What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-11 compared with 2026-05-12 · 106 added, 84 removed, 120 unchanged (61% of the section changed)

8 unchanged sentences

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.

Except as otherwise indicated, the totals below are net of discontinued operations.

Key Financial Measures

Three Months Ended

Six Months Ended

Loss from continuing operations

Adjusted EBITDA (1)

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Book-to-bill (5)

We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, other non-cash gains and losses, and the gain from the sale of the Manitowoc industrial fabrication operations) 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.

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.

We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.

Our backlog at March 31, 2026 and 2025 is net of revenue recognized over time.

Backlog has been adjusted to reflect updated assumptions related to raw material pricing (which is a customer passthrough) and other variables.

We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period.

The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measure:

Three Months Ended

Six Months Ended

Loss from continuing operations

Interest expense

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Share-based compensation and other stock payments

Transaction costs (6)

Adjusted EBITDA

3 unchanged sentences

Free Cash Flow

The OBBBA which was signed into law on July 4, 2025, eliminates AMP credits for components produced and sold after December 31, 2027.

The OBBBA shortened the time period in which we could benefit from the AMP credits, which could have a material adverse effect on our business in the near term.

Under the OBBBA, wind projects that begin construction after July 4, 2026, must be placed in service by December 31, 2027, to qualify for the production tax credit (“PTC”) or the investment tax credit (“ITC”).

Any wind project that begins construction after July 4, 2026, and is not placed in service by December 31, 2027, will not qualify for the PTC or the ITC.

The PTC and ITC drive demand for new wind projects by providing financial incentives to developers.

We expect the changes to the PTC and the ITC could lead to a decrease in the number of new wind projects, which would cause a corresponding decrease in demand for our wind products.

Lower demand for our wind products, coupled with the expedited phase out of the AMP credits, would adversely impact the profitability of our Heavy Fabrications segment.

The OBBBA also introduced new restrictions on foreign supply chains and foreign owners or investors in tax-credit-supported facilities, referred to as “Prohibited Foreign Entity” or “PFE” restrictions.

Taxpayers cannot claim AMP credits in taxable years beginning after enactment of the OBBBA if the taxpayers source from Prohibited Foreign Entities (which are generally entities that are formed in or controlled by covered nations, including China, Russia, Iran, and North Korea, as well as entities determined to be under effective control as a result of contracts entered into with such entities).

AMP credits are also disallowed in taxable years beginning after enactment of the OBBBA for eligible components that receive material assistance from a PFE.

These restrictions generally took effect on January 1, 2026, and the Treasury Department is required to issue final regulations implementing them by December 31, 2026.

On February 12, 2026, the Treasury Department released interim guidance that further clarified methods for calculating material assistance and included a request for comments by March 30.

We cannot predict with certainty what the final guidance, or any other future guidance, will provide, or how the guidance might impact our AMP credits claimed in 2026 and future years.

Subsequent to the quarter end, on April 30, 2026, Broadwind Heavy Fabrications, Inc.

a wholly owned subsidiary of the Company, entered into a Purchase and Sale Agreement with Freeman Enclosure Systems, LLC, a wholly-owned subsidiary of IES Holdings, Inc., pursuant to which BHF sold the real property and certain assets contained therein which comprise our production facility located in Abilene, Texas, including equipment, machinery, other personal property, specified service contracts, and permits for an aggregate purchase price of up to $19,500 in cash, subject to certain purchase price adjustments.

We expect the sale of the Facility along with the disposition of Manitowoc to meet discontinued operations reporting criteria in the second quarter of 2026 and have determined that the sale represents a strategic shift for us that will have a major effect on our operations.

As such, the results of operations of the wind business within the Heavy Fabrications segment will be reclassified to discontinued operations on our condensed consolidated statements of operations and retrospectively for all periods presented beginning in the second quarter of 2026.

In addition, the assets and liabilities will be presented separately on our condensed consolidated balance sheets for both current and prior periods beginning in the second quarter of 2026.

First Quarter Overview

We received $37,422 in new orders in the first quarter, up from $30,455 in the first quarter of 2025.

Gearing segment orders increased by 66% due to improved demand from most markets served, most notably in power generation which reflects significant orders from a leading Original Equipment Manufacturer (“OEM”) of natural gas turbines.

Industrial Solutions orders increased by 44% compared to the prior year quarter primarily due to an increase in demand associated with new gas turbine and aftermarket gas turbine projects.

Additionally, wind tower orders within the Heavy Fabrications segment increased significantly as we recognized meaningful wind tower orders again after an extended period of production against a long-term customer agreement announced in the first quarter of 2023.

These increases were partially offset by lower wind repowering orders, as well as lower industrial fabrication product line orders attributable to the wind down of our operations in Manitowoc.

We recognized revenue of $34,057 in the first quarter, which was an 8% decrease compared to the first quarter of 2025.

Within the Heavy Fabrications segment, revenues associated with wind repowering, the Manitowoc industrial fabrication product line and pressure reducing system (“PRS ”) units decreased in the current year period.

Industrial Solutions segment revenue increased by 64% from the prior year period primarily due to increased shipments to aftermarket gas turbine customers.

Gearing segment revenue increased 42% relative to the prior year period primarily due to increased shipments to power generation and mining customers.

We recorded a net loss of $495 or $0.02 per share in the first quarter of 2026, compared to a net loss of $370 or $0.02 per share in the first quarter of 2025.

The increase was primarily due to lower sales and manufacturing inefficiencies experienced early in the first quarter within the Heavy Fabrications segment, partially offset by higher sales in the Gearing and Industrial Solutions segments.

We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, other non-cash gains and losses, and transaction costs) 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.

Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

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 define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.

Our backlog at June 30, 2026 and 2025 is net of revenue recognized over time.

Backlog has been adjusted to reflect updated assumptions related to raw material pricing (which is a customer passthrough) and other variables.

Orders and backlog at June 30, 2026 and 2025 include results from our discontinued operations.

Orders from discontinued operations total ($2,591) and $6,782 for the three and six months ended June 30, 2026, respectively as well as ($36) and $9,740 the three and six months ended June 30, 2025, respectively.

Backlog includes $4,160 and $51,093 from discontinued operations at June 30, 2026 and June 30, 2025, respectively.

We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period.

Orders from discontinued operations were excluded from this ratio.

Transaction costs consist of professional services expenses including legal and professional fees attributable to completed or contemplated transactions.

On April 30, 2026, Broadwind Heavy Fabrications, Inc.

a wholly owned subsidiary of the Company, sold the real property and certain assets contained therein which comprise our production facility located in Abilene, Texas (the “Facility”), including equipment, machinery, other personal property, specified service contracts, and permits for an aggregate purchase price of up to $19,500 in cash, subject to certain purchase price adjustments.

The sale of the Facility represented a strategic shift that will have a major effect on our operations and qualify for discontinued operations treatment in the second quarter of 2026.

As such, the results of operations of the wind and industrial fabrication operations including operations historically in Manitowoc, Wisconsin, have been reclassified to discontinued operations on our condensed consolidated statements of operations and retrospectively for all periods presented beginning in the second quarter of 2026.

Our discontinued operations exclude the results of pressure reducing system (“PRS”) operations.

The One Big Beautiful Bill Act, which was signed into law on July 4, 2025 (the “OBBBA”), accelerated the phase-out of certain clean energy tax credits and imposed additional restrictions on tax-credit-supported wind and renewable energy projects, which impacted the market for and profitability of the wind products we produced in our former Heavy Fabrications segment.

In connection with the sale of our Abilene facility, we are exiting the wind business and do not expect the impact of the OBBBA to be material to our continuing operations.

Second Quarter Overview

Excluding discontinued operations, we received $35,240 in new orders in the second quarter, up from $20,991 in the second quarter of 2025.

Gearing segment orders increased by 138% due to improved demand from all markets served, most notably in oil and gas (“O&G”) and power generation which reflects significant orders from a leading Original Equipment Manufacturer (“OEM”) of natural gas turbines.

Industrial Solutions orders increased by 24% compared to the prior year quarter primarily due to an increase in demand associated with new gas turbine projects.

We recognized revenue of $24,303 in the second quarter, which was a 67% increase compared to the second quarter of 2025.

Industrial Solutions segment revenue increased by 79% from the prior year period primarily due to increased shipments to new and aftermarket gas turbine customers.

Gearing segment revenue increased 24% relative to the prior year period primarily due to increased shipments to power generation customers.

We recorded a net loss of $639 or ($0.03) per share in the second quarter of 2026, compared to a net loss of $989 or ($0.04) per share in the second quarter of 2025.

The decrease was primarily due to higher sales in the Gearing and Industrial Solutions segments, partially offset by higher transaction costs and the loss on the sale of the Abilene facility.

RESULTS OF OPERATIONS

Three months ended March 31, 2026, Compared to Three months ended March 31, 2025

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 March 31, 2026, compared to the three months ended March 31, 2025.

Three Months Ended March 31,

Three months ended June 30, 2026, Compared to Three months ended June 30, 2025

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 June 30, 2026, compared to the three months ended June 30, 2025.

Three Months Ended June 30,

Cost of sales

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Total operating expense, net

Operating income

Operating loss

Other expense, net

3 unchanged sentences

Provision for income taxes

Revenues decreased by $2,781 as compared to the prior year period primarily due to a 35% decrease in revenue within our Heavy Fabrications segment.

This decrease was largely attributable to lower industrial fabrication product line revenues reflective of the wind down of the Manitowoc, Wisconsin operations.

Wind repowering and PRS revenues also decreased.

Partially offsetting this decrease was a 64% increase in Industrial Solutions segment revenue primarily due to higher shipments to aftermarket gas turbine customers.

Gearing segment revenue increased 42% primarily reflective of increased shipments to power generation and mining customers.

Despite the overall decrease in revenue described above, gross profit increased versus the prior year due primarily to higher sales within the Gearing and Industrial Solutions segments, partially offset by manufacturing inefficiencies experienced early in the first quarter within the Heavy Fabrications segment.

We recorded a net loss of $495 during the three months ended March 31, 2026, compared to a net loss of $370 during the three months ended March 31, 2025.

This increase in net loss was primarily due to an increase in interest expense.

Heavy Fabrications Segment

Loss from continuing operations

Income from discontinued operations, net of tax

Revenues increased by $9,783 as compared to the prior year period primarily due to a 79% increase in Industrial Solutions segment revenue primarily due to higher shipments to new and aftermarket gas turbine customers.

Gearing revenue also increased 24% primarily reflective of increased shipments to power generation customers.

Gross profit increased versus the prior year due primarily to higher sales within the Gearing and Industrial Solutions segments and a more profitable mix of product sold in the Industrial Solutions segment.

We recorded a net loss of $639 during the three months ended June 30, 2026, compared to a net loss of $989 during the three months ended June 30, 2025.

This decrease in net loss was primarily due to the factors described above, partially offset by higher transaction costs and the loss on the sale of the Abilene facility.

Gearing Segment

Three Months Ended

Operating loss

Operating margin

Gearing segment orders increased by 138% versus the prior year period primarily due to higher demand from customers in all markets served, most notably in O&G and power generation which reflects significant orders from a leading OEM of natural gas turbines.

Gearing revenues were up 24% relative to the prior year primarily reflective of increased shipments to power generation customers.

The Gearing segment’s operating loss decreased by $595 from the prior year period.

This decrease was primarily attributable to higher sales in the current year period.

Industrial Solutions Segment

Three Months Ended

Operating income

Operating margin

Heavy Fabrications segment orders decreased 22% from the prior year period reflective of lower wind repowering and industrial fabrication product line orders as we wound down operations in Manitowoc, partially offset by an increase in wind tower orders as we recognized meaningful wind tower orders again after an extended period of production against a long-term customer agreement announced in the first quarter of 2023.

Segment revenues decreased by 35% compared to the prior year period due to lower wind repowering and industrial fabrication product line revenues, as well as lower PRS unit shipments.

Heavy Fabrications segment operating income decreased by $1,454 as compared to the prior year period.

The decrease in operating income was primarily a result of lower sales and manufacturing inefficiencies associated with a raw material supply issue experienced early in the first quarter.

Industrial Solutions segment orders increased from the prior year period primarily due to an increase in demand associated with new gas turbine projects.

Segment revenues increased from the prior year period primarily due to higher shipments to new and aftermarket gas turbine customers.

Operating income increased versus the prior year period primarily as a result of higher sales and a more profitable mix of product sold.

Six months ended June 30, 2026, Compared to Six months ended June 30, 2025

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 six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Six Months Ended June 30,

Cost of sales

Operating expenses

Selling, general and administrative expenses

Intangible amortization

Total operating expense, net

Operating loss

Other expense, net

Interest expense, net

Total other expense, net

Net loss before provision for income taxes

Provision for income taxes

Loss from continuing operations

Income from discontinued operations, net of tax

Revenues increased by $12,857 as compared to the prior year period primarily due to a 72% increase in Industrial Solutions segment revenue primarily due to higher shipments to new and aftermarket gas turbine customers.

Gearing segment revenue also increased 32% primarily due to increased shipments to power generation customers.

We recorded a net loss of $1,134 during the six months ended June 30, 2026, compared to a net loss of $1,359 during the six months ended June 30, 2025.

This decrease in net loss was primarily due to the factors described above, partially offset by the loss on the sale of the Abilene facility, higher transaction costs and increased employee related costs.

Gearing Segment

Three Months Ended

Six Months Ended

Operating loss

Operating margin

Gearing segment orders increased by 66% versus the prior year period primarily due to higher demand from customers in most markets served, most notably in power generation which reflects significant orders from a leading OEM of natural gas turbines.

Gearing revenues were up 42% relative to the prior year primarily reflective of increased shipments to power generation and mining customers.

Gearing segment orders nearly doubled versus the prior year period primarily due to higher demand from customers in all markets served, most notably in power generation which reflects significant orders from a leading OEM of natural gas turbines.

Gearing revenues were up 32% relative to the prior year primarily due to increased shipments to power generation customers.

The Gearing segment’s operating loss decreased by $1,431 from the prior year period.

This decrease was primarily attributable to higher sales in the current year period, partially offset by the absence of a favorable property tax adjustment recognized in the prior year period.

This decrease was primarily attributable to higher sales in the current year period, partially offset by the absence of a favorable $482 property tax adjustment recorded in the prior year period.

Industrial Solutions Segment

Three Months Ended

Six Months Ended

Operating income

Operating margin

Industrial Solutions segment orders increased from the prior year period primarily due to an increase in orders associated with new and aftermarket gas turbine projects.

Segment revenues increased from the prior year period primarily due to higher shipments to aftermarket gas turbine customers.

Industrial Solutions segment orders increased from the prior year period primarily due to an increase in demand associated with new gas turbine projects.

Segment revenues increased from the prior year period primarily due to higher shipments to new and aftermarket gas turbine 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 increased during the three months ended March 31, 2026 compared to the prior year period primarily due to higher self-insured medical expenses.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

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

As of March 31, 2026, cash totaled $943 , an increase of $487 from December 31, 2025.

Debt and finance lease obligations at March 31, 2026 totaled $14,993.

As of March 31, 2026, we had $9,603 outstanding under the 2022 Credit Facility and had the ability to borrow up to an additional $15,436, after considering the requirement to maintain minimum excess availability under the Credit Agreement equal to or greater than 25% of the revolving loan limit thereunder.

As of June 30, 2026, cash and cash equivalents totaled $17,043 an increase of $16,586 from December 31, 2025.

Debt and finance lease obligations at June 30, 2026 totaled $6,333.

As of June 30, 2026, we had $3,194 outstanding under the 2022 Credit Facility and had the ability to borrow up to an additional $23,014, or $14,264 after considering the requirement to maintain minimum excess availability under the Credit Agreement equal to or greater than 25% of the revolving loan limit thereunder.

On April 30, 2026, in addition to the normal required progress payments, we made a repayment of $1,420 on the outstanding senior secured term loan under the 2022 Credit Agreement in conjunction with the sale of the Abilene production facility.

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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 $1,150 and $1,618 as of March 31, 2026 and December 31, 2025, respectively, with $402 and $396 included in the “Line of Credit and current maturities of long-term debt” line item of our condensed consolidated financial statements as of March 31, 2026 and December 31, 2025, respectively.

We also have outstanding notes payable for capital expenditures in the amount of $109 and $130 as of June 30, 2026 and December 31, 2025, respectively, with $43 and $42 included in the “Line of Credit and current maturities of long-term debt” line item of our condensed consolidated financial statements as of June 30, 2026 and December 31, 2025, respectively.

The notes payable have monthly payments that range from $1 to $3 and an interest rate of approximately 6%.

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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, 2025 or three months ended March 31, 2026.

As of March 31, 2026, shares of our 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, 2025 or six months ended June 30, 2026.

As of June 30, 2026, 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.

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, and proceeds from sales of AMP credits will be adequate to meet our liquidity needs for at least the next twelve months.

If assumptions regarding our production, sales and subsequent collections from certain of our large customers, 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.

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Sources and Uses of Cash

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2026 and 2025:

Three Months Ended

Total cash provided by (used in):

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2026 and 2025:

Six Months Ended

Total cash (used in) provided by:

Operating activities

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Financing activities

Net increase (decrease) in cash

Net (decrease) increase in cash

Operating Cash Flows

During the three months ended March 31, 2026, net cash provided by operating activities totaled $2,905 compared to net cash used in operating activities of $8,037 during the prior year period.

The increase in net cash provided by operating activities during the current year period was primarily attributable to the absence of a significant decrease in customer deposits and a less significant increase in inventory in the current year period.

This was partially offset by a less significant increase in accounts payable in the current year period.

During the six months ended June 30, 2026, net cash used in operating activities totaled $871 compared to net cash used in operating activities of $3,516 during the prior year period.

The decrease in net cash used in operating activities during the current year period was primarily attributable to a decrease in the loss from continuing operations, a less significant increase in inventory, and an increase in accrued liabilities in the current year period.

This was partially offset by an increase in cash used to fund accounts receivable in the current year period.

Investing Cash Flows

During the three months ended March 31, 2026, net cash used in investing activities tot aled $2,688, comp ared to net cash used in investing activities of $916 during the prior year period.

During the six months ended June 30, 2026, net cash used in investing activities tot aled $3,142, comp ared to net cash used in investing activities of $430 during the prior year period.

The increase in net cash provided by investing activities as compared to the prior year period was primarily due to a net increase in purchases of property and equipment.

Financing Cash Flows

During the three months ended March 31, 2026, net cash provided by financing activities tot aled $270, co mpared to net cash provided by financing activities of $2,436 during the prior year period.

The decrease was primarily due to decreased net borrowings under the 2022 Credit Facility in the current year period.

During the six months ended June 30, 2026, net cash used in financing activities tot aled $6,485, co mpared to net cash provided by financing activities of $16,273 during the prior year period.

The decrease was primarily due to debt repayments under the 2022 Credit Facility in the current year period versus net borrowings in the prior year.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes in our critical accounting estimates during the three months ended March 31, 2026 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no material changes in our critical accounting estimates during the six months ended June 30, 2026 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2025.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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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-Q

Item 2. Management’s Discussion and Analysis