What changed in this filing

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Item 1A. Risk Factors

2025-03-05 compared with 2024-03-05 · 51 added, 44 removed, 310 unchanged (23% of the section changed)

5 unchanged sentences

For example, some wind turbine manufacturers are using wind turbine towers made partially or wholly from concrete instead of steel.

Additionally, if we implement emerging technologies such as artificial intelligence and machine learning into our products and services, we may not be able to anticipate vulnerabilities, flaws or security threats resulting from the use of such technology and develop adequate protection measures.

Additionally, we continue to evaluate the implementation of emerging technologies such as generative artificial intelligence and machine learning into our products and services.

Such technologies present unique business opportunities along with rapidly changing legal and regulatory risks, and we may not be able to anticipate vulnerabilities, flaws or security threats resulting from the use of such technology and develop adequate protection measures.

To maintain a successful business in our field, we must keep pace with technological developments and the changing standards of our customers and potential customers and meet their constantly evolving demands.

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Some of the markets we serve have a limited number of customers.

In 2023, one customer, GE Renewable Energy, accounted for more than 10% of our consolidated revenues, and our five largest customers accounted for 65% of our consolidated revenues.

In 2024, one customer, GE Vernova, accounted for more than 10% of our consolidated revenues, and our five largest customers accounted for 73% of our consolidated revenues.

Certain of our customers have periodically expressed their intent to scale back, delay or restructure existing customer agreements, which has led to reduced revenues from these customers and periodic deviations in expected ordering levels.

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federal government may affect our business in a manner that currently cannot be reliably predicted, especially given the potentially significant changes to various laws and regulations that affect us.

These uncertainties may include changes in laws and policies in areas such as corporate taxation, taxation on imports of internationally sourced products, international trade including trade treaties such as the United States-Mexico-Canada Agreement, environmental protection and workplace safety laws, labor and employment law, immigration and health care, which individually or in the aggregate could materially and adversely affect our business, results of operations or financial condition.

These uncertainties may include changes in laws and policies in areas such as corporate taxation, taxation and tariffs on imports of internationally sourced products, international trade including trade treaties such as the United States-Mexico-Canada Agreement, environmental protection and workplace safety laws, labor and employment law, immigration and health care.

For example, President Trump has indicated that his administration is likely to impose significant tariffs on imported goods.

The imposition of such tariffs may strain international trade relations or impact costs of raw materials.

Additionally, an advisory commission, the “Department of Government Efficiency” was announced to reform federal government processes and reduce expenditures.

Pressures on and uncertainty surrounding the U.S.

federal government’s budget, and potential change in budgetary priorities could adversely affect individual programs and delay purchasing or payment decisions by certain of our customers.

All of these uncertainties may individually or in the aggregate materially and adversely affect our business, results of operations or financial condition.

Disruptions in the supply of parts and raw materials, or changes in supplier relations, may negatively impact our operating results.

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Many of the products we sell, and related services that we provide require that we have skilled labor in our manufacturing facilities.

The availability of labor in the markets in which we operate has declined in recent years and competition for such labor has increased, especially under the economic crises experienced throughout and following the COVID-19 pandemic and current inflationary pressures.

The availability of labor in the markets in which we operate has declined in recent years and competition for such labor has increased, especially under current inflationary pressures.

A significant increase in wages paid by competitors, both within and outside the energy industry, for such work force could result in insufficient availability of workers or increase our labor costs, or both.

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A successful claim against us could have a material adverse effect on our business.

Cybersecurity incidents could disrupt our business and result in the compromise of confidential information.

Our business is at risk from and may be impacted by information security incidents, including attempts to gain unauthorized access to our confidential data and data systems, ransomware, malware, business email compromise, phishing attacks, and other electronic security events.

Cybersecurity incidents could disrupt our business and result in the compromise of confidential information and changes in information security and privacy laws, regulations, policies and contractual obligations could adversely affect our business.

Such incidents can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats.

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Cybersecurity incidents could disrupt our business and compromise confidential information belonging to us and third parties.

Certain of our suppliers and third parties we transact business with may receive information provided by us or by our customers and may also be at risk and impacted by cybersecurity incidents.

If these third parties fail to adhere to adequate data security practices, or in the event of a breach of their networks, our own and our customers’ data may be improperly accessed, used or disclosed.

Further, these third parties may incorporate generative artificial intelligence into their operations, and these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection.

Additionally, the legal and regulatory environment surrounding information security and privacy in the U.S.

and international jurisdictions is constantly evolving.

Violation or non-compliance with any of these laws or regulations could have a material adverse effect on our business, reputation and financial conditions, as well as subject us to significant fines, third party damages and other liability.

See Item 1C of this Form 10-K, “Cybersecurity,” for more information on our cybersecurity risk management and governance.

Recent increases in inflation and interest rates in the United States and elsewhere could adversely affect our business.

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

If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation and labor expenses and increased costs for supplies, and we may not be successful in offsetting such cost increases.

If the inflation rate continues to increase, it will likely continue to affect our expenses, including, but not limited to, employee compensation and labor expenses and increased costs for supplies, and we may not be successful in offsetting such cost increases.

In addition, historically we have carried a significant amount of variable rate debt which is subject to fluctuations in interest rates.

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

A severe or prolonged economic downturn, whether due to inflationary pressures, increased interest rates, or otherwise, could result in a variety of risks to our business, including weakened demand for our products.

RISKS RELATED TO OUR INDUSTRIES

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There has been consolidation among these manufacturers, and more consolidation may occur in the future.

For example, both Siemens Energy, Inc.

and Gamesa Wind US, LLC, were customers for our tower business until early 2017, at which time they merged into SGRE.

Customer consolidation may result in pricing pressures, leading to downward pressure on our margins and profits, and may also disrupt our supply chain relationships.

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We continue to seek to strategically diversify and grow the business to improve operational efficiency and meet customer demand.

Our diversification efforts into the natural gas turbine power generation, O&G, mining and other industries may require additional investments in personnel, equipment and operational infrastructure.

Our diversification efforts into natural gas turbine power generation (also known as aeroderivatives), defense, mining, precision machining, O&G and other power generation markets may require additional investments in personnel, equipment and operational infrastructure.

Moreover, although we have historically participated in most of these lines of business, there is no assurance that we will be able to grow our presence in these markets at a rate sufficient to compensate for a potentially weaker wind energy market.

8 unchanged sentences

Variability in the prices and relative demand for oil, gas, minerals and other commodities;

The cyclical nature of certain markets (i.e., the O&G market);

Changes in domestic and global political and economic conditions affecting the O&G and mining industries;

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The price we pay for a business may exceed the value realized and we cannot provide any assurance that we will realize the expected synergies and benefits of any acquisitions.

Our discovery of, or failure to discover, material issues during due diligence investigations of acquisition targets, either before closing with regard to potential risks of the acquired operations, or after closing with regard to the timely discovery of breaches of representations or warranties, could materially harm our business.

Our discovery of, or failure to discover, material issues during due diligence investigations of acquisition targets, either before closing with regard to potential risks of the acquired operations, or after closing with regard to the timely discovery of breaches of representations, warranties or covenants, could materially harm our business.

Our failure to meet the challenges involved in integrating a new business to realize the anticipated benefits of an acquisition could cause an interruption or loss of momentum in our existing activities and could adversely affect our profitability.

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Publicly traded companies have increasingly become subject to campaigns by activist investors advocating corporate actions such as governance changes, financial restructurings, increased borrowings, special dividends, stock repurchases or even sales of assets or entire companies to third parties or the activists themselves.

We received a notice dated January 18, 2023 from WM Argyle Fund, LLC (“WM Argyle”), which allegedly owned approximately 1.0% of the Company’s outstanding shares at the time of submission, purporting to nominate a slate of six candidates for election as directors at our 2023 Annual Meeting of Stockholders.

In 2023, WM Argyle Fund, LLC (“WM Argyle”) submitted a notice to the Board of Directors (the “Board”) purporting to nominate a slate of six candidates for election as directors at our 2023 Annual Meeting of Stockholders.

We did not reach an agreement with WM Argyle in connection with its nomination, and there was a contested election at the Company’s 2023 Annual Meeting of Stockholders, in which none of WM Argyle’s candidates were elected as directors.

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A proxy contest or related activities on the part of activist stockholders could adversely affect our business for a number of reasons, including, without limitation, the following:

Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting our operations and diverting the attention of our Board of Directors (the “Board”), management and our employees;

Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting our operations and diverting the attention of our Board, management and our employees;

Perceived uncertainties as to our future direction may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel, business partners, customers and others important to our success, any of which could negatively affect our business and our results of operations and financial condition;

Action by activist stockholders may be exploited by our competitors, cause concern to our current or potential customers and make it more difficult to attract and retain qualified personnel;

A successful proxy contest could result in a change in control of our Board, and such an event could subject us to certain contractual obligations under several material agreements, including our existing Amended and Restated 2015 Equity Incentive Plan (as amended, the “2015 EIP”), and underlying award agreements and certain employment agreements;

A successful proxy contest could result in a change in control of our Board, and such an event could subject us to certain contractual obligations under several key agreements, including our existing Amended and Restated 2015 Equity Incentive Plan (as amended, the “2015 EIP”), and underlying award agreements and certain employment and lease agreements;

If nominees advanced by activist stockholders are elected or appointed to our Board with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plans or to realize long-term value from our assets, and this could in turn have an adverse effect on our business and on our results of operations and financial condition;

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FINANCIAL RISKS

We have substantially generated net losses since our inception.

We have experienced operating losses since inception, except that we were profitable in 2016, 2021, and 2023.

We have generated substantial net losses since our inception.

Historically, we have had several years in which we have experienced operating losses.

We have incurred significant costs in connection with the development of our businesses, and because we have operated at low-capacity utilization in certain facilities, there is no assurance that we will generate sufficient revenues to offset anticipated operating costs.

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If we breach any of these restrictions or covenants and do not obtain a waiver from the lenders or holders, as applicable, then, subject to the applicable cure periods and conditions, any outstanding indebtedness could be declared immediately due and payable.

Our PPP Loans were forgiven, but we may still be subject to audit and any resulting adverse audit financings of non-compliance could result in the repayment of a portion or all of the PPP Loans and may restrict our flexibility in operating our business or otherwise adversely affect our results of operations.

Our PPP Loans were forgiven, but we may still be subject to audit and any resulting adverse audit findings of non-compliance could result in the repayment of a portion or all of the PPP Loans and may restrict our flexibility in operating our business or otherwise adversely affect our results of operations.

On April 15, 2020, we received funds under notes and related documents (“PPP Loans”) with CIBC Bank, USA under the Paycheck Protection Program (the “PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), as amended by the Paycheck Protection Program Flexibility Act of 2020 in response to the COVID-19 pandemic and is administered by the U.S.

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The Rights Plan is intended to deter any person or group from being or becoming the beneficial owner of 4.9% or more of our common stock and thereby triggering a further limitation of our available NOL carryforwards.

On February 3, 2025, the Board approved an amendment which included an extension of the Rights Plan for an additional three years.

The amendment is subject to approval by our stockholders at our 2025 Annual Meeting of Stockholders.

See Note 14, “Income Taxes” of our consolidated financial statements for further discussion of our Rights Plan.

There can be no assurance that the Rights Plan will be effective in protecting our NOL carryforwards.

There can be no assurance that the Rights Plan will be effective in protecting our NOL carryforwards or that it will be approved by our stockholders at our 2025 Annual Meeting of Stockholders.

Additionally, because the Rights Plan subjects any person that acquires 4.9% of our common stock without the Board’s permission to significant dilution, it could make it harder for a third party to acquire us without the consent of the Board.

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Treasury Department, (ii) subsequent amendments to or interpretations of the law, and/or (iii) future laws or regulations rendering certain provisions of the IRA less effective or ineffective, in whole or in part, could result in material adverse changes to the benefits we have recognized and expect to recognize.

Several significant administrative law cases were decided by the U.S.

Supreme Court in 2024, most notably Loper Bright Enterprises V.

In Loper Bright, the U.S.

Supreme Court held that the U.S.

Administrative Procedure Act requires that courts exercise their independent judgment when deciding whether a federal agency has acted within its statutory authority, and not to defer to an agency interpretation solely because a statute is ambiguous.

These decisions may result in additional legal challenges to regulations and guidance issued by federal regulatory agencies, including the IRS, which the Company relies on and intends to rely on in the future.

Successful challenges of certain regulations, any increased regulatory uncertainty, or delays or other impacts to the federal agency rulemaking process could adversely impact our business and operations.

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

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

We cannot assure that government support for renewable energy will continue including any assurance regarding the adoption of any of the clean energy provisions of President Biden’s Build Back Better agenda.

We cannot assure that government support for renewable energy will continue including any assurance regarding the adoption of any of the clean energy provisions of former President Biden’s Build Back Better agenda.

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

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and geopolitical policies, may impact our competitive position or adversely impact our margins.

Tariffs have resulted in increased prices, including with respect to certain steel products, and could adversely affect our consolidated results of operations, financial position and cash flows.

These tariffs, along with any additional tariffs or trade restrictions that may be implemented by the U.S.

or other countries, could result in further increased prices and a decreased available supply of steel and other imported components and inputs.

We may not be able to pass price increases on to our customers and may not be able to secure adequate alternative sources of steel on a timely basis.

The existence of government subsidies available to our competitors in certain countries may affect our ability to compete on a price basis.

Imports from China and Vietnam have declined following a determination by the U.S.

International Trade Commission (“USITC”) in 2013 that wind towers from those countries were being sold in the U.S.

at less than fair value.

As a result of the determination, the U.S.

Department of Commerce (“USDOC”) issued antidumping and countervailing duty orders on imports of wind towers from China and an antidumping duty order on imports of towers from Vietnam.

In May 2018, the U.S.

Court of Appeals affirmed the decision from the U.S.

Court of International Trade and at the same time excluded CS Wind Vietnam from the antidumping order.

In April 2019, the USDOC extended the term of these duties for an additional five-year period.

Following a renewed surge of tower imports from countries not impacted by existing tariffs, in July 2020, the USDOC issued antidumping and countervailing duty orders on imports of wind towers from Canada, Indonesia, and Vietnam and an antidumping order on imports of towers from Korea.

The Indonesia countervailing duty order was later revoked after an appeal to the U.S.

Court of International Trade (“CIT”).

Then in September 2020, a new trade case was brought before the USDOC and USITC, to assess whether wind towers imported from India, Malaysia, and Spain were being sold in the U.S.

at less than fair value.

The USDOC and USITC issued affirmative final determinations in all three antidumping (India, Malaysia, and Spain) and two countervailing duty cases (India and Malaysia).

The USDOC imposed orders for two cases in August 2021 and the remainder in December 2021.

Appeals of several of the USDOC determinations are currently pending at the CIT and the CAFC.

Renewed surges of unfairly traded imports continue to threaten our business segments.

If existing antidumping and countervailing duty orders were removed or revoked we would expect a renewed surge of unfairly traded imports.

While future trade actions on inputs such as steel may affect our pricing, the continued presence of unfairly traded imports in the market may hamper our ability to pass those price increases along.

Additionally, the existence of government subsidies available to our competitors in certain countries may affect our ability to compete on a price basis.

Additionally, the war in Ukraine has led to economic sanctions imposed against Russia by the U.S.

and certain European nations, including a prohibition on doing business with certain Russian companies.

Such sanctions may impact companies in many sectors and could lead to volatility of prices in the global energy industry.

and certain European nations, including a prohibition on doing business with certain Russian companies which may have led to, or may lead to, certain retaliatory trade restrictions from Russia.

Such sanctions may impact companies in many sectors and has lead to volatility of prices in the global energy industry and disruption and volatility in the U.S.

and global markets.

There is a possibility that such sanctions or trade restrictions may be expanded, or new sanctions or trade restrictions may be imposed by the U.S., Russia, China or other countries, which could further disrupt supply chains and increase volatility of pricing.

The extent and duration of the war and extent and strength of the sanctions are still developing, and the corresponding effect on the Company remains uncertain.

Certain other geopolitical conflicts, including the war between Israel and Hamas may also lead to material disruptions to certain supply chains and volatility in prices.

Certain other geopolitical conflicts, including the war between Israel and Hamas has also lead to material disruptions to certain supply chains and volatility in prices.

We could incur substantial costs to comply with environmental, health and safety (“EHS”) laws and regulations and to address violations of or liabilities under these requirements.

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

What changed 10-K

Item 1A. Risk Factors