Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2023. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries, as appropriate.
(Dollars are presented in thousands except share, per share and per employee data or unless otherwise stated)
KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE
In addition to measures of financial performance presented in our consolidated financial statements in accordance with GAAP, we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (as defined below) and free cash flow which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance.
Key Financial Measures
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net revenues
$
35,503
$
57,163
$
109,571
$
156,879
Net income
$
74
$
4,394
$
2,066
$
6,578
Adjusted EBITDA (1)
$
3,366
$
7,585
$
11,176
$
17,039
Capital expenditures
$
745
$
1,338
$
3,279
$
5,315
Free cash flow (2)
$
4,848
$
(1,167
)
$
(4,561
)
$
(13,772
)
Operating working capital (3)
$
32,025
$
25,986
$
32,025
$
25,986
Total debt
$
16,948
$
26,324
$
16,948
$
26,324
Total orders
$
22,975
$
15,890
$
70,343
$
80,853
Backlog at end of period (4)
$
124,298
$
220,755
$
124,298
$
220,755
Book-to-bill (5)
0.6
0.3
0.6
0.5
(1)
We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, proxy contest-related expenses, and other non-cash gains and losses) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when it internally evaluates the performance of our business, reviews financial trends and makes operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.
(2)
We define free cash flow as adjusted EBITDA plus or minus changes in operating working capital less capital expenditures net of any proceeds from disposals of property and equipment. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding future investments.
(3)
We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.
(4)
Our backlog at September 30, 2024 and 2023 is net of revenue recognized over time. Backlog as of September 30, 2024 has been adjusted to reflect updated assumptions related to raw material pricing (which is a customer passthrough) and other variables.
(5)
We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period.
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The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measure:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$
74
$
4,394
$
2,066
$
6,578
Interest expense
1,058
932
2,316
2,171
Income tax provision
41
28
133
79
Depreciation and amortization
1,671
1,605
4,986
4,772
Share-based compensation and other stock payments
522
603
1,685
1,660
Proxy contest-related expenses
—
23
(10
)
1,779
Adjusted EBITDA
3,366
7,585
11,176
17,039
Changes in operating working capital
2,227
(7,414
)
(12,617
)
(25,511
)
Capital expenditures
(745
)
(1,338
)
(3,279
)
(5,315
)
Proceeds from disposal of property and equipment
—
—
159
15
Free Cash Flow
$
4,848
$
(1,167
)
$
(4,561
)
$
(13,772
)
OUR BUSINESS
Third Quarter Overview
We received $22,975 in new orders in the third quarter of 2024, up from $15,890 in the third quarter of 2023. Within our Heavy Fabrications segment, orders increased primarily due to the timing of orders associated with wind repowering projects. Partially offsetting this was a 56% decrease in industrial fabrication orders, primarily due to reduced industrial and mining demand. Orders within our Industrial Solutions segment increased 52% compared to the prior year quarter primarily due to an increase in orders associated with new gas turbine projects. Gearing segment orders increased 46% from the prior year period primarily due to improved demand from most markets served.
We recognized revenue of $35,503 in the third quarter of 2024, down 38% compared to the third quarter of 2023. Within the Heavy Fabrications segment wind tower revenue decreased 45% from the prior year period primarily due to a decrease in tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Additionally, industrial fabrication revenues decreased primarily due to reduced shipments of our Pressure Reducing Systems (“PRS”) units from the prior year period. Gearing segment revenue decreased 20% relative to the comparable prior year period primarily due to reduced shipments to oil and gas (“O&G”) customers, partially offset by increased shipments to industrial customers. Industrial Solutions segment revenue decreased by 23% from the prior year period primarily due to reduced shipments to international customers.
We recorded net income of $74 or $0.00 per share in the third quarter of 2024, compared to net income of $4,394 or $0.21 per share in the third quarter of 2023. This decrease in net income was primarily attributable to lower tower sales within our Heavy Fabrications segment and the corresponding decrease in the Advanced Manufacturing Production tax credits (“AMP credits”) earned.
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RESULTS OF OPERATIONS
Three months ended September 30, 2024, Compared to Three months ended September 30, 2023
The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Three Months Ended September 30,
2024 vs. 2023
% of Total
% of Total
2024
Revenue
2023
Revenue
$ Change
% Change
Revenues
$
35,503
100.0
%
$
57,163
100.0
%
$
(21,660
)
(37.9
)%
Cost of sales
30,306
85.4
%
46,996
82.2
%
(16,690
)
(35.5
)%
Gross profit
5,197
14.6
%
10,167
17.8
%
(4,970
)
(48.9
)%
Operating expenses
Selling, general and administrative expenses
3,854
10.9
%
4,635
8.1
%
(781
)
(16.9
)%
Intangible amortization
165
0.5
%
165
0.3
%
—
0.0
%
Total operating expenses
4,019
11.3
%
4,800
8.4
%
(781
)
(16.3
)%
Operating income
1,178
3.3
%
5,367
9.4
%
(4,189
)
(78.1
)%
Other expense, net
Interest expense, net
(1,058
)
(3.0
)%
(932
)
(1.6
)%
(126
)
(13.5
)%
Other, net
(5
)
(0.0
)%
(13
)
(0.0
)%
8
61.5
%
Total other expense, net
(1,063
)
(3.0
)%
(945
)
(1.7
)%
(118
)
(12.5
)%
Net income before provision for income taxes
115
0.3
%
4,422
7.7
%
(4,307
)
(97.4
)%
Provision for income taxes
41
0.1
%
28
0.0
%
13
46.4
%
Net income
$
74
0.2
%
$
4,394
7.7
%
$
(4,320
)
(98.3
)%
Consolidated
Revenues decreased by $21,660 as compared to the prior year period as we experienced a drop in revenue across all three operating segments. Within our Heavy Fabrications segment, wind tower revenue decreased 45% from the prior year period primarily due to a 54% decrease in tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. In addition, industrial fabrications revenue decreased by 50% due largely to reduced sales of our PRS units. Gearing segment revenue decreased 20% relative to the comparable prior year period, reflective of reduced shipments to O&G customers, partially offset by increased shipments to industrial customers. Industrial Solutions segment revenue decreased 23% from the prior year period primarily due to reduced shipments to international customers.
Gross profit decreased by $4,970 when compared to the prior year period, primarily due to lower sales and the decrease in AMP credits earned. Operating expenses decreased from the prior year period primarily due to lower incentive compensation and commissions in the current year quarter.
Net income was $74 during the three months ended September 30, 2024, compared to net income of $4,394 during the three months ended September 30, 2023. This decrease in net income was primarily due to the factors described above.
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Heavy Fabrications Segment
Three Months Ended
September 30,
2024
2023
Orders
$
11,147
$
8,009
Tower sections sold
87
190
Revenues
20,600
38,326
Operating income
2,230
5,791
Operating margin
10.8
%
15.1
%
Within our Heavy Fabrications segment, orders increased 39% from the prior year period as wind orders increased primarily due to the timing of orders associated with wind repowering projects. Partially offsetting this was a 56% decrease in industrial fabrication orders, primarily due to reduced demand from industrial and mining customers. Segment revenues decreased by 46% compared to the prior year period primarily due to a 45% decrease in wind tower revenue. The decrease in wind tower revenue was primarily a result of less tower sections sold, as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Additionally, industrial fabrication revenues decreased by 50% during the current year period primarily due to reduced shipments of our PRS units in the current year quarter.
Heavy Fabrications segment operating income decreased by $3,561 as compared to the prior year period. The decrease in operating performance was primarily a result of lower tower sales and the corresponding reduction in AMP credits recognized, as well as lower industrial fabrication revenues. These factors were partially offset by reduced overhead costs. Operating margin was 10.8% during the three months ended September 30, 2024 compared to 15.1% during the three months ended September 30, 2023 primarily due to the factors described above.
Gearing Segment
Three Months Ended
September 30,
2024
2023
Orders
$
4,396
$
3,005
Revenues
9,167
11,404
Operating (loss) income
(78
)
265
Operating margin
(0.9
)%
2.3
%
Gearing segment orders increased 46% from the prior year period primarily due to improved demand from most markets served. Gearing revenue was down 20% relative to the comparable prior year period reflective of reduced shipments to O&G customers, partially offset by higher shipments to industrial customers.
Gearing segment operating income decreased by $343 from the prior year period. This decrease was primarily attributable to lower sales, partially offset by a more profitable product mix sold and cost savings. Operating margin was (0.9%) during the three months ended September 30, 2024, a decrease from 2.3% during the three months ended September 30, 2023, driven primarily by the items identified above.
Industrial Solutions Segment
Three Months Ended
September 30,
2024
2023
Orders
$
7,432
$
4,876
Revenues
5,737
7,434
Operating income
462
846
Operating margin
8.1
%
11.4
%
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Industrial Solutions segment orders increased from the prior year period primarily due to an increase in orders associated with new gas turbine projects. Segment revenues decreased from the prior year period primarily due to decreased shipments to international customers. Operating income decreased versus the prior-year period primarily as a result of lower sales.
Corporate and Other
Corporate and Other expenses decreased during the three months ended September 30, 2024 compared to the prior year period primarily due to lower employee compensation.
Nine months ended September 30, 2024, Compared to Nine months ended September 30, 2023
The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Nine Months Ended September 30,
2024 vs. 2023
% of Total
% of Total
2024
Revenue
2023
Revenue
$ Change
% Change
Revenues
$
109,571
100.0
%
$
156,879
100.0
%
$
(47,308
)
(30.2
)%
Cost of sales
92,171
84.1
%
131,403
83.8
%
(39,232
)
(29.9
)%
Gross profit
17,400
15.9
%
25,476
16.2
%
(8,076
)
(31.7
)%
Operating expenses
Selling, general and administrative expenses
12,391
11.3
%
16,113
10.3
%
(3,722
)
(23.1
)%
Intangible amortization
496
0.5
%
498
0.3
%
(2
)
(0.4
)%
Total operating expenses
12,887
11.8
%
16,611
10.6
%
(3,724
)
(22.4
)%
Operating income
4,513
4.1
%
8,865
5.7
%
(4,352
)
(49.1
)%
Other expense, net
Interest expense, net
(2,316
)
(2.1
)%
(2,171
)
(1.4
)%
(145
)
(6.7
)%
Other, net
2
0.0
%
(37
)
(0.0
)%
39
105.4
%
Total other expense, net
(2,314
)
(2.1
)%
(2,208
)
(1.4
)%
(106
)
(4.8
)%
Net income before provision for income taxes
2,199
2.0
%
6,657
4.2
%
(4,458
)
(67.0
)%
Provision for income taxes
133
0.1
%
79
0.1
%
54
68.4
%
Net income
$
2,066
1.9
%
$
6,578
4.2
%
$
(4,512
)
(68.6
)%
Consolidated
Revenues decreased by $47,308 as compared to the prior year period primarily due to lower sales within the Heavy Fabrications and Gearing segments, partially offset by increased sales within the Industrial Solutions segment. Wind revenue decreased 44% from the prior year period primarily due to a 52% decrease in tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Gearing segment revenue decreased 19% relative to the comparable prior year period reflective of reduced shipments within most markets served, but most significantly within O&G. This was partially offset by higher shipments to aftermarket wind customers. Industrial Solutions segment revenue increased 6% from the prior year period primarily due to increased shipments of new and aftermarket gas turbine content, partially offset by reduced shipments to international customers.
Gross profit decreased by $8,076 when compared to the prior year period, primarily due to lower sales, partially offset by reduced overhead costs. Operating expenses decreased from the prior year period primarily as a result of the absence of proxy-contest related expenses that were recognized in the prior year period.
Net income was $2,066 during the nine months ended September 30, 2024, compared to net income of $6,578 during the nine months ended September 30, 2023. This decrease in net income was primarily due to the factors described above.
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Heavy Fabrications Segment
Nine Months Ended
September 30,
2024
2023
Orders
$
31,506
$
40,608
Tower sections sold
223
468
Revenues
62,228
103,864
Operating income
5,832
12,448
Operating margin
9.4
%
12.0
%
Within our Heavy Fabrications segment, orders decreased 22% primarily due to reduced demand for our PRS units. These decreases were partially offset by an increase in orders associated with wind repowering projects. Segment revenues decreased by 40% during the nine months ended September 30, 2024 primarily due to a 44% decrease in wind tower revenue. The decrease in wind revenue was primarily a result of less tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025.
Heavy Fabrications segment operating income decreased by $6,616 as compared to the prior year period. The decrease in operating performance was primarily a result of lower tower sales and the corresponding reduction in AMP credits recognized. These factors were partially offset by reduced overhead costs. Operating margin was 9.4% during the nine months ended September 30, 2024 compared to 12.0% during the nine months ended September 30, 2023 primarily due to the factors described above.
Gearing Segment
Nine Months Ended
September 30,
2024
2023
Orders
$
19,546
$
21,211
Revenues
27,958
34,347
Operating income
429
1,194
Operating margin
1.5
%
3.5
%
Gearing segment orders decreased 8% from the prior year period primarily due to reduced demand from O&G customers, partially offset by increased demand from aftermarket wind customers. Gearing segment revenue decreased 19% relative to the comparable prior year period reflective of reduced shipments within most markets served, but most significantly within O&G. This was partially offset by higher shipments to aftermarket wind customers.
Gearing segment operating income decreased by $765 compared to the prior year period. This decrease was primarily attributable to lower sales, partially offset by a more profitable product mix sold and cost savings. Operating margin was 1.5% during the nine months ended September 30, 2024, a decrease from 3.5% during the nine months ended September 30, 2023, driven primarily by the items identified above.
Industrial Solutions Segment
Nine Months Ended
September 30,
2024
2023
Orders
$
19,291
$
19,034
Revenues
20,193
19,125
Operating income
2,852
2,311
Operating margin
14.1
%
12.1
%
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Industrial Solutions segment orders increased from the prior year period primarily due to improved orders associated with new gas turbine projects, partially offset by reduced orders associated with aftermarket projects. Segment revenues increased from the prior year period primarily due to increased shipments of aftermarket gas turbine content, partially offset by reduced shipments to international customers. Operating income increased versus the prior-year period primarily as a result of higher sales and a more profitable mix of product sold.
Corporate and Other
Corporate and Other expenses during the nine months ended September 30, 2024 decreased from the prior year period primarily due to the absence of professional fees associated with the contested proxy election recognized in the prior year quarter and lower employee compensation costs.
LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES
On August 4, 2022, we entered into a credit agreement (the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of September 30, 2024, cash totaled $1,384, an increase of $285 from December 31, 2023. Debt and finance lease obligations at September 30, 2024 totaled $23,353. As of September 30, 2024, we had the ability to borrow up to an additional $17,614 un der the 2022 Credit Facility.
In addition to the 2022 Credit Facility, we also utilize supply chain financing arrangements as a component of our funding for working capital, which accelerates receivable collections and helps to better manage cash flow. Under these agreements, we have agreed to sell certain of our accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense.
We also have outstanding notes payable for capital expenditures in the amount of $1,706 and $1,361 as of September 30, 2024 and December 31, 2023, respectively, with $365 and $163 included in the “Line of Credit and current maturities of long-term debt” line item of our condensed consolidated financial statements as of September 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 have maturity dates that range from September 2028 to June 2029.
On September 22, 2023, we 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. The Form S-3 will expire on October 11, 2026. This shelf registration statement, which includes a base prospectus, allows us 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, we 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, we 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, we may sell from time to time through the Agents shares of our common stock with an aggregate sales price of up to $12,000. We 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. No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December 31, 2023 or nine months ended September 30, 2024. As of September 30, 2024, shares of our 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.
We anticipate that current cash resources, amounts available under the 2022 Credit Facility, cash to be generated from operations and equipment financing, potential proceeds from the sale of securities under the Sales Agreement, access to the public or private debt and/or equity markets including any potential proceeds from the sale of further securities under the Form S-3, and proceeds from sales of AMP credits will be adequate to meet our liquidity needs for at least the next twelve months.
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If assumptions regarding our production, sales and subsequent collections from certain of our large customers, our ability to finalize the terms of the remaining obligations under a supply agreement with a leading global wind turbine manufacturer, as well as receipt of customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, we may in the future encounter cash flow and liquidity issues.
If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the 2022 Credit Facility. This could limit our operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on our stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity-linked financing, if available, will be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on us. While we believe that we will continue to have sufficient cash available to operate our businesses and to meet our financial obligations and debt covenants, there can be no assurances that our operations will generate sufficient cash, or that credit facilities or equity or equity-linked financings will be available in an amount sufficient to enable us to meet these financial obligations.
Sources and Uses of Cash
The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 and 2023:
Nine Months Ended
September 30,
2024
2023
Total cash (used in) provided by:
Operating activities
$
(986
)
$
(22,593
)
Investing activities
(3,120
)
(5,300
)
Financing activities
4,391
16,901
Net increase (decrease) in cash
$
285
$
(10,992
)
Operating Cash Flows
During the nine months ended September 30, 2024, net cash used in operating activities totaled $986 compared to net cash used in operating activities of $22,593 during the prior year period. The decrease in net cash used in operating activities during the current year period was primarily attributable to proceeds from the sale of the 2023 AMP credits received during the current year period, in addition to a decrease in accounts receivable during the current year period compared to a significant increase in accounts receivable during the prior year period due to a change in payment terms with a major customer. This was partially offset by a more significant decrease in customer deposits during the current year period.
Investing Cash Flows
During the nine months ended September 30, 2024, net cash used in investing activities tot aled $3,120, comp ared to net cash used in investing activities of $5,300 during the prior year period. The decrease in net cash used in investing activities as compared to the prior-year period was primarily due to a net decrease in purchases of property and equipment.
Financing Cash Flows
During the nine months ended September 30, 2024, net cash provided by financing activities tot aled $4,391, co mpared to net cash provided by financing activities of $16,901 during the prior year period. The decrease was primarily due to decreased net borrowings under the 2022 Credit Facility in the current year period.
CRITICAL ACCOUNTING ESTIMATES
There have been no material changes in our critical accounting estimates during the nine months ended September 30, 2024 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2023.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2023. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward-looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) the impact of global health concerns on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants, including the advanced manufacturing tax credits, and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (v) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary; (vi) our ability to continue to grow our business organically and through acquisitions; (vii) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (viii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security; (ix) the sufficiency of our liquidity and alternate sources of funding, if necessary; (x) our ability to realize revenue from customer orders and backlog (including our ability to finalize the terms of the remaining obligations under a supply agreement with a leading global wind turbine manufacturer); (xi) the economy and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally, including the availability of tax credits, and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) the limited trading market for our securities and the volatility of market price for our securities; (xix) our outstanding indebtedness and its impact on our business activities (including our ability to incur additional debt in the future); and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K under the Securities Act and as such are not required to provide information under this Item pursuant to Item 305I of Regulation S-K.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.