What changed in this filing

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Item 1. Financial Statements

2024-08-13 compared with 2024-05-14 · 173 added, 103 removed, 486 unchanged (36% of the section changed)

31 unchanged sentences

Customer deposits

11,403 16,500

Total current liabilities

14 unchanged sentences

45,000,000 shares authorized;

21,947,606 and 21,840,301 shares issued as of March 31, 2024, and December 31, 2023, respectively

Treasury stock, at cost, 273,937 shares as of March 31, 2024 and December 31, 2023

22,259,496 and 21,840,301 shares issued as of June 30, 2024, and December 31, 2023, respectively

Treasury stock, at cost, 273,937 shares as of June 30, 2024 and December 31, 2023

( 1,842 ) ( 1,842 )

7 unchanged sentences

$ 122,533 $ 135,156

(1) Refer to Note 17 “Capitalization”, for additional information regarding the calculation of the number of shares of common stock authorized.

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

3 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31,

$ 37,616 $ 48,873

Three Months Ended June 30,

Six Months Ended June 30,

Cost of sales

30,979 41,897

OPERATING EXPENSES:

5 unchanged sentences

Interest expense, net

( 532 ) ( 488 )

Total other expense, net

( 529 ) ( 490 )

Net income before provision for income taxes

1 unchanged sentence

NET INCOME PER COMMON SHARE—BASIC:

$ 0.07 $ 0.04

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

21,595 20,869

NET INCOME PER COMMON SHARE—DILUTED:

$ 0.07 $ 0.04

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

21,807 21,387

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

13 unchanged sentences

21,191,937 $ 21 ( 273,937 ) $ ( 1,842 ) $ 397,720 $ ( 348,377 ) $ 47,522

Stock issued for restricted stock

408,436 1 — — — — 1

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

71,536 — — — 346 — 346

Share-based compensation

— — — — 231 — 231

Shares withheld for taxes in connection with issuance of restricted stock

( 92,984 ) — — — ( 117 ) — ( 117 )

Sale of common stock, net

— — — — — — —

— — — — — 1,415 1,415

BALANCE, June 30, 2023

21,578,925 $ 22 ( 273,937 ) $ ( 1,842 ) $ 398,180 $ ( 346,962 ) $ 49,398

BALANCE, December 31, 2023

7 unchanged sentences

21,947,606 $ 22 ( 273,937 ) $ ( 1,842 ) $ 399,848 $ ( 339,987 ) $ 58,041

Stock issued for restricted stock

240,397 — — — — — —

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

118,161 — — — 308 — 308

Share-based compensation

— — — — 351 — 351

Shares withheld for taxes in connection with issuance of restricted stock

( 46,668 ) — — — ( 130 ) — ( 130 )

— — — — — 482 482

BALANCE, June 30, 2024

22,259,496 $ 22 ( 273,937 ) $ ( 1,842 ) $ 400,377 $ ( 339,505 ) $ 59,052

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

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

$ 1,510 $ 769

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

Adjustments to reconcile net cash used in operating activities:

Depreciation and amortization expense

Deferred income taxes

Stock-based compensation

Allowance for doubtful accounts

Share-based compensation

Allowance for credit losses

Common stock issued under defined contribution 401(k) plan

(Gain) loss on disposal of assets

Changes in operating assets and liabilities:

Accounts receivable

4,632 ( 8,841 )

AMP credit receivable

5,319 ( 3,162 )

Contract assets

1 unchanged sentence

Accounts payable

( 4,005 ) ( 784 )

Accrued liabilities

Customer deposits

( 5,097 ) ( 12,799 )

Other non-current assets and liabilities

Net cash provided by (used in) operating activities

5,857 ( 25,984 )

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

( 1,744 ) ( 1,065 )

Proceeds from disposals of property and equipment

Net cash used in investing activities

( 1,744 ) ( 1,065 )

CASH FLOWS FROM FINANCING ACTIVITIES:

(Payments on) proceeds from line of credit, net

( 4,657 ) 16,945

Proceeds from line of credit, net

Proceeds from long-term debt

Payments on long-term debt

( 325 ) ( 634 )

Principal payments on finance leases

( 401 ) ( 265 )

Net cash (used in) provided by financing activities

( 4,139 ) 16,046

Payments on finance leases

Shares withheld for taxes in connection with issuance of restricted stock

Net cash provided by financing activities

NET DECREASE IN CASH

( 26 ) ( 11,003 )

CASH beginning of the period

CASH end of the period

$ 1,073 $ 1,729

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

12 unchanged sentences

In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2024, or any other interim period, which may differ materially due to, among other things, the risk factors set forth in our Annual Report on Form 10 -K for the year ended December 31, 2023 .

Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2024, or any other interim period, which may differ materially due to, among other things, the risk factors set forth in our Annual Report on Form 10 -K for the year ended December 31, 2023 .

The December 31, 2023 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2023 .

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2024 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2023 .

There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2024 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2023 .

Company Description

2 unchanged sentences

The Company’s capabilities include, but are not limited to, the following:

heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, gearbox manufacturing and repair, heat treatment, assembly, engineering and packaging solutions.

heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, gearbox manufacturing and repair, heat treatment, precision machining, assembly, engineering and packaging solutions.

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

wind energy industry, which accounted for 39 % and 50 % of the Company’s revenue during the first three months of 2024 and 2023, respectively.

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the 2022 Credit Facility (as defined below), equipment financing, and access to the public and private debt and/or equity markets, and has the option to raise capital from the sale of the Company’s securities 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 5 “AMP Credits” of these condensed consolidated financial statements).

wind energy industry, which accounted for 40 % and 50 % of the Company’s revenue during the first six months of 2024 and 2023, respectively.

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the 2022 Credit Facility (as defined below), equipment financing, access to the public and private debt and/or equity markets, and has the option to raise capital from the sale of the Company’s securities 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 5 “AMP Credits” of these condensed consolidated financial statements).

See Note 8, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a description of the 2022 Credit Facility and the Company’s other debt.

Debt and finance lease obligations at March 31, 2024 totaled $ 13,628 , which includes current outstanding debt and finance leases totaling $ 3,633 .

Debt and finance lease obligations at June 30, 2024 totaled $ 23,536 , which includes current outstanding debt and finance leases totaling $ 14,110 .

The Company’s outstanding debt includes $ 5,593 outstanding from the senior secured term loan under the 2022 Credit Facility.

During the three months ended March 31, 2024, the Company borrowed on the revolving line of credit and repaid such borrowings during the quarter.

The Company had no amounts drawn on the revolving line of credit as of March 31, 2024.

During the six months ended June 30, 2024, the Company borrowed on the revolving line of credit and repaid such borrowings during the period.

The Company had $ 10,571 drawn on the revolving line of credit as of June 30, 2024.

The Company’s revolving line of credit balance, if any, is included in the “Line of credit and current maturities of long-term debt” line item in the Company's condensed consolidated balance sheet.

5 unchanged sentences

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 or during the three months ended March 31, 2024.

As of March 31, 2024, shares of the Company’s common stock having a value of approximately $ 11,667 remained available for issuance under the Sales Agreement.

No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December 31, 2023 or during the six months ended June 30, 2024.

As of June 30, 2024, 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.

4 unchanged sentences

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

During the three months ended March 31, 2024 and March 31, 2023, the Company sold account receivables totaling $ 6,805 and $ 9,614 , respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $ 164 and $ 131 , respectively.

During the three and six months ended June 30, 2024, the Company sold account receivables totaling $ 13,234 and $ 20,039 , respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $ 352 and $ 516 , respectively.

During the three and six months ended June 30, 2023, the Company sold account receivables totaling $ 9,495 and $ 18,807 , respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $ 184 and $ 315 , respectively.

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.

12 unchanged sentences

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period.

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

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

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

1 unchanged sentence

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

The following table presents the Company’s revenues disaggregated by revenue source for the three months ended March 31, 2024 and 2023 :

Three Months Ended March 31,

The following table presents the Company’s revenues disaggregated by revenue source for the three and six months ended June 30, 2024 and 2023 :

Three Months Ended June 30,

Six Months Ended June 30,

Heavy Fabrications

$ 19,611 $ 33,944 $ 41,628 $ 65,537

10,454 10,977 18,791 22,943

Industrial Solutions

1 unchanged sentence

( 76 ) ( 348 ) ( 807 ) ( 456 )

$ 36,452 $ 50,843 $ 74,068 $ 99,716

Revenue within the Company’s Gearing and Industrial Solutions segments, as well as industrial fabrication product line revenues within the Heavy Fabrications segment, are generally recognized at a point in time, typically when the promised goods or services are physically transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.

5 unchanged sentences

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

During the three months ended March 31, 2024 and 2023, the Company recognized a portion of revenue within the Heavy Fabrications segment over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts.

Within the Heavy Fabrications segment, the Company recognized revenue for contracts that meet over time criteria of $ 280 and $ 3,669 for the three months ended March 31, 2024 and March 31, 2023, respectively.

During the six months ended June 30, 2024 and 2023, the Company recognized a portion of revenue within the Heavy Fabrications segment over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts.

Within the Heavy Fabrications segment, the Company recognized revenue for contracts that meet over time criteria of $ 2,067 and $ 2,347 for the three and six months ended June 30, 2024, respectively.

Within the Heavy Fabrications segment, the Company recognized revenue over time of $ 3,076 and $ 6,744 for the three and six months ended June 30, 2023, respectively.

The Company uses labor hours as the input measure of progress for the applicable Heavy Fabrications contracts because the projects are labor intensive.

7 unchanged sentences

NOTE 3 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2024 and 2023 , as follows:

The following table presents a reconciliation of basic and diluted earnings per share for the three and six months ended June 30, 2024 and 2023 , as follows:

Three Months Ended

Six Months Ended

Basic earnings per share calculation:

16 unchanged sentences

NOTE 4 — INVENTORIES

The components of inventories as of March 31, 2024 and December 31, 2023 are summarized as follows:

The components of inventories as of June 30, 2024 and December 31, 2023 are summarized as follows:

Raw materials

8 unchanged sentences

NOTE 5 — AMP CREDITS

During the three months ended March 31, 2024 and March 31, 2023, the Company recognized gross AMP credits totaling $ 1,872 and $ 3,162 , respectively, within the Heavy Fabrications segment.

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

The Inflation Reduction Act (“IRA”) includes advanced manufacturing tax credits for manufacturers of eligible components, including wind components.

During the three and six months ended June 30, 2024, the Company recognized gross AMP credits totaling $ 1,848 and $ 3,720 , respectively, within the Heavy Fabrications segment.

During the three and six months ended June 30, 2023, the Company recognized AMP credits totaling $ 3,567 and $ 6,729 , respectively, 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.

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

4 unchanged sentences

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 condensed consolidated statements of operations for the three months ended March 31, 2024 and March 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 condensed consolidated balance sheet as of March 31, 2024 and December 31, 2023.

The Company recognized the AMP credits as a reduction to cost of sales in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2024 and June 30, 2023.

The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in the Company’s condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023.

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

3 unchanged sentences

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 condensed consolidated financial statements at December 31, 2023.

During the three months ended March 31, 2024, the Company recognized gross AMP credits totaling $ 1,872 and recognized a 6.5 % discount on the credits totaling $ 122 , which was recognized in cost of sales.

During the six months ended June 30, 2024, the Company recognized gross AMP credits totaling $ 3,720 and recognized a 6.5 % discount on the credits totaling $ 242 , which was recognized in cost of sales.

The Company also incurred other miscellaneous administrative costs related to the credits in the amount of $ 65 , which have been recorded as cost of sales.

Additionally, costs totaling $ 42 are included in the “Prepaid expenses and other current assets” line item of the Company’s condensed consolidated financial statements at March 31, 2024.

Additionally, costs totaling $ 28 are included in the “Prepaid expenses and other current assets” line item of the Company’s condensed consolidated financial statements at June 30, 2024.

NOTE 6 — INTANGIBLE ASSETS

1 unchanged sentence

Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 2 to 3 years.

As of March 31, 2024 and December 31, 2023 , the cost basis, accumulated amortization and net book value of intangible assets were as follows:

March 31, 2024

As of June 30, 2024 and December 31, 2023 , the cost basis, accumulated amortization and net book value of intangible assets were as follows:

June 30, 2024

December 31, 2023

7 unchanged sentences

$ 25,248 $ ( 15,923 ) $ ( 7,592 ) $ 1,733 2.9 $ 25,248 $ ( 15,592 ) $ ( 7,592 ) $ 2,064 3.3

As of March 31, 2024 , estimated future amortization expense was as follows:

As of June 30, 2024 , estimated future amortization expense was as follows:

NOTE 7 — ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2024 and December 31, 2023 consisted of the following:

Accrued liabilities as of June 30, 2024 and December 31, 2023 consisted of the following:

Accrued payroll and benefits

10 unchanged sentences

NOTE 8 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of March 31, 2024 and December 31, 2023 consisted of the following:

The Company’s outstanding debt balances as of June 30, 2024 and December 31, 2023 consisted of the following:

Line of credit

$ 10,571 $ 4,657

Other notes payable

Long-term debt

17,957 12,153

current maturities

3 unchanged sentences

Credit Facility

On August 4, 2022, the Company entered into a credit agreement (the “2022 Credit Agreement”) with 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, the “2022 Credit Facility”).

On August 4, 2022, the Company entered into a credit agreement (the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), 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, 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 $ 333 primarily related to the revolving credit loan, which is net of accumulated amortization of $ 167 , at March 31, 2024.

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

These costs are included in the “Other assets” line item of the Company's condensed consolidated financial statements at March 31, 2024 and December 31, 2023.

At June 30, 2024, deferred financing costs related to the 2022 Credit Facility were $ 308 primarily related to the revolving credit loan, which is net of accumulated amortization of $ 192 .

At December 31, 2023, deferred financing costs related to the 2022 Credit Facility were $ 359 which is net of accumulated amortization of $ 141 .

These costs are included in the “Other assets” line item of the Company's condensed consolidated financial statements at June 30, 2024 and December 31, 2023.

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

3 unchanged sentences

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

As of March 31, 2024 , there was $ 5,864 of outstanding indebtedness under the 2022 Credit Facility, with the ability to borrow an additional $ 21,326 .

As of March 31, 2024, the Company was in compliance with all financial covenants under the 2022 Credit Facility.

As of March 31, 2024, the effective interest rate of the senior secured revolving credit facility was 7.32 % and the senior secured term loan was 7.82 %.

As of June 30, 2024 , there was $ 16,164 of outstanding indebtedness under the 2022 Credit Facility, with the ability to borrow an additional $ 17,509 .

As of June 30, 2024, the Company was in compliance with all financial covenants under the 2022 Credit Facility.

As of June 30, 2024, the effective interest rate of the senior secured revolving credit facility was 7.59 % and the senior secured term loan was 7.84 %.

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 %.

In addition, the Company has outstanding notes payable for capital expenditures in the amount of $ 1,826 and $ 1,361 as of March 31, 2024 and December 31, 2023 , respectively, with $ 345 and $ 163 included in the “Line of credit and current maturities of long-term debt” line item of the Company’s condensed consolidated financial statements as of March 31, 2024 and December 31, 2023 , respectively.

In addition, the Company has outstanding notes payable for capital expenditures in the amount of $ 1,793 and $ 1,361 as of June 30, 2024 and December 31, 2023 , respectively, with $ 359 and $ 163 included in the “Line of credit and current maturities of long-term debt” line item of the Company’s condensed consolidated financial statements as of June 30, 2024 and December 31, 2023 , respectively.

The notes payable have monthly payments that range from $ 1 to $ 20 and an interest rate of approximately 7 %.

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

The outstanding notes payable mature in September 2028.

The outstanding notes payable have maturity dates that range from September 2028 to May 2029.

NOTE 9 — LEASES

3 unchanged sentences

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

During the three months ended March 31, 2024 and 2023, the Company did not have additional operating leases that resulted in right-of-use assets obtained in exchange for lease obligations.

During the three months ended March 31, 2024 and 2023, the Company had additional finance leases associated with property, plant, and equipment of $ 813 and $ 0 respectively.

During the six months ended June 30, 2024 and 2023, the Company had an additional operating lease that resulted in right-of-use assets obtained in exchange for lease obligations in the amount of $ 29 and $ 0 , respectively.

During the six months ended June 30, 2024 and 2023, the Company had additional finance leases associated with property, plant, and equipment of $ 880 and $ 0 , respectively.

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

2 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Components of lease cost

1 unchanged sentence

Amortization of finance lease assets

$ 370 $ 369 $ 728 $ 739

Interest on finance lease liabilities

121 86 228 184

Total finance lease costs

491 455 956 923

Operating lease cost components:

Operating lease cost

703 689 1,345 1,393

Short-term lease cost

54 78 100 167

Variable lease cost (1)

384 178 753 523

Sublease income

1 unchanged sentence

Total operating lease costs

1,092 896 2,099 1,986

Total lease cost

$ 1,583 $ 1,351 $ 3,055 $ 2,909

Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2024 and 2023:

Supplemental cash flow information related to our operating leases is as follows for the six months ended June 30, 2024 and 2023:

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

Operating cash outflow from operating leases

$ 1,679 $ 1,727

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

3 unchanged sentences

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

As of March 31, 2024 , future minimum lease payments under finance leases and operating leases were as follows:

As of June 30, 2024 , future minimum lease payments under finance leases and operating leases were as follows:

$ 1,637 $ 1,683 $ 3,320

31 unchanged sentences

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes.

As of March 31, 2024 , the Company has a full valuation allowance recorded against deferred tax assets.

During the three months ended March 31, 2024 , the Company recorded a provision for income taxes of $ 39 , compared to a provision for income taxes of $ 23 during the three months ended March 31, 2023 .

As of June 30, 2024 , the Company has a full valuation allowance recorded against deferred tax assets.

During the six months ended June 30, 2024 , the Company recorded a provision for income taxes of $ 92 , compared to a provision for income taxes of $ 51 during the six months ended June 30, 2023 .

On August 16, 2022, Congress enacted the IRA which includes advanced manufacturing tax credits for manufacturers of eligible components, including wind components produced and sold in the U.S.

3 unchanged sentences

federal and state jurisdictions.

As of March 31, 2024 , open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards.

As of June 30, 2024 , open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards.

As of December 31, 2023 , the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of $ 290,233 of which $ 227,781 will generally begin to expire in 2026.

14 unchanged sentences

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

As of March 31, 2024 , the Company had no unrecognized tax benefits.

As of June 30, 2024 , the Company had no unrecognized tax benefits.

The Company recognizes interest and penalties related to uncertain tax positions as income tax expense.

The Company had no accrued interest and penalties as of March 31, 2024 .

The Company had no accrued interest and penalties as of June 30, 2024 .

NOTE 12 — SHARE-BASED COMPENSATION

There was no stock option activity during the three months ended March 31, 2024 and March 31, 2023 and no stock options were outstanding as of March 31, 2024 or March 31, 2023.

The following table summarizes the Company’s restricted stock unit and performance award activity during the three months ended March 31, 2024 :

There was no stock option activity during the six months ended June 30, 2024 and June 30, 2023 and no stock options were outstanding as of June 30, 2024 or June 30, 2023.

The following table summarizes the Company’s restricted stock unit and performance award activity during the six months ended June 30, 2024 :

Weighted Average

3 unchanged sentences

456,370 $ 2.72

Unvested as of March 31, 2024

( 240,397 ) $ 3.41

( 46,418 ) $ 2.98

Unvested as of June 30, 2024

856,761 $ 2.76

Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards.

For the three months ended March 31, 2024 and 2023, no shares were withheld to cover tax obligations.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 , as follows:

Three Months Ended March 31,

For the six months ended June 30, 2024 and 2023, 46,668 and 92,984 shares, respectively, were withheld to cover tax obligations.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2024 and 2023 , as follows:

Six Months Ended June 30,

Share-based compensation expense:

10 unchanged sentences

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

While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows.

On an ongoing basis, the Company is often the subject of, or party to, various legal claims by other parties against the Company, by the Company against other parties, or involving the Company, which arise in the normal course of its business, including the claims described in Note 17, “Capitalization” of these condensed consolidated financial statements.

While the results of these legal proceedings or claims cannot be predicted with certainty, management believes that the final outcome of these proceedings or claims will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows.

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

30 unchanged sentences

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

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

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

The Company 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, defense, 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.

4 unchanged sentences

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 and controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes and wiring, energy storage services and electromechanical devices.

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

2 unchanged sentences

The accounting policies of the reportable segments are the same as those referenced in Note 1, “Basis of Presentation” of these condensed consolidated financial statements.

Summary financial information by reportable segment for the three months ended March 31, 2024 and 2023 is as follows:

Summary financial information by reportable segment for the three and six months ended June 30, 2024 and 2023 is as follows:

Heavy Fabrications

Industrial Solutions

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

Revenues from external customers

11 unchanged sentences

Industrial Solutions

For the Three Months Ended March 31, 2023

For the Three Months Ended June 30, 2023

Revenues from external customers

9 unchanged sentences

2,156 739 — 17 — 2,912

Heavy Fabrications

Industrial Solutions

For the Six Months Ended June 30, 2024

Revenues from external customers

$ 41,628 $ 18,791 $ 13,649 $ — $ — $ 74,068

Intersegment revenues

— — 807 — ( 807 ) —

41,628 18,791 14,456 — ( 807 ) 74,068

Operating income (loss)

3,601 508 2,390 ( 3,164 ) — 3,335

Depreciation and amortization

1,933 1,093 205 83 — 3,314

Capital expenditures

831 1,348 338 17 — 2,534

Heavy Fabrications

Industrial Solutions

For the Six Months Ended June 30, 2023

Revenues from external customers

$ 65,537 $ 22,943 $ 11,236 $ — $ — $ 99,716

Intersegment revenues

— — 456 — ( 456 ) —

65,537 22,943 11,692 — ( 456 ) 99,716

Operating income (loss)

6,657 929 1,465 ( 5,556 ) 3 3,498

Depreciation and amortization

1,714 1,152 186 115 — 3,167

Capital expenditures

2,818 1,124 18 17 — 3,977

Total Assets as of

14 unchanged sentences

Allowance for Credit Losses

Beginning January 1, 2023, the Company assessed and recorded an allowance for credit losses using the CECL model.

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

The adjustment for credit losses using this CECL model on accounts receivable and contract assets during the six months ended June 30, 2024 and 2023 was not material.

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, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results.

The activity in the accounts receivable allowance liability for the three months ended March 31, 2024 and 2023 consisted of the following:

For the Three Months Ended March 31,

The activity in the accounts receivable allowance liability for the six months ended June 30, 2024 and 2023 consisted of the following:

For the Six Months Ended June 30,

Balance at beginning of period

7 unchanged sentences

The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations.

There was a reserve for liquidated damages of $ 84 at March 31, 2024 and December 31, 2023.

There was a reserve for liquidated damages of $ 84 at June 30, 2024 and December 31, 2023.

NOTE 17 — CAPITALIZATION

The Company’s authorized capital stock at June 30, 2024 consisted of 45,000,000 shares of common stock, par value $ 0.001 per share and 10,000,000 shares of undesignated stock, par value $ 0.001 per share.

At June 30, 2024, 21,985,559 shares of common stock were outstanding and no shares of preferred stock were issued and outstanding.

On March 18, 2024, the Board of Directors of the Company (the “Board”) approved an amendment to the Company’s Certificate of Incorporation to increase the number of shares of our common stock from thirty million ( 30,000,000 ) to forty-five million ( 45,000,000 ) (the “Share Increase Amendment”), subject to the approval of such amendment by the stockholders.

On May 16, 2024, an annual meeting of the stockholders was convened (the “Annual Meeting”).

In the definitive proxy statement dated April 2, 2024 filed by the Company with the SEC in respect of the Annual Meeting (the “Proxy Statement”), the Board solicited the vote of the stockholders in favor of the Share Increase Amendment.

The Proxy Statement stated that broker non-votes in respect of the Share Increase Amendment would be counted as votes against the amendment.

However, under relevant stock exchange rules, brokers, banks and/or other nominees had discretionary authority to vote shares held in their name on behalf of beneficial owners in favor of the Share Increase Amendment if the broker, bank and/or other nominee had not received voting instruction from the beneficial owners.

As such, brokers, banks and/or other nominees that had not received voting instructions from the beneficial owners of such shares may have voted in favor of the Share Increase Amendment at the Annual Meeting.

Such votes, and others cast by the Company’s stockholders, were tabulated by the Company’s inspector of elections in accordance with the applicable New York Stock Exchange rules (which also applies to Nasdaq-listed companies) and based on the tabulation, the inspector of elections determined that the proposal to approve the Share Increase Amendment was adopted by the requisite vote of stockholders and certified that the proposal had passed.

Following this approval, the Company filed the Share Increase Amendment with the Secretary of State on May 16, 2024, and it became effective on the same date.

Following the Annual Meeting, the Company received letters from two stockholders claiming that disclosures in the Proxy Statement regarding the authority of brokers, banks and/or other nominees to vote on the Share Increase Amendment in the absence of instructions from the beneficial owners of the applicable shares were inconsistent with how votes were tabulated and counted or that the Company mistabulated uninstructed votes of brokers, banks and/or other nominees as votes in favor of the Share Increase Amendment.

The stockholders requested that the Board deem the Share Increase Amendment ineffective and make appropriate disclosure of such determination or seek valid stockholder approval of the Share Increase Amendment.

The Company believes it was and is appropriate to include the affirmative votes cast by brokers, banks and/or other nominees pursuant to their discretionary authority in the tabulation of votes in favor of the Share Increase Amendment and, thus, that the Share Increase Amendment was properly approved and is effective.

However, to avoid potential future litigation risk, and to eliminate any uncertainty as to the Share Increase Amendment and the validity of shares of Common Stock that in the future may be issued by virtue of the Share Increase Amendment, the Board has determined that it is advisable and in the best interests of the Company to solicit stockholders to ratify the Share Increase Amendment at a stockholder meeting.

No specific transaction was contemplated in connection with the Share Increase Amendment, and as of the date of the filing of this Form 10 -Q, none of the shares authorized by the Share Increase Amendment have been issued.

Further information about such meeting will be provided in a Definitive Proxy Statement to be filed with the Securities and Exchange Commission.

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

What changed 10-Q

Item 1. Financial Statements