BROADWIND, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES (a) 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 were effective as of December 31, 2023. (b) Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. (c) Report of Management on Internal Control Over Financial Reporting Our management, including our CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). 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. Based on this assessment, management determined that our internal control over financial reporting was effective as of December 31, 2023. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. ITEM 9B. 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. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 30 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE With the exception of the description of our Code of Ethics and Business Conduct below, the information required by this item is incorporated herein by reference from the discussion under the headings “Directors and Director Compensation,” “Corporate Governance,” 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: 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. ITEM 11. 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 2024 Proxy Statement. ITEM 12. 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 2024 Proxy Statement. 31 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: EQUITY COMPENSATION PLAN INFORMATION (a) (b) (c) Number of securities remaining available for Number of securities future issuances under to be issued upon Weighted‑average equity compensation exercise of exercise price of plans (excluding outstanding options, outstanding options, securities reflected in Plan Category warrants, and rights warrants, and rights column (a)) Equity compensation plans approved by stockholders 687,206 (1) $ 3.03 1,272,405 Total 687,206 $ 3.03 1,272,405 (1) Includes outstanding restricted stock awards pursuant to the 2015 EIP. This plan has been approved by our stockholders. ITEM 13. 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 2024 Proxy Statement. ITEM 14. 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 2024 Proxy Statement. 32 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 1. Financial Statements The financial statements listed on the Index to Financial Statements (page 34) are filed as part of this Annual Report. 2. Financial Statement Schedules These schedules have been omitted because the required information is included in the consolidated financial statements or notes thereto or because they are not applicable or not required. 3. Exhibits The exhibits listed on the Index to Exhibits are filed as part of this Annual Report. ITEM 16. FORM 10-K SUMMARY None. 33 INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ( PCAOB ID 49 ) 35 Consolidated Balance Sheets as of December 31, 2023 and 2022 37 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 38 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023 and 2022 39 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 40 Notes to Consolidated Financial Statements 41 34 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Broadwind, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Broadwind, Inc. 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. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of 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 it relates. 35 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 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 We have served as the Company's auditor since 2016. Chicago, Illinois March 5, 2024 36 BROADWIND , INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) As of December 31, 2023 2022 ASSETS CURRENT ASSETS: Cash $ 1,099 $ 12,732 Accounts receivable, net 19,231 17,018 AMP credit receivable 7,051 — Contract assets 1,460 1,955 Inventories 37,405 44,262 Prepaid expenses and other current assets 3,500 3,291 Total current assets 69,746 79,258 LONG-TERM ASSETS: Property and equipment, net 47,123 45,319 Operating lease right-of-use assets 15,593 16,396 Intangible assets, net 2,064 2,728 Other assets 630 839 TOTAL ASSETS $ 135,156 $ 144,540 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Line of credit and current maturities of long-term debt $ 5,903 $ 1,170 Current portion of finance lease obligations 2,153 2,008 Current portion of operating lease obligations 1,851 1,882 Accounts payable 20,728 26,255 Accrued liabilities 6,477 4,313 Customer deposits 16,500 34,550 Total current liabilities 53,612 70,178 LONG-TERM LIABILITIES: Long-term debt, net of current maturities 6,250 7,141 Long-term finance lease obligations, net of current portion 3,372 4,226 Long-term operating lease obligations, net of current portion 15,888 16,696 Other 15 26 Total long-term liabilities 25,525 28,089 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY: Preferred stock, $ 0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock, $ 0.001 par value; 30,000,000 shares authorized; 21,840,301 and 21,127,130 shares issued as of December 31, 2023, and December 31, 2022, respectively 22 21 Treasury stock, at cost, 273,937 shares as of December 31, 2023 and December 31, 2022 ( 1,842 ) ( 1,842 ) Additional paid-in capital 399,336 397,240 Accumulated deficit ( 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. 37 BROADWIND , INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) For the Years Ended December 31, 2023 2022 Revenues $ 203,477 $ 176,759 Cost of sales 170,969 166,049 Gross profit 32,508 10,710 OPERATING EXPENSES: Selling, general and administrative 20,705 16,592 Intangible amortization 664 725 Total operating expenses 21,369 17,317 Operating income (loss) 11,139 ( 6,607 ) OTHER EXPENSE, net: Interest expense, net ( 3,201 ) ( 3,218 ) Other, net ( 48 ) 130 Total other expense, net ( 3,249 ) ( 3,088 ) Net income (loss) before provision for income taxes 7,890 ( 9,695 ) Provision for income taxes 241 35 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. 38 BROADWIND , INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except share data) Common Stock Treasury Stock Shares Issued Issued Additional Accumulated Issued Amount Shares Amount Paid-in Capital Deficit Total 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 Net loss — — — — — ( 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 ( 160,403 ) — — — ( 735 ) — ( 735 ) Net income — — — — — 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. 39 BROADWIND , INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 7,649 $ ( 9,730 ) Adjustments to reconcile net cash (used in) provided by operating activities: Depreciation and amortization expense 6,383 6,060 Deferred income taxes ( 10 ) ( 13 ) Change in fair value of interest rate swap agreements — ( 27 ) Stock-based compensation 877 944 Allowance for doubtful accounts 82 ( 30 ) Common stock issued under defined contribution 401(k) plan 1,336 1,244 Loss on disposal of assets 42 3 Changes in operating assets and liabilities: Accounts receivable ( 2,295 ) ( 3,186 ) AMP credit receivable ( 7,051 ) — Employee retention credit receivable — 497 Contract assets 495 ( 820 ) Inventories 6,857 ( 10,885 ) Prepaid expenses and other current assets ( 210 ) ( 629 ) Accounts payable ( 6,008 ) 9,926 Accrued liabilities 2,782 686 Customer deposits ( 18,050 ) 22,468 Other non-current assets and liabilities 175 135 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 21 — Net cash used in investing activities ( 6,384 ) ( 3,098 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from (payments on) line of credit, net 4,705 ( 6,368 ) Payments for deferred financing costs ( 48 ) ( 452 ) Proceeds from long-term debt 1,056 8,113 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 — 230 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 12,732 852 CASH end of the period $ 1,099 $ 12,732 Supplemental cash flow information: Interest paid $ 2,073 $ 1,638 Income taxes paid $ 17 $ 23 Non-cash investing and financing activities: Equipment additions via finance lease $ 719 $ 3,882 Non-cash purchases of property and equipment $ 482 $ 134 Settlement of incentive compensation liability with stock $ 619 — The accompanying notes are an integral part of these consolidated financial statements. 40 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 and 2022 (in thousands, except share and per share data) 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. wind energy industry, although the Company has increasingly diversified into other industrial markets. Within the U.S. 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: Heavy Fabrications, Gearing, and Industrial Solutions. Heavy Fabrications The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers ( 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 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. 41 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) Gearing 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. 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. Liquidity 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, 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. The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the Company's consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense by the Company. During the 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. 42 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 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. 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 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 . 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 . 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. 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. 43 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) Cash 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 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 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 Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. These costs include operation, repair and maintenance of equipment, materials, direct and indirect labor and benefit costs, rent and utilities, maintenance, insurance, equipment rentals, freight, and depreciation. 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. 44 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 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, 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  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 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. AMP Credits 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 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. Inventories consist of raw materials, work-in-process and finished goods. Raw materials consist of components and parts for general production use. Work-in-process consists of labor and overhead, processing costs, purchased subcomponents and materials purchased for specific customer orders. 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. 45 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) Long-Lived Assets Property and equipment are stated at cost less accumulated depreciation and amortization. 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, 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. 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 8, “Long-Lived Assets” of these consolidated financial statements for further discussion of long-lived assets. Leases The Company leases various property and equipment under operating lease arrangements. 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. 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. 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. 46 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) Warranty Liability The Company provides warranty terms that generally range from one to five years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery from third parties for amounts paid to customers under warranty provisions. Warranty liability is recorded in accrued liabilities within the consolidated balance sheet. 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, 2023 and 2022 were as follows: As of December 31, 2023 2022 Balance, beginning of period $ 149 $ 125 Increase of warranty reserve 206 23 Warranty claims ( 19 ) — Other adjustments ( 14 ) 1 Balance, end of period $ 322 $ 149 Income Taxes The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. 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. 47 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) The Company also accounts for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. The Company follows the applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition related to the uncertainty in these income tax positions. 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 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. Basic net income (loss) per share is based solely upon the weighted average number of common shares outstanding and excludes any dilutive effects of restricted stock, options, warrants and convertible securities. Diluted net income (loss) per share is based upon the weighted average number of common shares and common-share equivalents outstanding during the year excluding those common-share equivalents where the impact to basic net income (loss) per share would be anti-dilutive. 2. REVENUES 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. 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, 2023 2022 Heavy Fabrications $ 133,368 $ 117,206 Gearing 45,408 42,588 Industrial Solutions 25,159 17,804 Eliminations ( 458 ) ( 839 ) Consolidated $ 203,477 $ 176,759 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. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. 48 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (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 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. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations. The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less. 3 . EARNINGS PER SHARE The following table presents a reconciliation of basic and diluted earnings per share for the years ended December 31, 2023 and 2022 as follows: For the Years Ended December 31, 2023 2022 Basic earnings per share calculation: Net income (loss) $ 7,649 $ ( 9,730 ) Weighted average number of common shares outstanding 21,188,669 20,298,641 Basic net income (loss) per share $ 0.36 $ ( 0.48 ) Diluted earnings per share calculation: Net income (loss) $ 7,649 $ ( 9,730 ) Weighted average number of common shares outstanding 21,188,669 20,298,641 Common stock equivalents: Non-vested stock awards (1) 302,601 — Weighted average number of common shares outstanding 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. 49 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 4. RECENT ACCOUNTING PRONOUNCEMENTS The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its 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. The guidance should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. 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 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. 5 . ALLOWANCE FOR DOUBTFUL ACCOUNTS The activity in the accounts receivable allowance from operations for the years ended December 31, 2023 and 2022 consists of the following: For the Year Ended December 31, 2023 2022 Balance at beginning of period $ 17 $ 47 Bad debt expense 127 — Write-offs ( 47 ) — Other adjustments 2 ( 30 ) Balance at end of period $ 99 $ 17 6. INVENTORIES The components of inventories as of December 31, 2023 and 2022 are summarized as follows: As of December 31, 2023 2022 Raw materials $ 24,651 $ 27,644 Work-in-process 10,390 13,843 Finished goods 4,595 4,916 39,636 46,403 Less: Reserve ( 2,231 ) ( 2,141 ) Net inventories $ 37,405 $ 44,262 50 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 7. AMP CREDITS 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. 8. LONG-LIVED ASSETS The cost basis and estimated lives of property and equipment as of December 31, 2023 and 2022 are as follows: As of December 31, 2023 2022 Life (in years) Land $ 1,423 $ 1,423 Buildings 22,111 20,792 39 Machinery and equipment 125,107 120,893 2 - 10 Office furniture and equipment 5,962 5,705 3 - 7 Leasehold improvements 9,068 9,040 Shorter of asset life or life of lease Construction in progress 3,526 2,360 167,197 160,213 Less accumulated depreciation and amortization ( 120,074 ) ( 114,894 ) Total property and equipment $ 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. 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 for the Heavy Fabrications asset group for the year ended December 31, 2022. 51 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) As of December 31, 2023 and 2022 , the cost basis, accumulated amortization and net book value of intangible assets were as follows: December 31, 2023 December 31, 2022 Remaining Remaining Weighted Weighted Accumulated Net Average Accumulated Net Average Cost Accumulated Impairment Book Amortization Accumulated Impairment Book Amortization Basis Amortization Charges Value Period Cost Amortization Charges Value Period Intangible assets: Noncompete agreements $ 170 $ ( 170 ) $ — $ — — $ 170 $ ( 167 ) $ — $ 3 0.1 Customer relationships 15,979 ( 7,842 ) ( 7,592 ) 545 2.1 15,979 ( 7,581 ) ( 7,592 ) 806 3.1 Trade names 9,099 ( 7,580 ) — 1,519 3.8 9,099 ( 7,180 ) — 1,919 4.8 Intangible assets $ 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: 2024 $ 661 2025 661 2026 422 2027 320 Total $ 2,064 9. ACCRUED LIABILITIES Accrued liabilities as of December 31, 2023 and 2022 consisted of the following: December 31, December 31, 2023 2022 Accrued payroll and benefits $ 5,051 $ 3,110 Accrued property taxes — 17 Income taxes payable 254 26 Accrued professional fees 140 118 Accrued warranty liability 322 149 Self-insured workers compensation reserve 21 30 Long term incentive plan accrual — 619 Accrued sales tax 310 5 Accrued other 379 239 Total accrued liabilities $ 6,477 $ 4,313 52 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 10. DEBT AND CREDIT AGREEMENTS The Company’s outstanding debt balances as of December 31, 2023 and 2022 consisted of the following: December 31, 2023 2022 Line of credit $ 4,657 $ — Other notes payable 1,361 1,094 Long-term debt 6,135 7,217 Total debt 12,153 8,311 Less: current maturities ( 5,903 ) ( 1,170 ) Long-term debt, net of current maturities $ 6,250 $ 7,141 As of December 31, 2023 , future annual principal payments on the Company’s outstanding debt obligations were as follows: 2024 $ 5,903 2025 1,756 2026 1,267 2027 1,279 2028 1,198 2029 and thereafter 750 Total $ 12,153 Credit Facilities 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. 53 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) On February 8, 2023, the Company executed Amendment No. 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 %. Other 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 in September 2028. 54 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 11. LEASES The Company leases various property and equipment under operating lease arrangements. 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. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them. Certain leases contain rent escalation clauses that require additional rental payments in the later years of the term. 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, 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, 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. 55 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) Quantitative information regarding the Company’s leases is as follows: Year Ended December 31, 2023 2022 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 1,263 $ 1,172 Interest on finance lease liabilities 527 467 Total finance lease costs 1,790 1,639 Operating lease cost components: Operating lease cost 2,792 2,839 Short-term lease cost 361 707 Variable lease cost (1) 1,260 898 Sublease income ( 212 ) ( 191 ) Total operating lease costs 4,201 4,253 Total lease cost $ 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: Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 3,460 $ 3,496 Right-of-use assets obtained in exchange for new operating lease liabilities $ 983 $ 187 Weighted-average remaining lease term-finance leases at end of period (in years) 3.2 3.3 Weighted-average remaining lease term-operating leases at end of period (in years) 7.1 8.1 Weighted-average discount rate-finance leases at end of period 6.1 % 6.0 % Weighted-average discount rate-operating leases at end of period 8.5 % 8.7 % ( 1 ) Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment. 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: Finance Operating Leases Leases Total 2024 $ 2,416 $ 3,351 $ 5,767 2025 1,193 3,447 4,640 2026 937 3,442 4,379 2027 671 3,144 3,815 2028 671 3,153 3,824 2029 and thereafter 344 7,803 8,147 Total lease payments 6,232 24,340 30,572 Less—portion representing interest ( 707 ) ( 6,601 ) ( 7,308 ) Present value of lease obligations 5,525 17,739 23,264 Less—current portion of lease obligations ( 2,153 ) ( 1,851 ) ( 4,004 ) Long-term portion of lease obligations $ 3,372 $ 15,888 $ 19,260 56 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 12. COMMITMENTS AND CONTINGENCIES Legal Proceedings 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, 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. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites. 57 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) Collateral In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations. Warranty Liability The Company provides warranty terms that generally range from one to five years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery from third parties for amounts paid to customers under warranty provisions. Liquidated Damages In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and dependent on actual losses sustained by the customer. When the damages are determined to be probable and estimable, the damages are recorded as a reduction to revenue. 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. 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. Health Insurance Reserves 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. Historical loss experience combined with actuarial evaluation methods and the application of risk transfer programs are used to determine required health insurance reserves. The Company takes into account claims incurred but not reported when determining its health insurance reserves. 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. 58 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) Other 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. 13 . FAIR VALUE MEASUREMENTS The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows: Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly. 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. 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. 59 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 14. INCOME TAXES The provision for income taxes for the years ended December 31, 2023 and 2022 consists of the following: For the Years Ended Year Ended December 31, 2023 2022 Current provision Federal $ — $ — State 251 48 Total current provision 251 48 Deferred provision Federal ( 1,758 ) ( 2,102 ) State ( 209 ) ( 460 ) Total deferred provision ( 1,967 ) ( 2,562 ) Increase in deferred tax valuation allowance 1,957 2,549 Total provision for income taxes $ 241 $ 35 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. Management believes that significant uncertainty exists surrounding the recoverability of deferred tax assets. As a result, the Company recorded a valuation allowance against the remaining deferred tax assets. 60 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) The tax effects of the temporary differences and NOLs that give rise to significant portions of deferred tax assets and liabilities are as follows: As of Year Ended December 31, 2023 2022 Noncurrent deferred income tax assets: Net operating loss carryforwards $ 75,235 $ 74,807 Accrual and reserves 4,637 3,531 Leases 3,532 3,834 Other 4 4 Total noncurrent deferred tax assets 83,408 82,176 Valuation allowance ( 76,516 ) ( 74,559 ) Noncurrent deferred tax assets, net of valuation allowance 6,892 7,617 Noncurrent deferred income tax liabilities: Fixed assets 2,364 2,584 Intangible assets 487 674 Leases 4,016 4,344 Total noncurrent deferred tax liabilities 6,867 7,602 Net deferred income tax asset $ 25 $ 15 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: Valuation allowance as of December 31, 2022 $ ( 74,559 ) Gross increase for current year activity ( 1,957 ) Valuation allowance as of Balance at December 31, 2023 $ ( 76,516 ) 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. NOLs generated after January 1, 2018 will not expire. 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 December 31, 2023 2022 Statutory U.S. federal income tax rate 21.0 % 21.0 % State and local income taxes, net of federal income tax benefit 0.6 3.3 Other permanent differences 0.4 ( 0.6 ) Change in valuation allowance 22.8 ( 26.3 ) 162(m) 0.5 0.0 Other 0.2 ( 2.1 ) Other deferred adjustment ( 7.5 ) 4.3 AMP credits ( 35.2 ) 0.0 Effective income tax rate 2.8 % ( 0.4 )% 61 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) The Company accounts for the uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken, or expected to be taken, in a tax return that is required to be met before being recognized in the financial statements. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. As of December 31, 2023 , the Company had no unrecognized tax benefits that could impact the income tax expense. The Company files income tax returns in the U.S. federal and state jurisdictions. 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. 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 22, 2013. 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. 62 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 15. SHARE-BASED COMPENSATION Overview of Share-Based Compensation Plan The Company has granted incentive stock options and other equity awards pursuant to previously Board approved equity incentive plans. 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. 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; and (c) to motivate such persons to act in the long-term best interests of the Company and its stockholders. 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); (iii) stock appreciation rights; (iv) restricted stock and restrictive stock units; and (v) performance awards. 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. Additionally, stock options expire ten years after the date of grant. The fair value of stock options granted is expensed ratably over their vesting term. Restricted Stock Units (RSUs). The granting of RSUs is provided for under the 2015 EIP. 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). The granting of PSUs is provided for under the 2015 EIP. 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. 63 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 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. 64 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (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, 2023 and 2022 : Weighted Average Grant-Date Fair Value Number of Shares Per Share Unvested as of December 31, 2022 822,737 $ 2.37 Granted 492,665 $ 4.10 Vested ( 493,327 ) $ 2.73 Forfeited ( 134,869 ) $ 3.98 Unvested as of December 31, 2023 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, 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. 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, 2023 and 2022 as follows: For the Years Ended December 31, 2023 2022 Share-based compensation expense: Cost of sales $ 118 $ 129 Selling, general and administrative 759 1,434 Net effect of share-based compensation expense on net income $ 877 $ 1,563 Reduction in earnings per share: Basic earnings per share $ 0.04 $ 0.08 Diluted earnings per share $ 0.04 $ 0.08 ( 1 ) 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, 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. 16. 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. 65 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (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. 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. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers ( 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. 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. Gearing 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. 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. 66 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 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. Summary financial information by reportable segment is as follows: Heavy Fabrications Gearing Industrial Solutions Corporate Eliminations Consolidated For the Year Ended December 31, 2023 Revenues from external customers $ 133,368 45,408 24,701 — — $ 203,477 Intersegment revenues — — 458 — ( 458 ) — Net revenues 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 4,739 1,398 214 54 — 6,405 Total assets 46,931 48,599 16,295 58,487 ( 35,156 ) 135,156 Heavy Fabrications Gearing Industrial Solutions Corporate Eliminations Consolidated For the Year Ended December 31, 2022 Revenues from external customers $ 117,194 42,572 16,993 — — $ 176,759 Intersegment revenues 12 16 811 — ( 839 ) — Net revenues 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 2,601 446 48 3 — 3,098 Total assets 45,475 51,944 12,775 224,856 ( 190,510 ) 144,540 The Company generates revenues entirely from transactions completed in the U.S. and its long-lived assets are all located in the U.S. All intercompany revenue is eliminated in consolidation. 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. 67 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 17. EMPLOYEE BENEFIT PLANS Retirement Savings and Profit Sharing Plans Retirement Savings and Profit Sharing Plans 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, 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, 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 (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. 68 BROADWIND, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 and 2022 (in thousands, except share and per share data) 18. QUARTERLY FINANCIAL SUMMARY (UNAUDITED) 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: 2023 First Second Third Fourth Revenues $ 48,873 $ 50,843 $ 57,163 $ 46,598 Gross profit 6,976 8,333 10,167 7,032 Operating income 1,282 2,216 5,367 2,274 Net income 769 1,415 4,394 1,071 Net income per share: Basic $ 0.04 $ 0.07 $ 0.21 $ 0.05 Diluted $ 0.04 $ 0.07 $ 0.20 $ 0.05 2022 First Second Third Fourth Revenues $ 41,844 $ 50,012 $ 44,843 $ 40,060 Gross profit 2,012 2,394 3,748 2,556 Operating loss ( 2,073 ) ( 1,912 ) ( 520 ) ( 2,102 ) Net loss ( 2,404 ) ( 2,703 ) ( 1,772 ) ( 2,851 ) Net loss per share: Basic $ ( 0.12 ) $ ( 0.13 ) $ ( 0.09 ) $ ( 0.14 ) Diluted $ ( 0.12 ) $ ( 0.13 ) $ ( 0.09 ) $ ( 0.14 ) 69 INDEX TO EXHIBITS Exhibit Number Description 3.1 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) 3.2 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) 3.3 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) 3.4 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) 4.1 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) 4.2 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) 4.3 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) 4.4 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) 4.5 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 4.6 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) 10.1 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) 10.2 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) 10.3† 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) 10.4† Broadwind Energy, Inc. 2015 Equity Incentive Plan (incorporated by reference to Exhibit A to the Company’s Schedule 14A filed on March 12, 2015) 10.5† 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) 10.6† 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) 10.7† 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) 10.8† 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) 10.9† 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† 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) 10.13† 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) 10.14† 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) 10.15† 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) 10.16† 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) 10.17† 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) 10.18† 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) 10.19 Second Amendment to Amended and Restated Broadwind, Inc. 2015 Equity Incentive Plan (incorporated by reference to Appendix B to Amendment No. 1 to the Company's Schedule 14A filed April 5, 2021) 10.20 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) 10.21 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) 10.22 Guaranty, dated as of August 4, 2022, by Broadwind, Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc. and 5100 Neville Road, LLC in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed August 8, 2022) 10.23 Severance and Non-Competition Agreement dated as of August 10, 2022, between Broadwind, Inc. and Thomas A. Ciccone (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 12, 2022) 10.24 Sales Agreement, dated September 12, 2022, by and among Broadwind, Inc., Roth Capital Partners, LLC and H.C. Wainwright & Co. (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed September 12, 2022) 10.25 Amendment No. 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) 10.26 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) 10.27 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) 21 Subsidiaries of the Registrant (filed herewith) 23 Consent of RSM LLP (filed herewith) 31.1 Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith) 31.2 Rule 13a-14(a) Certification of Chief Financial Officer (filed herewith) 32.1 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) 32.2 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) 97 Broadwind, Inc. Policy on Recoupment of Incentive-Based Compensation (filed herewith) 101 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, 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. 104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) † Indicates management contract or compensation plan or arrangement. 70 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. By: /s/ Eric B. Blashford Eric B. Blashford 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. SIGNATURE TITLE DATE /s/ Eric B. Blashford President, Chief Executive Officer, and Director (Principal Executive Officer) March 5, 2024 Eric B. Blashford /s/ Thomas A. Ciccone Vice President and Chief Financial Officer (Principal Financial Officer) March 5, 2024 Thomas A. Ciccone /s/ David P. Reiland Director March 5 2024 David P. Reiland /s/ Philip J. Christman Director March 5, 2024 Philip J. Christman /s/ Thomas A. Wagner Director March 5, 2024 Thomas A. Wagner /s/ Cary B. Wood Director March 5, 2024 Cary B. Wood /s/ Sachin M. Shivaram Director March 5, 2024 Sachin M. Shivaram /s/ Jeanette A. Press Director March 5, 2024 Jeanette A. Press 71