 31, 2025.

The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

4 unchanged sentences

Other adjustments

( 30 )  

Balance at end of period

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

The components of inventories as of December 31, 2023 and 2022 are summarized as follows:

As of December 31,

Raw materials

$ 27,644  

$ 16,148  

$ 24,651 $ 27,644

Work-in-process

13,843  

13,639  

10,390 13,843

Finished goods

46,403  

36,362  

( 2,141 )  

39,636 46,403

( 2,231 ) ( 2,141 )

Net inventories

$ 44,262  

$ 33,377  

BROADWIND, INC.

$ 37,405 $ 44,262

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

During 2023, the Company recognized gross AMP credits totaling $ 14,493 , within the Heavy Fabrications segment.

These AMP credits were introduced as part of the IRA, which was enacted on August 16, 2022.

The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components.

Manufacturers of wind components qualify for the AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed.

The credit applies to each component produced and sold in the U.S.

beginning in 2023 through 2032.

Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $ 0.03 per watt for each wind tower produced.

In calculating the eligible credit, the Company relied on the megawatt rating provided by the customer.

Manufacturers who qualify for the AMP credits can apply to the Internal Revenue Service for cash refunds of the AMP credits or sell the AMP credits to third parties for cash, or apply the AMP credits against taxable income.

The Company recognized the AMP credits as a reduction to cost of sales in the Company’s consolidated statements of operations for the year ended December 31, 2023.

The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in the Company's consolidated balance sheet as of December 31, 2023.

On December 21, 2023, the Company entered into an agreement to sell 2023 and 2024 AMP credits to a third party.

At that time, the Company sold a portion of the gross 2023 credits in the amount of $ 6,952 and recognized a 6.5 % discount on the sale in the amount of $ 452 which was recognized in cost of sales.

In addition, the Company wrote down the remaining receivable of $ 7,541 to net realizable value and recorded the expected loss on sale of $ 490 in cost of sales.

The remaining 2023 AMP credit receivable was collected during the first quarter of 2024.

The Company also incurred other miscellaneous administrative costs related to selling the credits in the amount of $ 254 , $ 197 of which has been recorded as cost of sales, with the remaining capitalized and included in the “Prepaid expenses and other current assets” line item of the Company's consolidated financial statements at December 31, 2023.

LONG-LIVED ASSETS

The cost basis and estimated lives of property and equipment from continuing operations as of December 31, 2022 and 2021 are as follows:

The cost basis and estimated lives of property and equipment as of December 31, 2023 and 2022 are as follows:

As of December 31,

Life (in years)

$ 1,423  

20,792  

20,778  

$ 1,423 $ 1,423

22,111 20,792 39

Machinery and equipment

120,893  

116,725  

2 - 10  

125,107 120,893 2 - 10

Office furniture and equipment

5,962 5,705 3 - 7

Leasehold improvements

1 unchanged sentence

Construction in progress

160,213  

154,020  

167,197 160,213

Less accumulated depreciation and amortization

( 114,894 )  

( 110,365 )  

( 120,074 ) ( 114,894 )

Total property and equipment

$ 45,319  

$ 43,655  

As of December 31, 2022 , the Company had commitments of $ 1,942  related to the completion of projects within construction in progress.

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships.

Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 1  to 5  years.

During November 2022, the Company identified a triggering event associated with  

an expected operating loss within the Heavy Fabrications segment during the year ended December 31, 2022.

Accordingly, the Company performed an undiscounted cash flow analysis as of November 30, 2022 and determined that the undiscounted future cash flows exceeded the asset group's carrying value.

As a result, no impairment charge was recorded for the Heavy Fabrications asset group for the year ended December 31, 2022. 

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

Accordingly, the Company performed undiscounted cash flow analyses as of November 30, 2021 

and determined that the undiscounted future cash flows exceeded the asset groups' carrying values.

Additionally, there were no changes in facts or circumstances following the November 30, 2021 

assessments through December 31, 2021, which would alter the asset groups initial undiscounted future cash flows or carrying value estimates.

As a result, no impairment charges were recorded for the Heavy Fabrications and Gearing asset groups for the year ended December 31, 2021.

BROADWIND, INC.

$ 47,123 $ 45,319

As of December 31, 2023 , the Company had commitments of $ 1,523 related to the completion of projects within construction in progress.

During the year ended December 31, 2023, the Company did not identify any impairment triggering events within its segments.

As a result, no impairment charges were recorded for the year ended December 31, 2023.

During November 2022, the Company identified a triggering event associated with an expected operating loss within the Heavy Fabrications segment during the year ended December 31, 2022.

Accordingly, the Company performed an undiscounted cash flow analysis as of November 30, 2022 and determined that the undiscounted future cash flows exceeded the asset group's carrying value.

As a result, no impairment charge was recorded for the Heavy Fabrications asset group for the year ended December 31, 2022.

BROADWIND, INC.

AND SUBSIDIARIES

7 unchanged sentences

Noncompete agreements

$ ( 167 )  

$ ( 139 )  

$ 170 $ ( 170 ) $ — $ — — $ 170 $ ( 167 ) $ — $ 3 0.1

Customer relationships

15,979  

( 7,581 )  

( 7,592 )  

15,979  

( 7,284 )  

( 7,592 )  

( 7,180 )  

( 6,780 )  

15,979 ( 7,842 ) ( 7,592 ) 545 2.1 15,979 ( 7,581 ) ( 7,592 ) 806 3.1

9,099 ( 7,580 ) — 1,519 3.8 9,099 ( 7,180 ) — 1,919 4.8

Intangible assets

$ 25,248  

$ ( 14,928 )  

$ ( 7,592 )  

$ 2,728  

$ 25,248  

$ ( 14,203 )  

$ ( 7,592 )  

$ 3,453  

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

Amortization expense was $ 725  for the years ended December 31, 2022 and 2021 .

$ 25,248 $ ( 15,592 ) $ ( 7,592 ) $ 2,064 3.3 $ 25,248 $ ( 14,928 ) $ ( 7,592 ) $ 2,728 4.3

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships.

Estimated useful lives for intangibles assets range from 6 to 20 years.

Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 2 to 4 years.

Amortization expense was $ 664 and $ 725 for the years ended December 31, 2023 and 2022 , respectively.

As of December 31, 2023 , estimated future amortization expense is as follows:

$ 2,728  

ACCRUED LIABILITIES

1 unchanged sentence

Accrued payroll and benefits

$ 3,110  

$ 2,992  

Fair value of interest rate swap

$ 5,051 $ 3,110

Accrued property taxes

4 unchanged sentences

Long term incentive plan accrual

Accrued sales tax

Accrued other

Total accrued liabilities

$ 4,313  

$ 3,654  

BROADWIND, INC.

$ 6,477 $ 4,313

BROADWIND, INC.

AND SUBSIDIARIES

3 unchanged sentences

DEBT AND CREDIT AGREEMENTS

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

The Company’s outstanding debt balances as of December 31, 2023 and 2022 consisted of the following:

Line of credit

$ 6,350  

Other notes payable

Long-term debt

current portion

( 1,170 )  

current maturities

( 5,903 ) ( 1,170 )

Long-term debt, net of current maturities

$ 7,141  

As of December 31, 2022 , future annual principal payments on the Company’s outstanding debt obligations were as follows:

$ 1,170  

$ 6,250 $ 7,141

As of December 31, 2023 , future annual principal payments on the Company’s outstanding debt obligations were as follows:

2029 and thereafter

$ 8,311  

Credit Facilities

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

This line of credit has been amended from time to time.

On February 25, 2019, the line of credit was expanded and extended for three years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the “2016 Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto (the “Lenders”), providing the Company and its subsidiaries with a $ 35,000 secured credit facility (as amended to date, the “2016 Credit Facility”).

The obligations under the 2016 Credit Facility were 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 2016 Amended and Restated Loan Agreement (the “First Amendment”), implementing a payoff of a syndicated lender and a pricing grid based on the Company's trailing twelve month EBITDA under which applicable margins range from 2.25 % to 2.75 % for LIBOR rate loans and 0.00 % and 0.75 % for base rate loans, and extending the term of the 2016 Credit Facility to 

BROADWIND, INC.

On August 4, 2022, the Company entered into a credit agreement (as amended, the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), which replaced its prior credit facility and provided 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, as amended, the “2022 Credit Facility”).

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

Deferred financing costs related to the 2022 Credit Facility were $ 359 primarily related to the revolving credit loan, which is net of accumulated amortization of $ 141 , at December 31, 2023.

Deferred financing costs related to the 2022 Credit Facility were $ 414 which is net of accumulated amortization of $ 38 , at December 31, 2022.

These costs are included in the “Other assets” line item of the Company's consolidated financial statements at December 31, 2023 and December 31, 2022.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

On February 23, 2021, the Company executed the Second Amendment to the Amended and Restated Loan Agreement, which waived testing of the fixed charge coverage covenant for the quarters ended March 31, 2021 and June 20, 2021, added a new liquidity covenant applicable to the quarter ended March 31, 2021 and new minimum EBITDA covenants applicable to the quarters ended March 31, 2021 and June 30, 2021.

As of September 30, 2021, the Company transitioned back to a fixed charge coverage covenant.

On November 8, 2021, the Company executed the Third Amendment to the Amended and Restated Loan Agreement (the “Third Amendment”) which waived the fixed charge coverage ratio default for the quarter ended September 30, 2021, suspended testing of the fixed charge coverage ratio covenant through September 30, 2022, added a minimum EBITDA covenant applicable to the three -month period ending December 31, 2021, the six -month period ending March 31, 2022, the nine -month period ending June 30, 2022 and the twelve -month period ending September 30, 2022 

and added a reserve of $ 5,000  to the Revolving Loan Availability through December 31, 2022. 

On February 28, 2022, the Company executed the Fourth Amendment to the Amended and Restated Loan Agreement (the “Fourth Amendment”) which reduced the line of credit from $ 35,000 to $ 30,000 , extended the maturity date until January 31, 2024, waived the minimum EBITDA covenant for the three -month period ended December 31, 2021, revised the fixed charge coverage ratio covenant as of December 31, 2022 for the trailing nine -month period after March 31, 2022, revised the minimum EBITDA covenant applicable to the three -month period ending March 31, 2022, the six -month period ending June 30, 2022 and the nine -month period ending September 30, 2022, revised the liquidity reserve and amended certain other provisions in connection with the discontinuation of LIBOR and replacement with the forward-looking term Secured Overnight Financing Rate (Term SOFR) administered by CME Group, Inc.

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

The swap agreement has a notional amount of $ 6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the 2016 Credit Facility at 2.13 %, before considering the Company’s risk premium.

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

Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which may subject the Company’s results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities”

line item of the Company’s consolidated financial statements as of 

December 31, 2021. 

The interest rate swap expired in 

February 2022. 

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

On August 4, 2022, the Company entered into a credit agreement (the “2022 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 replaced the 2016 Credit Facility.

In connection with the 2022 Credit Facility, the Company incurred deferred financing costs in the amount of $ 470 primarily related to the revolving credit loan. These costs are included in the “Other assets”

line item of the Company's consolidated financial statements as of December 31, 2022. 

The 2022 Credit Facility, as amended, 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 (i) as of the twelve -month period ending January 31, 2024 through and including June 30, 2024 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 $ 1,921,000 for the twelve -month period ending March 31, 2023, $ 3,661,000 for the twelve -month period ending June 30, 2023, $ 5,876,000 for the twelve -month period ending September 30, 2023, and $ 9,929,000 for the twelve -month period ending December 31, 2023.

The initial term of the revolving credit facility matures August 4, 2027.

The term loan also matures on August 4, 2027, with monthly payments based on an 84 -month amortization. 

On February 8, 2023, the Company executed Amendment No.

1 to Credit Agreement and Limited Waiver (the “First Amendment to 2022 Credit Agreement”), which waived the Company's fourth quarter minimum EBITDA (as defined in the 2022 Credit Facility) requirement for the period ended December 31, 2022, amended the Fixed Charge Coverage Ratio (as defined in the 2022 Credit Facility) requirements for the twelve -month period ending January 31, 2024 through and including June 30, 2024 and each twelve -month period thereafter, and amended the minimum EBITDA requirements applicable to the twelve -month periods ending March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023.

As of December 31, 2022 , only $ 7,217  

from the senior secured term loan was outstanding under the 2022 Credit Facility.

The Company had $ 0 drawn on the senior secured revolving credit facility and had the ability to borrow up to $ 27,351  under the 2022 Credit Facility as of December 31, 2022 .

As of December 31, 2022, the effective interest rate of the senior secured revolving credit facility was 6.55 % and the effective rate of the senior secured term loan was 6.80 %. As of December 31, 2021, the effective interest rate of the 2016 Credit Facility was 4.0 %. 

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

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

During each of the years ended December 31, 2022 and 2021 , $114 of the loan was forgiven.

As of December 31, 2022  and December 31, 2021, the loan balance was $ 0  

and $114, respectively.

In addition, the Company has outstanding notes payable for capital expenditures in the amount of $ 1,094  and $ 363  as of December 31, 2022 and 2021 , respectively, with $ 88  and $ 186  included in the “Line of credit and current portion of long-term debt”

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

The notes payable have monthly payments that range from $ 3  

to $ 16 and an interest rate of 4 %.

1 to Credit Agreement and Limited Waiver which waived the Company’s fourth quarter minimum EBITDA (as defined in the 2022 Credit Agreement) requirement for the period ended December 31, 2022, amended the Fixed Charge Coverage Ratio (as defined in the 2022 Credit Agreement) requirements for the twelve -month period ending January 31, 2024 through and including June 30, 2024 and each twelve -month period thereafter, and amended the minimum EBITDA requirements applicable to the twelve -month periods ending March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023.

The 2022 Credit Agreement 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.

The initial term of the revolving credit facility matures August 4, 2027.

The term loan also matures on August 4, 2027, with monthly payments based on an 84 -month amortization.

As of December 31, 2023 , there was $ 10,792 of outstanding indebtedness under the 2022 Credit Facility, with the ability to borrow an additional $ 21,714 .

As of December 31, 2023, the Company was in compliance with all financial covenants under the 2022 Credit Facility.

As of December 31, 2023, the effective interest rate of the senior secured revolving credit facility was 7.64 % and the effective rate of the senior secured term loan was 7.89 %.

As of December 31, 2022, the effective interest rate of the senior secured revolving credit facility was 6.55 % and the effective rate of the senior secured term loan was 6.80 %.

The Company has outstanding notes payable for capital expenditures in the amount of $ 1,361 and $ 1,094 as of December 31, 2023 and 2022 , respectively, with $ 163 and $ 88 included in the “Line of credit and current maturities of long-term debt” line item of the Company’s consolidated financial statements as of December 31, 2023 and 2022 , respectively.

The notes payable have monthly payments that range from $ 3 to $ 15 and an interest rate of 6 %.

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

The outstanding notes payable have maturity dates that range from July  

2023  to September 

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

Small Business Administration (“SBA”).

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

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

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

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

During the quarter ended June 

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

in the Company's condensed consolidated statements of operations. 

BROADWIND, INC.

The outstanding notes payable have maturity dates in September 2028.

BROADWIND, INC.

AND SUBSIDIARIES

3 unchanged sentences

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

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

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

 As of December 31, 2022 , the right-of-use (“ROU”) asset had a balance of $ 16,396  

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

line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $ 1,882  

and $ 16,696 , respectively, and are included in the “Current portion of operating lease obligations”

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

line items of these consolidated financial statements.

As of December 31, 2021, the ROU asset had a balance of $ 18,029  and current and non-current lease liabilities relating to the ROU asset of $ 1,775  

and $ 18,405 , respectively.

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

Lease terms generally range from 3 to 15  

years with renewal options for extended terms.

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

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

The Company recognizes operating lease assets and liabilities on the balance sheet and discloses key information regarding leasing arrangements.

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

As of December 31, 2023 , the right-of-use (“ROU”) asset had a balance of $ 15,593 which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $ 1,851 and $ 15,888 , respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these consolidated financial statements.

As of December 31, 2022, the ROU asset had a balance of $ 16,396 and current and non-current lease liabilities relating to the ROU asset of $ 1,882 and $ 16,696 , respectively.

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

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

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

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

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

2 unchanged sentences

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

Operating rental expense for the years ended December 31, 2022 and 2021 was $ 4,253  and $ 4,302 , respectively.

Operating rental expense for the years ended December 31, 2023 and 2022 was $ 4,201 and $ 4,253 , respectively.

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

Finance rental expense for the years ended December 31, 2022 and 2021 was $ 1,639  and $ 1,379 , respectively.

Amortization expense recorded in connection with assets recorded under finance leases was $ 1,172  and $ 984  for the years ended December 31, 2022 and 2021 , respectively.

BROADWIND, INC.

Finance rental expense for the years ended December 31, 2023 and 2022 was $ 1,790 and $ 1,639 , respectively.

Amortization expense recorded in connection with assets recorded under finance leases was $ 1,263 and $ 1,172 for the years ended December 31, 2023 and 2022 , respectively.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

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

Year Ended December 31,

2 unchanged sentences

Amortization of finance lease assets

$ 1,172  

$ 1,263 $ 1,172

Interest on finance lease liabilities

5 unchanged sentences

Sublease income

( 191 )  

( 212 ) ( 191 )

Total operating lease costs

Total lease cost

$ 5,892  

$ 5,681  

$ 5,991 $ 5,892

Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2023 and 2022:

1 unchanged sentence

Operating cash outflow from operating leases

$ 3,496  

$ 3,581  

$ 3,460 $ 3,496

Right-of-use assets obtained in exchange for new

4 unchanged sentences

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

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

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is $ 20  and $ 270  for the years ended December 31, 2022 

and 2021, respectively. 

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

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is $ 5 and $ 20 for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023 , future minimum lease payments under finance leases and operating leases were as follows:

$ 2,372  

$ 3,453  

$ 5,825  

$ 2,416 $ 3,351 $ 5,767

1,193 3,447 4,640

937 3,442 4,379

671 3,144 3,815

671 3,153 3,824

2029 and thereafter

10,948  

11,963  

344 7,803 8,147

Total lease payments

26,620  

33,830  

Less—portion representing interest

( 976 )  

( 8,042 )  

6,232 24,340 30,572

Less—portion representing interest

( 707 ) ( 6,601 ) ( 7,308 )

Present value of lease obligations

18,578  

24,812  

Less—current portion of lease obligations

( 2,008 )  

( 1,882 )  

5,525 17,739 23,264

Less—current portion of lease obligations

( 2,153 ) ( 1,851 ) ( 4,004 )

Long-term portion of lease obligations

$ 4,226  

$ 16,696  

$ 20,922  

BROADWIND, INC.

$ 3,372 $ 15,888 $ 19,260

BROADWIND, INC.

AND SUBSIDIARIES

4 unchanged sentences

Legal Proceedings

From time to time, the Company is subject to legal proceedings or claims that arise in the ordinary course of its business.

The Company is party to a variety of legal proceedings or claims that arise in the ordinary course of its business.

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

As of December 31, 2022 , the Company is not aware of any material pending legal proceedings or threatened litigation that would have a material adverse effect on the Company’s results of operations, financial condition or cash flows, although no assurance can be given with respect to the ultimate outcome of pending actions.

Refer to Note 

18, “Legal Proceedings”

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

As of December 31, 2023 , the Company is not aware of any material pending legal proceedings or threatened litigation that would have a material adverse effect individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows, although no assurance can be given with respect to the ultimate outcome of pending actions.

Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

It is possible that if one or more litigation matters were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability.

Environmental Compliance and Remediation Liabilities

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

Also, certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site.

1 unchanged sentence

Third parties may also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

10 unchanged sentences

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

During 2022 and 2021 , the Company incurred no liquidated damages and there was no reserve for liquidated damages as of December 31, 2022  or December 31, 2021.

Workers’

Compensation Reserves

As of December 31, 2022 and 2021 , the Company had $ 30  

and $ 166 , respectively, accrued for self-insured workers’

compensation liabilities.

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

compensation liabilities, including reserves for self-retained losses.

The Company entered into a guaranteed workers’

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

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

During 2023 and 2022 , the Company incurred liquidated damages of $ 84 and $ 0 , respectively, and there was a reserve for liquidated damages of $ 84 and $ 0 as of December 31, 2023 and December 31, 2022, respectively.

Workers’ Compensation Reserves

The Company entered into a guaranteed workers’ compensation cost program at the beginning of the third quarter of 2016.

The reserve prior to 2016 is immaterial.

Health Insurance Reserves

As of December 31, 2022 and 2021 , the Company had $ 360  and $ 416 , respectively, accrued for health insurance liabilities.

As of December 31, 2023 and 2022 , the Company had $ 742 and $ 360 , respectively, accrued for health insurance liabilities.

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

2 unchanged sentences

Health insurance reserves are included in accrued liabilities.

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

As of December 31, 2022 , approximately 19 % of the Company’s employees were covered by two collective bargaining agreements with local unions at the Company’s Cicero, Illinois and Neville Island, Pennsylvania locations.

During November 2022, the Company negotiated a 

four -year collective bargaining agreement with the Neville Island union and it is expected to remain in effect through October 2026.

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

As of December 31, 2023 , approximately 18 % of the Company’s employees were covered by two collective bargaining agreements with local unions at the Company’s Cicero, Illinois and Neville Island, Pennsylvania locations.

During November 2022, the Company negotiated a four -year collective bargaining agreement with the Neville Island union and it is expected to remain in effect through October 2026.

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

FAIR VALUE MEASUREMENTS

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

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

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

1 provides the most reliable measure of fair value while Level 

3 generally requires significant management judgment.

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

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.

2 unchanged sentences

The fair value hierarchy is defined as follows:

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

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

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

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

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

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

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

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

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

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

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash, A/R, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments.

Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

BROADWIND, INC.

Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

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

The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these consolidated financial statements.

The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date.

The interest rate swap expired in February 2022.

BROADWIND, INC.

AND SUBSIDIARIES

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(in thousands, except share and per share data)

The Company entered into an interest rate swap in June 2019 to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note 9, “Debt and Credit Agreements,”

of these consolidated financial statements.

The fair value of the interest rate swap is reported in “Accrued liabilities”

and the change in fair value is reported in “Interest expense, net”

of these consolidated financial statements.

The 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 following table represents the fair value of the Company’s financial assets measured as of December 31, 2022 and 2021 :

December 31, 2021

Liabilities measured on a recurring basis:

Interest rate swap

Total liabilities at fair value

The provision for income taxes for the years ended December 31, 2023 and 2022 consists of the following:

3 unchanged sentences

Deferred provision

( 2,102 )  

( 460 )  

( 1,758 ) ( 2,102 )

( 209 ) ( 460 )

Total deferred provision

( 2,562 )  

( 1,967 ) ( 2,562 )

Increase in deferred tax valuation allowance

Total provision for income taxes

During the year ended December 31, 2022 , the Company recorded an expense for income taxes of $ 35 , compared to an expense for income taxes of $ 25  during the year ended December 31, 2021 .

August 16, 2022, Congress enacted the Inflation Reduction Act which includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components produced and sold in the US from 2023 through 2032.

No  rulings have been made on the taxability of these credits. 

The total change in the deferred tax valuation allowance was $ 2,549  

and $ 1,944  for the years ended December 31, 2022 and 2021 , respectively.

During the year ended December 31, 2023 , the Company recorded an expense for income taxes of $ 241 , compared to an expense for income taxes of $ 35 during the year ended December 31, 2022 .

On August 16, 2022, Congress enacted the Inflation Reduction Act which includes AMP credits for manufacturers of eligible components, including wind and solar components produced and sold in the US from 2023 through 2032.

These credits will have no impact on income tax expense.

The total change in the deferred tax valuation allowance was $ 1,957 and $ 2,549 for the years ended December 31, 2023 and 2022 , respectively.

The changes in the deferred tax valuation allowance in 2023 and 2022 were primarily the result of increases to the deferred tax assets pertaining to federal and state NOLs.

1 unchanged sentence

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

6 unchanged sentences

Net operating loss carryforwards

$ 74,807  

$ 71,967  

Intangible assets

$ 75,235 $ 74,807

Accrual and reserves

Total noncurrent deferred tax assets

82,176  

79,802  

83,408 82,176

Valuation allowance

( 74,559 )  

( 76,516 ) ( 74,559 )

Noncurrent deferred tax assets, net of valuation allowance

3 unchanged sentences

Net deferred income tax asset

Certain prior year amounts have been reclassified to conform to current year presentation. Valuation allowances of $ 74,559  and $ 72,010  have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2022 and 2021 , respectively.

Valuation allowances of $ 76,516 and $ 74,559 have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2023 and 2022 , respectively.

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

2 unchanged sentences

Valuation allowance as of Balance at December 31, 2023

As of December 31, 2022 , the Company had federal and unapportioned state NOL carryforwards of approximately $ 288,462  of which $ 227,781  will begin to expire in 2026.

As of December 31, 2023 , the Company had federal and unapportioned state NOL carryforwards of approximately $ 290,233 of which $ 227,781 will begin to expire in 2026.

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

1 unchanged sentence

The reconciliation between the statutory U.S.

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

For the Year Ended

1 unchanged sentence

federal income tax rate

21.0 %  

21.0 % 21.0 %

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

Permanent differences

( 0.6 )  

Other permanent differences

Change in valuation allowance

( 26.3 )  

Equity compensation

( 2.1 )  

State NOL deferred adjustment

PPP loan forgiveness

22.8 ( 26.3 )

Other deferred adjustment

Effective income tax rate

( 0.4 )%  

BROADWIND, INC.

2.8 % ( 0.4 )%

BROADWIND, INC.

AND SUBSIDIARIES

7 unchanged sentences

federal and state jurisdictions.

As of December 31, 2022 , with few exceptions, the Company is no longer subject to federal or state income tax examinations by taxing authorities for years before December 31, 2018;

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

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

As of December 31, 2023 , with few exceptions, the Company is no longer subject to federal or state income tax examinations by taxing authorities for years before December 31, 2019;

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

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

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

Section 

382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership.

The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership.

Upon completion of the Company’s analysis of IRC Section 

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

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

Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership.

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

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

In February 2013, the Company adopted a Stockholder Rights Plan, which was amended in February 2016 and approved by our stockholders (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under Section 

382 of the IRC.

On February 7, 2019, the Board of Directors (the “Board”) approved an amendment extending the Rights Plan for an additional three years, which was subsequently approved by the Company’s stockholders at the 2019 Annual Meeting of Stockholders held on April 23, 2019 ( the “2019 Annual Meeting of Stockholders”). 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 by the Company's stockholders at the 

2022 Annual Meeting of Stockholders.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or becoming the beneficial owner of 4.9 % or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards.

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 

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 by the Company's stockholders at the 2022 Annual Meeting of Stockholders.

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

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

Each Right entitles its holder to purchase from the Company one one -thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $ 7.26  per Right, subject to adjustment.

As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9 % or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group.

Stockholders who owned 4.9 % or more of the outstanding shares of the Company’s common stock as of February 

12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date.

BROADWIND, INC.

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.

Stockholders who owned 4.9 % or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date.

BROADWIND, INC.

AND SUBSIDIARIES

6 unchanged sentences

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

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

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

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

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

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

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

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

On February 7, 2021, the Board approved the Second Amendment to the Amended and Restated 2015 Equity Incentive Plan which, among other things, increased the number of shares of our common stock authorized for issuance under the 2015 EIP from 2,200,000 to 3,200,000 .

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

On March 2, 2023, the Board approved the Third Amendment to the Amended and Restated 2015 Equity Incentive Plan which, among other things, increased the number of shares of our common stock authorized for issuance under the 2015 EIP from 3,200,000 to 4,700,000 .

The Third Amendment to the amendment and restatement of the 2015 EIP was approved by the Company’s stockholders at the 2023 Annual Meeting of Stockholders.

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

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

1 unchanged sentence

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

(ii) “incentive stock options”

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

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

(iii) stock appreciation rights;

2 unchanged sentences

Stock Options.

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

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

4 unchanged sentences

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

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

Performance Awards (PSUs).

1 unchanged sentence

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

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

BROADWIND, INC.

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

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

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

As of December 31, 2022, 1,854,919  

shares of common stock reserved for issuance pursuant to stock options and RSU awards granted under the 2015 EIP had been issued in the form of common stock and 822,737  

shares of common stock are issued and unvested.

There was no  stock option activity during the years ended 

December 31, 2022  and 

2021 and no  stock options were outstanding as of December 31, 2022 and 

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

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

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

BROADWIND, INC.

The 2015 EIP reserves 4,700,000 shares of the Company’s common stock.

As of December 31, 2023, 2,187,843 shares of common stock reserved for issuance pursuant to stock options and RSU awards granted under the 2015 EIP had been issued in the form of common stock and 687,206 shares of common stock are issued and unvested.

There was no stock option activity during the years ended December 31, 2023 and 2022 and no stock options were outstanding as of December 31, 2023 and 2022.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

The following table summarizes information with respect to outstanding RSUs and PSUs accounted for as equity awards as of December 31, 2022 and 2021 :

The following table summarizes information with respect to outstanding RSUs and PSUs accounted for as equity awards as of December 31, 2023 and 2022 :

Weighted Average

2 unchanged sentences

Unvested as of December 31, 2022

918,448  

$ 2.73  

748,694  

$ 1.75  

( 818,956 )  

$ 2.23  

( 25,449 )  

$ 2.60  

822,737 $ 2.37

492,665 $ 4.10

( 493,327 ) $ 2.73

( 134,869 ) $ 3.98

Unvested as of December 31, 2023

822,737  

$ 2.37  

687,206 $ 3.03

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

Compensation expense related to these service and performance based awards is generally recognized on a straight-line basis over the vesting period.

During the years ended December 31, 2022 and 2021 , the Company utilized a forfeiture rate of 25 % for estimating the forfeitures of stock compensation granted.

During the year ended December 31, 2022, the Company recorded share-based compensation expense in the amount of $ 619  for PSUs treated as liability awards that will be settled in shares in 2023.

The liability is recognized in the “Accrued liabilities”

line item of the Company’s condensed consolidated balance sheet and has a balance of $ 619  as of December 31, 2022.

The following table summarizes share-based compensation expense, net of taxes withheld, included in the Company’s consolidated statements of operations for the years ended December 31, 2022 and 2021 as follows:

During the years ended December 31, 2023 and 2022 , the Company utilized a forfeiture rate of 25 %, based on historical activity, for estimating the forfeitures of stock compensation granted.

During the year ended December 31, 2022, the Company recorded share-based compensation expense in the amount of $ 619 for PSUs treated as liability awards that were settled in shares of the Company’s stock in 2023.

The liability is recognized in the “Accrued liabilities” line item of the Company’s condensed consolidated balance sheet and has a balance of $ 619 as of December 31, 2022.

For the Years Ended

3 unchanged sentences

Net effect of share-based compensation expense on net income

$ 1,563  

$ 1,541  

$ 877 $ 1,563

Reduction in earnings per share:

Basic earnings per share

$ 0.08  

$ 0.04 $ 0.08

Diluted earnings per share

$ 0.08  

$ 0.04 $ 0.08

Income tax benefit is not illustrated because the Company is currently in a full tax valuation allowance position and an actual income tax benefit was not realized for the years ended December 31, 2023 and 2022 .

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

As of December 31, 2022 , the Company estimates that pre-tax compensation expense for all unvested share-based RSUs and PSUs in the amount of approximately $ 1,162  

will be recognized through the year 2024.

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

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

As of December 31, 2023 , the Company estimates that pre-tax compensation expense for all unvested share-based RSUs and PSUs in the amount of approximately $ 1,467 will be recognized through the year 2025.

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

SEGMENT REPORTING

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

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

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets.

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

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domestic wind energy and equipment manufacturing hubs.

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

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

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 and gearbox repair in Neville Island, Pennsylvania.

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

The Company has designed and manufactures a mobile, modular pressure reducing system for the compressed natural gas virtual pipeline market.

The Company manufactures components for buckets, shovels, car bodies, drill masts and other products that support mining and construction markets.

In other industrial markets, the Company provides crane components, pressure vessels, frames and other structures.

The Company provides gearing, gearboxes and precision machined components to a broad set of customers in diverse markets including;

surface and underground mining, wind energy, steel, material handling, infrastructure, onshore and offshore oil and gas fracking and drilling, marine, and other industrial markets.

The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for a century.

The Company uses an integrated manufacturing process, which includes machining and finishing processes in addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair 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.

BROADWIND, INC.

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

The Company has recently expanded into the U.S.

wind power generation market, by providing tower internals kitting solutions for on-site installations, as OEMs domesticate their supply chain due to lead time and reliability issues.

The Company also provides packaging solutions and fabricates panels and sub-assemblies to reduce customers’ costs, improve manufacturing velocity and reliability.

BROADWIND, INC.

AND SUBSIDIARIES

3 unchanged sentences

Corporate and Other

“Corporate”

includes the assets and SG&A expenses of the Company’s corporate office.

“Eliminations”

comprises adjustments to reconcile segment results to consolidated results.

The accounting policies of the reportable segments are the same as those referenced in Note 

1, “Description of Business and Summary of Significant Accounting Policies”

of these consolidated financial statements.

“Corporate” includes the assets and SG&A expenses of the Company’s corporate office.

“Eliminations” comprises adjustments to reconcile segment results to consolidated results.

The accounting policies of the reportable segments are the same as those referenced in Note 1, “Description of Business and Summary of Significant Accounting Policies” of these consolidated financial statements.

Summary financial information by reportable segment is as follows:

3 unchanged sentences

Revenues from external customers

$ 117,194  

42,572  

16,993  

$ 176,759  

$ 133,368 45,408 24,701 — — $ 203,477

Intersegment revenues

( 839 )  

117,206  

42,588  

17,804  

( 839 )  

176,759  

Operating (loss) income

( 1,044 )  

( 5,722 )  

— — 458 — ( 458 ) —

133,368 45,408 25,159 — ( 458 ) 203,477

Operating income (loss)

15,006 1,846 3,160 ( 8,884 ) 11 11,139

Depreciation and amortization

3,517 2,270 380 216 — 6,383

Capital expenditures

45,475  

51,944  

12,775  

224,856  

( 190,510 )  

144,540  

4,739 1,398 214 54 — 6,405

46,931 48,599 16,295 58,487 ( 35,156 ) 135,156

Heavy Fabrications

2 unchanged sentences

Revenues from external customers

$ 101,989  

28,583  

15,047  

$ 145,619  

$ 117,194 42,572 16,993 — — $ 176,759

Intersegment revenues

( 360 )  

101,994  

28,583  

15,402  

( 360 )  

145,619  

Operating loss

( 3,214 )  

( 2,593 )  

( 386 )  

( 6,401 )  

12 16 811 — ( 839 ) —

117,206 42,588 17,804 — ( 839 ) 176,759

Operating (loss) income

( 1,044 ) 43 120 ( 5,722 ) ( 4 ) ( 6,607 )

Depreciation and amortization

3,446 1,978 397 239 — 6,060

Capital expenditures

37,131  

46,219  

10,825  

228,219  

( 204,347 )  

118,047  

2,601 446 48 3 — 3,098

45,475 51,944 12,775 224,856 ( 190,510 ) 144,540

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

1 unchanged sentence

All intercompany revenue is eliminated in consolidation.

During 2022 , two  

customers accounted for more than 10% of total net revenues. The customers, reported within the Heavy Fabrications segment, accounted for revenues of $ 64,625 and $ 20,336 , respectively.

During 2021 , two  customers accounted for more than 10% of total net revenues.

The customers, reported within the Heavy Fabrications segment, accounted for revenues of $ 59,278  and $ 25,946 respectively. During the years ended December 31, 2022 and 2021 , five customers accounted for 69 % and 71 %, respectively, of total net revenues.

BROADWIND, INC.

During 2023 , one customer accounted for more than 10% of total net revenues.

The customer, reported within the Heavy Fabrications segment, accounted for revenues of $ 88,144 .

During 2022 , two customers accounted for more than 10% of total net revenues.

The customers, reported within the Heavy Fabrications segment, accounted for revenues of $ 64,625 and $ 20,336 , respectively.

During the years ended December 31, 2023 and 2022 , five customers accounted for 65 % and 69 %, respectively, of total net revenues.

BROADWIND, INC.

AND SUBSIDIARIES

6 unchanged sentences

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

As of December 31, 2022 , all employees were eligible to receive safe harbor matching contributions equal to 100 % of the first 3 % of the participant’s elective deferral contributions and 50 % of the next 2 % of the participant’s elective deferral contributions.

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

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

As of December 31, 2023 , all employees were eligible to receive safe harbor matching contributions equal to 100 % of the first 3 % of the participant’s elective deferral contributions and 50 % of the next 2 % of the participant’s elective deferral contributions.

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

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

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

For the years ended December 31, 2022 and 2021 , the Company recorded expense under these plans of approximately $ 1,247  and $ 1,195 , respectively.

For the years ended December 31, 2023 and 2022 , the Company recorded expense under these plans of approximately $ 1,394 and $ 1,247 , respectively.

Deferred Compensation Plan

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

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

Compensation income associated with the deferred compensation plan recorded during the years ended December 31, 2022 and 2021 was $( 1 )  

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

As of December 31, 2022 and 2021 , the fair value of plan liability to the Company was $ 15  and $ 16 , respectively.

Compensation income (expense) associated with the deferred compensation plan recorded during the years ended December 31, 2023 and 2022 was $ 8 and $( 1 ).

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

As of December 31, 2023 and 2022 , the fair value of plan liability to the Company was $ 23 and $ 15 , respectively.

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

4 unchanged sentences

The following table provides a summary of selected financial results of operations by quarter for the years ended December 31, 2023 and 2022 as follows:

$ 41,844  

$ 50,012  

$ 44,843  

$ 40,060  

$ 48,873 $ 50,843 $ 57,163 $ 46,598

6,976 8,333 10,167 7,032

Operating income

1,282 2,216 5,367 2,274

769 1,415 4,394 1,071

Net income per share:

$ 0.04 $ 0.07 $ 0.21 $ 0.05

$ 0.04 $ 0.07 $ 0.20 $ 0.05

$ 41,844 $ 50,012 $ 44,843 $ 40,060

2,012 2,394 3,748 2,556

Operating loss

( 2,073 )  

( 1,912 )  

( 520 )  

( 2,404 )  

( 2,703 )  

( 1,772 )  

( 2,073 ) ( 1,912 ) ( 520 ) ( 2,102 )

( 2,404 ) ( 2,703 ) ( 1,772 ) ( 2,851 )

Net loss per share:

$ ( 0.12 )  

$ ( 0.13 )  

$ ( 0.09 )  

$ ( 0.12 )  

$ ( 0.13 )  

$ ( 0.09 )  

$ 32,728  

$ 46,491  

$ 40,389  

$ 26,011  

Operating loss

( 4,311 )  

( 2,311 )  

( 1,997 )  

Net (loss) income

( 1,210 )  

10,252  

( 2,105 )  

Net (loss) income per share:

$ ( 0.07 )  

$ 0.55  

$ ( 0.11 )  

$ ( 0.07 )  

$ 0.53  

$ ( 0.11 )  

BROADWIND, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2022 and 2021

(in thousands, except share and per share data)

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.

The Company received a notice dated January 18, 2023 from WM Argyle Fund, LLC, which allegedly owned approximately 1.0% of the Company’s outstanding shares at the time of submission, purporting to nominate a slate of six candidates for election as directors at the Company's 

2023 Annual Meeting of Stockholders.

The Company remains open to ongoing engagement with WM Argyle. However, if the Company and WM Argyle cannot reach an agreement in connection with its nomination, there will be a contested election at the Company’s 2023 Annual Meeting of Stockholders.

$ ( 0.12 ) $ ( 0.13 ) $ ( 0.09 ) $ ( 0.14 )

INDEX TO EXHIBITS

Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008)

Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 23, 2012)

Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 6, 2020)

Third Amended and Restated Bylaws of the Company, adopted as of May 4, 2020 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed May 6, 2020)

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

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

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

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

Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008)

Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 23, 2012)

Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 6, 2020)

Fourth Amended and Restated Bylaws of the Company, adopted as of June 26, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 28, 2023)

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

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

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

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

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

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

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

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

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

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

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

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

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

Broadwind Energy, Inc.

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

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

Form of Restricted Stock Unit Award Agreement 

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

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

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

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

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

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

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

10.10†

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

10.11†

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

10.12†

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

Broadwind Energy, Inc.

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

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

10.14†

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

10.15†

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

Form of Performance Award Agreement (Broadwind Energy, Inc.

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

10.16†

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

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

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

10.17†

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

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

10.18†

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

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

10.19†

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

Amended and Restated Broadwind Energy, Inc.

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

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

and CIBC Bank USA (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)

Note dated April 5, 2020 by and between Broadwind Heavy Fabricators, Inc.

and CIBC Bank USA (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)

Note dated April 5, 2020 by and between Broadwind Industrial Solutions, Inc.

and CIBC Bank USA (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)

Note dated April 8, 2020 by and between Broadwind Energy, Inc.

n/k/a Broadwind, Inc.

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

10.24†

Form of Performance Award 

Agreement (Amended and Restated Broadwind, Inc.

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

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

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

10.25†

First Amendment to Amended and Restated Broadwind Energy, Inc.

2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020)

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

Second Amendment to the Amended and Restated Loan and Security Agreement, dated February 23, 2021, among the Company, Brad Foote Gearworks, Inc, Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC, and CIBC Bank USA, as Administrative Agent for itself and all Lenders (incorporated by reference to Exhibit 10.33 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020)

Second Amendment to Amended and Restated Broadwind, Inc.

1 unchanged sentence

1 to the Company's Schedule 14A filed April 5, 2021)

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

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

Fourth Amendment to Amended and Restated Loan and Security Agreement, dated February 28, 2022, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC and CIBC Bank USA, as Administrative Agent for itself and all Lenders (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021)

Credit Agreement, dated as of August 4, 2022, by and among Broadwind, Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc., 5100 Neville Road, LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 8, 2022)  

Third Amendment to Amended and Restated Broadwind, Inc.

2015 Equity Incentive Plan (incorporated by reference to Appendix B to the Company’s Schedule 14A filed April 7, 2023)

Guaranty, dated as of August 4, 2022, by Broadwind, Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc.

8 unchanged sentences

1 to Credit Agreement and Limited Waiver, dated as of February 8, 2023, by and among Broadwind Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc., 5100 Neville Island, LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed February 14, 2023)

Tax Credit Transfer Agreement, dated as of December 21, 2023, by and between Broadwind Heavy Fabrications Inc.

and MarketAxess Holding Inc.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 27, 2023)

Guaranty, dated as of December 21, 2023, by and between Broadwind, Inc.

and MarketAxess Holdings Inc.

(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 27, 2023)

Subsidiaries of the Registrant (filed herewith)

Consent of RSM LLP (filed herewith)

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

Consent of RSM LLP (filed herewith)

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

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

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

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

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

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

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

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

Broadwind, Inc.

Policy on Recoupment of Incentive-Based Compensation (filed herewith)

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

for the year ended December 31, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets as of December 31, 2022 and 2021, (ii) Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, (iii) Consolidated Statements of Stockholders’

Equity for the years ended December 31, 2022 and 2021, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

(i) Consolidated Balance Sheets as of December 31, 2023 and 2022, (ii) Consolidated Statements of Operations for the years ended December 31, 2023 and 2022, (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2022, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

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

Indicates management contract or compensation plan or arrangement.

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

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

day of March, 2024

BROADWIND, INC.

BROADWIND, INC.

President and Chief Executive Officer

(Principal Executive Officer)

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

 TITLE 

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

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

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

March 5, 2024

2 unchanged sentences

March 5, 2024

March 9, 2023

/s/ Philip J.

3 unchanged sentences

March 5, 2024

/s/ Sachin Shivaram

/s/ Sachin M.

March 5, 2024

Sachin Shivaram

/s/ Jeanette A.

March 5, 2024

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

What changed 10-K

Item 9A. Controls and Procedures