BROADWIND INC

None.** **

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Broadwind, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Broadwind, Inc. and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Advanced Manufacturing Production Tax Credits ** **

As described in Note 7 of the financial statements, in 2023, the Company recognized gross Advanced Manufacturing Production tax credits (AMP Credits) totaling $14,493, within the Heavy Fabrications segment. These AMP Credits were introduced as part of the Inflation Reduction Act (IRA), which was enacted on August 16, 2022. Eligible manufacturers of wind components qualify for the AMP Credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed. The credit applies to each component produced and sold in the U.S. beginning in 2023 through 2032. Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $0.03 per watt for each wind tower produced. In calculating the eligible credit, the Company relied on the megawatt rating provided by the customer. Manufacturers who qualify for the AMP Credits can apply to the Internal Revenue Service for cash refunds of the AMP Credits, sell the AMP Credits to third parties for cash, or apply the AMP Credits against taxable income. The Company recognized the AMP Credits as a reduction to cost of sales in the Company’s consolidated statement of operations for the year ended December 31, 2023. The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in the Company’s consolidated balance sheet as of December 31, 2023.

On December 21, 2023, the Company entered into an agreement to sell 2023 and 2024 AMP Credits to a third party. At that time, the Company sold a portion of the gross 2023 credits in the amount of $6,952 and recognized a 6.5% discount on the sale in the amount of $452, which was recognized in cost of sales. In addition, the Company wrote down the remaining receivable of $7,541 to net realizable value and recorded the expected loss on sale of $490 in cost of sales. The remaining 2023 AMP credit receivable was collected during the first quarter of 2024. The Company also incurred other miscellaneous administrative costs related to selling the credits in the amount of $254, $197 of which has been recorded as cost of sales, with the remaining capitalized and included in the “Prepaid expenses and other current assets” line item of the Company's consolidated financial statements at December 31, 2023.

The evaluation of the initial accounting, and subsequent sale of the AMP Credits involves judgement as there is no direct authoritative guidance under accounting principles generally accepted in the United States of America (US GAAP). Additionally, current IRS and Department of the Treasury regulations are in the proposed stages.

Changes in IRS and Department of the Treasury, or US GAAP guidance could have a significant impact on the accounting and presentation of AMP Credits in future periods.

We identified accounting for the AMP Credits as a critical audit matter because of the high degree of judgement and subjectivity involved in auditing management’s assertions related to the initial accounting for the AMP Credits, the subsequent sale of the AMP Credits, and the presentation and disclosure of the transactions related to the AMP Credits in the consolidated financial statements.

How the Critical Audit Matter Was Addressed in the Audit

The audit procedures performed related to the evaluation of Company management’s assertions regarding the initial accounting for the AMP Credits, the subsequent sale of the AMP Credits, and the presentation and disclosure the AMP Credits, included the following, among others:

/S/RSM US LLP

We have served as the Company's auditor since 2016.

Chicago, Illinois

March 5, 2024

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Broadwind, Inc. (the “Company”) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company’s most significant presence is within the U.S. wind energy industry, although the Company has increasingly diversified into other industrial markets. Within the U.S. wind energy industry, the Company provides products primarily to turbine manufacturers. The Company also provides precision gearing and heavy fabrications to a broad range of industrial customers for oil and gas (“O&G”), mining, steel and other industrial applications, in addition to supplying components for natural gas turbines. The Company hasthree reportable operating segments: Heavy Fabrications, Gearing, and Industrial Solutions.

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. Thetwo facilities have a combined annual tower production capacity of up to approximately 550 towers (1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power. The Company has expanded its production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, O&G and other infrastructure markets. The Company has designed and manufactures a mobile, modular pressure reducing system for the compressed natural gas virtual pipeline market. The Company manufactures components for buckets, shovels, car bodies, drill masts and other products that support mining and construction markets. In other industrial markets, the Company provides crane components, pressure vessels, frames and other structures.

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Gearing

The Company provides gearing, gearboxes and precision machined components to a broad set of customers in diverse markets including; surface and underground mining, wind energy, steel, material handling, infrastructure, onshore and offshore O&G fracking and drilling, marine, and other industrial markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair in Neville Island, Pennsylvania.

Industrial Solutions

The Company provides supply chain solutions, light fabrication, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market. The Company has recently expanded into the U.S. wind power generation market, by providing tower internals kitting solutions for on-site installations, as OEMs domesticate their supply chain due to lead time and reliability issues. The Company leverages a global supply chain to provide instrumentation & controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes & wiring, energy storage services and electromechanical devices. The Company also provides packaging solutions and fabricates panels and sub-assemblies to reduce customers’ costs, improve manufacturing velocity and reliability.

Liquidity

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, through its2022 Credit Facility (as defined and further discussed in Note10 “Debt and Credit Agreements” of these consolidated financial statements), equipment financing, access to the public and private debt and/or equity markets, and has the option to raise capital under the Company’s registration statement on Form S-3 (as discussed below), and proceeds from sales of Advanced Manufacturing Production tax credits (“AMP credits”) (discussed in Note7 “AMP Credits” of these consolidated financial statements). The Company uses the2022 Credit Facility to fund working capital requirements. Under the2022 Credit Facility, borrowings are continuous and all cash receipts are usually applied to the outstanding borrowed balance. As of* December 31, 2023*, cash totaled $1,099, a decrease of $11,633 from* December 31, 2022*. The Company had the ability to borrow up to $21,714 under the2022 Credit Facility as of* December 31, 2023*.

The Company also utilizes supply chain financing arrangements as a component of its funding for working capital, which accelerates receivable collections and helps to better manage cash flow. Under these agreements, the Company has agreed to sell certain of its accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the Company's consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense by the Company.

During the years ended* December*31,* 2023 and* December 31, 2022,the Company sold account receivables totaling $40,343 **and $93,245, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $858 and $1,431, respectively.

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Debt and finance lease obligations at* December 31, 2023* totaled $17,678, which includes current outstanding debt and finance lease obligations totaling $8,056. The Company's outstanding debt includes $6,135** outstanding from the senior secured term loan under the2022 Credit Facility. The Company had $4,657 drawn on the senior secured revolving credit facility as of December 31, 2023.

On* September 22, 2023,the Company filed a shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 12, 2023 (the “Form S-3”), replacing a prior shelf registration statement which expired on October 12, 2023.This shelf registration statement, which includes a base prospectus, allows the Company to offer any combination of securities described in the prospectus inone* or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

On* September 12, 2022,the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, the Company maysell from time to time through the Agents shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $12,000. The Company will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. During the year ended December 31, 2022,the Company issued 100,379 shares of the Company’s common stock under the Sales Agreement and the net proceeds (before upfront costs) to the Company from the sale of the Company’s common stock were approximately $323 after deducting commissions paid of approximately $9 and before deducting other expenses of $93.No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December31,* 2023. As of* December31,* 2023, shares of the Company’s common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement. Any additional shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and a424(b) prospectus supplement.

In* January 2023,the Company announced that it had entered into a supply agreement for wind tower purchases valued at approximately $175 million with a leading global wind turbine manufacturer. Under the terms of the supply agreement, order fulfillment is to occur beginning in2023* through year-end2024. In early* November 2023,the parties discussed their joint intent to shift approximately half of the contracted tower section orders initially planned for2024* into2025, while maintaining the total number of tower sections stipulated under the supply agreement.

The Company anticipates that current cash resources, amounts available under the2022 Credit Facility, sales of shares under the Sales Agreement, cash to be generated from operations and equipment financing, any potential proceeds from the sale of further Company securities under the Form S-3, and proceeds from sales of AMP credits will be adequate to meet the Company’s liquidity needs for at least the nexttwelve months.

Reclassifications

Certain prior year amounts, which arenot material, have been reclassified to conform to current year presentation in the consolidated financial statements and the notes to the consolidated financial statements.

Summary of Significant Accounting Policies

Management’s Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, and valuation allowances on deferred taxes. Although these estimates are based upon management’s best knowledge of current events and actions that the Company* may*undertake in the future, actual results could differ from these estimates.

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Cash

As of* December 31, 2023* and* December 31, 2022*, cash totaled $1,099 and $12,732, respectively. For the years ended* December 31, 2023and2022*, interest income was $8** **and $0, respectively.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are presumed to be classified as reductions of revenue in the Company’s statement of operations.

For substantially all tower sales within the Company’s Heavy Fabrications segment, as well as certain2023 sales within our Gearing segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer andnot available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company doesnot have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

During** 2023 and2022, the Company also recognized revenue over time, versus point in time, when products in the Heavy Fabrications segments hadno alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contract by the customer. Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the contract. Contract assets are recorded when performance obligations are satisfied but the Company isnot yet entitled to payment. The Company recognizes contract assets associated with this revenue which represents its rights to consideration for work completed butnot billed at the end of the period.

Cost of Sales

Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. These costs include operation, repair and maintenance of equipment, materials, direct and indirect labor and benefit costs, rent and utilities, maintenance, insurance, equipment rentals, freight, and depreciation. AMP credits and related discounts and administrative fees are also recognized in cost of sales. See “AMP Credits” discussion below in this “Summary of Significant Accounting Policies” for further details.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses include all corporate and administrative functions such as sales and marketing, legal, human resource management, finance, investor and public relations, information technology and senior management. These functions serve to support the Company’s current and future operations and provide an infrastructure to support future growth. Major expense items in this category include management and staff wages and benefits, share-based compensation and professional services.

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Accounts Receivable (A/R)

The Company generally grants uncollateralized credit to customers on an individual basis based upon the customer’s financial condition and credit history. Credit is typically on net30 day terms and customer deposits are frequently required at various stages of the production process to finance customized products and minimize credit risk.

Historically, the Company’s A/R is highly concentrated with a select number of customers. During the year ended* December 31, 2023*, the Company’sfive largest customers accounted for 65% of its consolidated revenues and 27% of outstanding A/R balances, compared to the year ended* December 31, 2022* when the Company’sfive largest customers accounted for 69% of its consolidated revenues and 43% of its outstanding A/R balances.

Allowance for Doubtful Accounts

Beginning* January 1, 2023,*the Company assessed and recorded an allowance for credit losses using the current expected credit loss (“CECL”) model. The adjustment for credit losses to management’s current estimate is recorded in net income as credit loss expense. All credit losses were on trade receivables and/or contract assets arising from the Company’s contracts with customers.

The Company selected a loss-rate method for the CECL model based on the relationship between historical write-offs of receivables and the underlying sales by major customers. Utilizing this model, a historical loss-rate is applied against the amortized cost of applicable assets, at the time the asset is established. The loss rate reflects the Company’s current estimate of the risk of loss (even when that risk is remote) over the expected remaining contractual life of the assets. The Company’s policy is to deduct write-offs from the allowance for credit losses account in the period in which the financial assets are deemed uncollectible. The adjustment for credit losses using this CECL model on accounts receivable and contract assets during the year ended* December**31,* 2023 wasnot material.

The allowance for credit losses for prior periods was prepared in accordance with legacy GAAP. Based upon past experience and judgment, the Company established an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considered a number of factors that, based on its collections experience, the Company believed would have an impact on its credit risk and the collectability of its accounts receivable. These factors included individual customer circumstances, history with the Company, the length of the time period during which the account receivable had been past due and other relevant criteria.

The Company monitors its collections and write-off experience to assess whether ornot adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes* mayimpact the collectability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may*impact the Company’s allowance for doubtful accounts and its financial results.

AMP Credits

The Company accounts for government assistance that isnot subject to the scope of ASC740 using a grant accounting model, by analogy to International Accounting Standards20, Accounting for Government Grants and Disclosure of Government Assistance, and recognizes such grants when it has reasonable assurance that it will comply with the grant’s conditions and that the grant will be received. Income-based grants are initially recognized as “AMP credit receivable” and as a reduction to cost of sales. The Company recognizes grants expected to be received directly from a government entity at their stated value. When the Company expects to transfer grants to athird party, it recognizes the grants at, or adjusts their carrying value to, the amount expected to be received from the transaction. Proceeds received from income-based grants are presented as cash inflows from operating activities.

Inventories

Inventories are stated at the lower of cost or net realizable value. Net realizable value is the value that can be realized upon the sale of the inventory less a reasonable estimate of selling costs. Cost is determined either based on thefirst-in,first-out (“FIFO”) method, or on a standard cost basis that approximates the FIFO method. Any excess of cost over net realizable value is included in the Company’s inventory allowance. Net realizable value of inventory, and management’s judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period, contract terms and usefulness.

Inventories consist of raw materials, work-in-process and finished goods. Raw materials consist of components and parts for general production use. Work-in-process consists of labor and overhead, processing costs, purchased subcomponents and materials purchased for specific customer orders. Finished goods consist of components purchased fromthird parties as well as components manufactured by the Company that will be used to produce final customer products.

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Long-Lived Assets

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is recognized using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes, and generally using an accelerated method for income tax reporting purposes. Depreciation expense related to property and equipment for the years ended* December 31, 2023and2022* was $5,719 and $5,335, respectively. Expenditures for additions and improvements are capitalized, while replacements, maintenance and repairs that donot improve or extend the useful lives of the respective assets are expensed as incurred. Property or equipment sold or disposed of is removed from the respective property accounts, with any corresponding gains and losses recorded within the operating results of the Company’s consolidated statement of operations.

The Company reviews property and equipment and other long-lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that carrying amounts* may**not* be recoverable. Asset recoverability isfirst measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired.

In evaluating the recoverability of long-lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets. If the Company’s fair value estimates or related assumptions change in the future, the Company* maybe required to record impairment charges related to property and equipment and other long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value. See Note8,* “Long-Lived Assets” of these consolidated financial statements for further discussion of long-lived assets.

Leases

The Company leases various property and equipment under operating lease arrangements. The Company recognizes operating lease assets and liabilities on the balance sheet. Rent expense for these types of leases is recognized on a straight-line basis over the lease term. In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions. The cost basis and accumulated amortization of assets recorded under finance leases are included in property and equipment, while the liabilities are included in finance lease obligations.

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Warranty Liability

The Company provides warranty terms that generally range fromone tofive years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery fromthird parties for amounts paid to customers under warranty provisions. Warranty liability is recorded in accrued liabilities within the consolidated balance sheet. The Company estimates the warranty accrual based on various factors, including historical warranty costs, current trends, product mix and sales. The changes in the carrying amount of the Company’s total product warranty liability for the years ended* December 31, 2023and2022* were as follows:

Income Taxes

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely thannot that some portion or all of the deferred tax assets willnot be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted.

In connection with the preparation of its consolidated financial statements, the Company is required to estimate its income tax liability for each of the tax jurisdictions in which the Company operates. This process involves estimating the Company’s actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for income tax reporting and financial reporting purposes. The Company also recognizes as deferred income tax assets the expected future income tax benefits of net operating loss (“NOL”) carryforwards. In evaluating the realizability of deferred income tax assets associated with NOL carryforwards, the Company considers, among other things, expected future taxable income, the expected timing of the reversals of existing temporary reporting differences and the expected impact of tax planning strategies that* may*be implemented to prevent the potential loss of future income tax benefits. Changes in, among other things, income tax legislation, statutory income tax rates or future taxable income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause its income tax provision to vary significantly among financial reporting periods.

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The Company also accounts for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. The Company follows the applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition related to the uncertainty in these income tax positions.

Share-Based Compensation

The Company grants incentive stock options, restricted stock units (“RSUs”) and/or performance awards (“PSUs”) to certain officers, directors, and employees. The Company accounts for share-based compensation related to these awards based on the estimated fair value of the equity award and recognizes expense ratably over the required vesting term of the award. The expense associated with PSUs is also based on the probability of achieving embedded targets. Awards that are based on a fixed number of shares are treated as equity while awards that are based on a fixed amount of dollars are treated as liabilities. See Note15 “Share-Based Compensation” of these consolidated financial statements for further discussion of the Company’s share-based compensation plans, the nature of share-based awards issued and the Company’s accounting for share-based compensation.

Net Income Per Share

The Company presents both basic and diluted net income (loss) per share. Basic net income (loss) per share is based solely upon the weighted average number of common shares outstanding and excludes any dilutive effects of restricted stock, options, warrants and convertible securities. Diluted net income (loss) per share is based upon the weighted average number of common shares and common-share equivalents outstanding during the year excluding those common-share equivalents where the impact to basic net income (loss) per share would be anti-dilutive.

2. REVENUES

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

The following table presents the Company’s revenues disaggregated by revenue source for the years ended* December 31, 2023and2022*:

The Company’s revenue is generally recognized at a point in time, typically when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

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For substantially all tower sales within the Company’s Heavy Fabrications segment as well as certain2023 sales within our Gearing segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment. The Company recognizes revenue under these arrangements only when there is a substantive reason for the arrangement, the ordered goods are identified separately as belonging to the customer andnot available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company doesnot have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance. During the year ended* December**31,* 2023, the Company recognized $5,370 of revenue within the Gearing segment under terms included in bill and hold sales arrangements.

During the years ended* December31,* 2023 and2022, the Company recognized a portion of revenue within the Heavy Fabrications segments over time, as the products hadno alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts. Within the Heavy Fabrications segment, the Company recognized revenue for contracts that meet over time criteria of $11,033 and $15,117 for the years ended* December31,* 2023 and2022, respectively. Contract assets are recorded when performance obligations are satisfied but the Company isnot yet entitled to payment. Contract assets represent the Company’s rights to consideration for work completed butnot billed at the end of the period.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.

The Company doesnot disclose the value of the unsatisfied performance obligations for contracts with an original expected length ofone year or less.

3**. EARNINGS PER SHARE**

The following table presents a reconciliation of basic and diluted earnings per share for the years ended* December 31, 2023and2022* as follows:

(1) Restricted stock units granted and outstanding of 822,737** *are excluded from the computation of diluted earnings for the year ended December 31, 2022*due to the anti-dilutive effect as a result of the Company’s net loss for that period.

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4. RECENT ACCOUNTING PRONOUNCEMENTS

The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year* maybe applicable to it, the Company believes thatnone* of the new standards have a significant impact on its consolidated financial statements.

In* June 2016,the Financial Accounting Standards Board issued Accounting Standards UpdateNo.* 2016-13, “Financial Instruments-Credit Losses (Topic326),” which replaces the current incurred loss impairment methodology for most financial assets with the CECL methodology. The series of new guidance amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables and contract assets. The guidance should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. The guidance is effective for annual periods beginning after* December 15, 2022,including interim periods within those fiscal years, with early adoption permitted. The Company implemented CECL during the year ended December**31,* 2023. The impact on the Company's financial statements wasnot material. See Note1, “Description of Business and Summary of Significant Accounting Policies,” of these consolidated financial statements for a further discussion of CECL.

In* November 2023,the Financial Accounting Standards Board issued Accounting Standards UpdateNo.* 2023-07, “Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures,” which requires additional disclosure of significant segment expenses on an annual and interim basis. This guidance will be applied retrospectively and will be effective for the annual periods beginning the year ended* December 31, 2024,and for interim periods beginning January 1, 2025.The Company doesnot* expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In* December 2023,the Financial Accounting Standards Board issued Accounting Standards UpdateNo.* 2023-09, “Income Taxes (Topic740): Improvements to Income Tax Disclosures,” which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This guidance will be effective for the annual periods beginning the year ended* December 31, 2025.The Company doesnot* expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

5**. ALLOWANCE FOR DOUBTFUL ACCOUNTS**

The activity in the accounts receivable allowance from operations for the years ended* December 31, 2023and2022* consists of the following:

6. INVENTORIES

The components of inventories as of* December 31, 2023and2022* are summarized as follows:

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7. AMP CREDITS

During2023, the Company recognized gross AMP credits totaling $14,493, within the Heavy Fabrications segment. These AMP credits were introduced as part of the IRA, which was enacted on* August 16, 2022.The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components. Manufacturers of wind components qualify for the AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed. The credit applies to each component produced and sold in the U.S. beginning in2023* through2032. Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $0.03 per watt for each wind tower produced. In calculating the eligible credit, the Company relied on the megawatt rating provided by the customer. Manufacturers who qualify for the AMP credits can apply to the Internal Revenue Service for cash refunds of the AMP credits or sell the AMP credits tothird parties for cash, or apply the AMP credits against taxable income. The Company recognized the AMP credits as a reduction to cost of sales in the Company’s consolidated statements of operations for the year ended* December31,* 2023. The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in the Company's consolidated balance sheet as of* December31,* 2023.

On* December 21, 2023,the Company entered into an agreement to sell2023* and2024 AMP credits to athird party. At that time, the Company sold a portion of the gross2023 credits in the amount of $6,952 and recognized a 6.5% discount on the sale in the amount of $452 which was recognized in cost of sales. In addition, the Company wrote down the remaining receivable of $7,541 to net realizable value and recorded the expected loss on sale of $490 in cost of sales. The remaining2023 AMP credit receivable was collected during thefirst quarter of2024. The Company also incurred other miscellaneous administrative costs related to selling the credits in the amount of $254, $197 of which has been recorded as cost of sales, with the remaining capitalized and included in the “Prepaid expenses and other current assets” line item of the Company's consolidated financial statements at* December**31,* 2023.

8. LONG-LIVED ASSETS

The cost basis and estimated lives of property and equipment as of* December 31, 2023and2022* are as follows:

As of* December 31, 2023*, the Company had commitments of $1,523 related to the completion of projects within construction in progress.

During the year ended* December 31, 2023,the Company didnot* identify any impairment triggering events within its segments. As a result, no impairment charges were recorded for the year ended* December 31, 2023.*

During* November 2022,the Company identified a triggering event associated with an expected operating loss within the Heavy Fabrications segment during the year ended December 31, 2022.Accordingly, the Company performed an undiscounted cash flow analysis as of November 30, 2022and determined that the undiscounted future cash flows exceeded the asset group's carrying value. Additionally, there wereno* changes in facts or circumstances following the* November 30, 2022assessment through December 31, 2022,which would alter the asset group’s initial undiscounted future cash flows or carrying value estimates. As a result,no impairment charge was recorded for the Heavy Fabrications asset group for the year ended December 31, 2022.*

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As of* December 31, 2023and2022*, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships. Estimated useful lives for intangibles assets range from** 6 to 20 years. Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 2 to 4 years. Amortization expense was $664 and $725 for the years ended December 31, 2023and2022, respectively. As of* December 31, 2023*, estimated future amortization expense is as follows:

9. ACCRUED LIABILITIES

Accrued liabilities as of* December 31, 2023and2022* consisted of the following:

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10. DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of* December 31, 2023and2022* consisted of the following:

As of* December 31, 2023*, future annual principal payments on the Company’s outstanding debt obligations were as follows:

Credit Facilities

On* August 4, 2022,the Company entered into a credit agreement (as amended, the“2022* Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), which replaced its prior credit facility and provided the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which* maybe further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, as amended, the“2022* Credit Facility”). The proceeds of the2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. Deferred financing costs related to the2022 Credit Facility were $359 primarily related to the revolving credit loan, which is net of accumulated amortization of $141, at* December 31, 2023.Deferred financing costs related to the2022* Credit Facility were $414 which is net of accumulated amortization of $38, at* December 31, 2022.These costs are included in the “Other assets” line item of the Company's consolidated financial statements at December**31,* 2023 and* December 31, 2022.*

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On* February 8, 2023,the Company executed AmendmentNo.* 1 to Credit Agreement and Limited Waiver which** waived the Company’sfourth quarter minimum EBITDA (as defined in the2022 Credit Agreement) requirement for the period ended December 31, 2022,amended the Fixed Charge Coverage Ratio (as defined in the2022 Credit Agreement) requirements for thetwelve-month period ending* January 31, 2024through and including June 30, 2024and eachtwelve*-month period thereafter, and amended the minimum EBITDA requirements applicable to thetwelve-month periods ending* March 31, 2023,** June 30, 2023,** September 30, 2023,and December 31, 2023.*

The2022 Credit Agreement contains customary covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with others or dispose of assets, change the nature of its business, and enter into transactions with affiliates. The initial term of the revolving credit facility matures* August 4, 2027.The term loan also matures on August 4, 2027,with monthly payments based on an84*-month amortization.

As of* December 31, 2023*, there was $10,792** of outstanding indebtedness under the2022 Credit Facility, with the ability to borrow an additional $21,714. As of December*31,* 2023, the Company was in compliance with all financial covenants under the2022 Credit Facility. As of* December 31, 2023,the effective interest rate of the senior secured revolving credit facility was 7.64% and the effective rate of the senior secured term loan was 7.89%. As of December 31, 2022,*the effective interest rate of the senior secured revolving credit facility was 6.55% and the effective rate of the senior secured term loan was 6.80%.

Other

The Company has outstanding notes payable for capital expenditures in the amount of $1,361 and $1,094 as of* December 31, 2023and2022*, respectively, with $163 and $88 included in the “Line of credit and current maturities of long-term debt” line item of the Company’s consolidated financial statements as of* December 31, 2023and2022*, respectively. The notes payable have monthly payments that range from $3 to $15 and an interest rate of 6%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates in* September**2028.*

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11. LEASES

The Company leases various property and equipment under operating lease arrangements. The Company recognizes operating lease assets and liabilities on the balance sheet and discloses key information regarding leasing arrangements. The Company has elected to apply the short-term lease exception to all leases ofone year or less.

As of* December 31, 2023*, the right-of-use (“ROU”) asset had a balance of $15,593 which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $1,851 and $15,888, respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these consolidated financial statements. As of* December 31, 2022,the ROU asset had a balance of $16,396 and current and non-current lease liabilities relating to the ROU asset of $1,882* **and $16,696, respectively. The discount rates used for leases accounted for under Topic842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

Lease terms generally range from 3 to 15** years with renewal options for extended terms. Some of the Company’s facility leases include options to renew. The exercise of the renewal options is at the Company’s discretion. Therefore, the majority of renewals to extend the lease terms arenot included in ROU assets and lease liabilities as they arenot reasonably certain of exercise. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them. Certain leases contain rent escalation clauses that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the lease term. Operating rental expense for the years ended December 31, 2023and2022 was $4,201** **and $4,253, respectively.

In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions. Finance rental expense for the years ended* December 31, 2023and2022* was $1,790** **and $1,639, respectively.

Amortization expense recorded in connection with assets recorded under finance leases was $1,263 and $1,172 for the years ended* December 31, 2023and2022*, respectively.

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

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is $5 and $20 for the years ended* December 31, 2023and2022,* respectively.

As of* December 31, 2023*, future minimum lease payments under finance leases and operating leases were as follows:

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12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is party to a variety of legal proceedings or claims that arise in the ordinary course of its business. The Company accrues for costs related to loss contingencies when such costs are probable and reasonably estimable. As of* December 31, 2023*, the Company isnot aware of any material pending legal proceedings or threatened litigation that would have a material adverse effect individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows, althoughno assurance can be given with respect to the ultimate outcome of pending actions. Due to the inherent uncertainty of litigation, there can beno assurance that the resolution of any particular claim or proceeding wouldnot have a material adverse effect on the Company’s results of operations, financial condition or cash flows. It is possible that ifone or more litigation matters were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability.

Environmental Compliance and Remediation Liabilities

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Also, certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon anyone or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties* may*also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.

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Collateral

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations.

Warranty Liability

The Company provides warranty terms that generally range fromone tofive years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery fromthird parties for amounts paid to customers under warranty provisions.

Liquidated Damages

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and dependent on actual losses sustained by the customer. When the damages are determined to be probable and estimable, the damages are recorded as a reduction to revenue. During2023 and2022, the Company incurred** liquidated damages of $84 and $0, respectively, and there was a reserve for liquidated damages of $84 and $0 as of December 31, 2023 and* December 31, 2022,*respectively.

Workers’ Compensation Reserves

The Company entered into a guaranteed workers’ compensation cost program at the beginning of thethird quarter of2016. The reserve prior to2016 is immaterial. Although the ultimate outcome of these matters* mayexceed the amounts recorded and additional losses maybe incurred, the Company doesnot* believe that any additional potential exposure for such liabilities will have a material adverse effect on the Company’s consolidated financial position or results of operations.

Health Insurance Reserves

As of* December 31, 2023and2022*, the Company had $742 and $360, respectively, accrued for health insurance liabilities. The Company self-insures for its health insurance liabilities, including establishing reserves for self-retained losses. Historical loss experience combined with actuarial evaluation methods and the application of risk transfer programs are used to determine required health insurance reserves. The Company takes into account claims incurred butnot reported when determining its health insurance reserves. Health insurance reserves are included in accrued liabilities. While the Company’s management believes that it has adequately reserved for these claims, the ultimate outcome of these matters* mayexceed the amounts recorded and additional losses may*be incurred.

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Other

As of* December 31, 2023*, approximately 18% of the Company’s employees were covered bytwo collective bargaining agreements with local unions at the Company’s Cicero, Illinois and Neville Island, Pennsylvania locations. During* November 2022,the Company negotiated afour-year collective bargaining agreement with the Neville Island union and it is expected to remain in effect through October 2026.Afour-year collective bargaining agreement in regards to the Cicero, Illinois facility was negotiated in February 2022and is expected to remain in effect through February 2026.*** **

13**. FAIR VALUE MEASUREMENTS**

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value intoone ofthree different levels depending on the assumptions (i.e., inputs) used in the valuation. Level1 provides the most reliable measure of fair value while Level3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that arenot active for which significant inputs are observable, either directly or indirectly. For the Company’s corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently.

Level3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash, A/R, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

The Company entered into an interest rate swap in* June 2019to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note10,* “Debt and Credit Agreements,” of these consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date. The interest rate swap expired in* February 2022.*

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14. INCOME TAXES

The provision for income taxes for the years ended* December 31, 2023and2022* consists of the following:

During the year ended* December 31, 2023*, the Company recorded an expense for income taxes of $241, compared to an expense for income taxes of $35 during the year ended* December 31, 2022*. On* August 16, 2022,Congress enacted the Inflation Reduction Act which includes AMP credits for manufacturers of eligible components, including wind and solar components produced and sold in the US from2023* through2032. These credits will haveno impact on income tax expense.

The total change in the deferred tax valuation allowance was $1,957** and $2,549 for the years ended December 31, 2023and2022, respectively. The changes in the deferred tax valuation allowance in2023 and2022 were primarily the result of increases to the deferred tax assets pertaining to federal and state NOLs. Management believes that significant uncertainty exists surrounding the recoverability of deferred tax assets. As a result, the Company recorded a valuation allowance against the remaining deferred tax assets.

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The tax effects of the temporary differences and NOLs that give rise to significant portions of deferred tax assets and liabilities are as follows:

Valuation allowances of $76,516 and $74,559 have been provided for deferred income tax assets for which realization is uncertain as of* December 31, 2023and2022*, respectively. A reconciliation of the beginning and ending amounts of the valuation is as follows:

As of* December 31, 2023*, the Company had federal and unapportioned state NOL carryforwards of approximately $290,233 of which $227,781** will begin to expire in2026. The majority of the NOL carryforwards will expire in various years from 2028 through2037. NOLs generated after* January 1, 2018willnot* expire.

The reconciliation between the statutory U.S. federal income tax rate and the Company’s effective income tax rate is as follows:

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The Company accounts for the uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken, or expected to be taken, in a tax return that is required to be met before being recognized in the financial statements. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. As of* December 31, 2023*, the Company hadno unrecognized tax benefits that could impact the income tax expense.

The Company files income tax returns in the U.S. federal and state jurisdictions. As of* December 31, 2023*, with few exceptions, the Company isno longer subject to federal or state income tax examinations by taxing authorities for years before* December 31, 2019;however, taxing authorities have the ability to adjust NOL carryforwards in open tax years that mayhave been carried forward from closed years. The Company’s2008* and2009 federal tax returns were examined in2011 andno material adjustments were identified related to any of the Company’s tax positions. Although these periods have been audited, they continue to remain open until all NOLs generated in those tax years have either been utilized or expire.

Section382 of the Internal Revenue Code of1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that* maybe used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses maybe limited, under this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section382,* the Company has determined that aggregate changes in stock ownership have resulted in an annual limitation of $14,284 on NOLs and built-in losses available for utilization based on the triggering event in2010. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future due to additional changes in stock ownership, the Company’s income could be subject to U.S. corporate income tax earlier than it would if the Company were able to use NOL carryforwards and built-in losses without such annual limitation, which could result in lower profits and the loss of the majority of the benefits from these attributes.

In* February 2013,the Company adopted a Stockholder Rights Plan, which was amended in February 2016and approved by our stockholders (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under Section382* of the IRC. On* February 7, 2019,the Board of Directors (the “Board”) approved an amendment extending the Rights Plan for an additional three years, which was subsequently approved by the Company’s stockholders at the2019* Annual Meeting of Stockholders held on* April 23, 2019 (the“2019* Annual Meeting of Stockholders”). On* February 3, 2022,the Board approved an amendment which included an extension of the Rights Plan for an additional three years, which was subsequently approved by the Company's stockholders at the2022* Annual Meeting of Stockholders.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend ofone preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on* February22,* 2013. Since the record date, the Company has issuedone Right with each newly issued share of its common stock. Until the distribution date (unless earlier redeemed or exchanged or upon expiration of the Rights, as applicable), the Rights will be evidenced by certificates of the Company's common stock and will be transferred only with such certificates. Each Right entitles its holder to purchase from the Companyone one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $7.26 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of* February12,* 2013 willnot trigger the preferred share purchase rights unless they acquire additional shares after that date.

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15. SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plan

The Company has granted incentive stock options and other equity awards pursuant to previously Board approved equity incentive plans. Most recently, the Company has granted equity awards pursuant to the Broadwind Energy, Inc.2015 Equity Incentive Plan, which was approved by the Board in* February 2015and by the Company’s stockholders in April 2015.On February 19, 2019,the Board approved an Amended and Restated2015* Equity Incentive Plan (as amended, the*“2015* EIP,”), which, among other things, increased the number of shares of our common stock authorized for issuance under the2015 EIP from 1,100,000 to 2,200,000. The amendment and restatement of the2015 EIP was approved by the Company’s stockholders at the2019 Annual Meeting of Stockholders. On* February 7, 2021,the Board approved the Second Amendment to the Amended and Restated2015* Equity Incentive Plan which, among other things, increased the number of shares of our common stock authorized for issuance under the2015 EIP from 2,200,000 to 3,200,000. The Second Amendment to the amendment and restatement of the2015 EIP was approved by the Company’s stockholders at the2021 Annual Meeting of Stockholders. On* March**2,* 2023, the Board approved the Third Amendment to the Amended and Restated2015 Equity Incentive Plan which, among other things, increased the number of shares of our common stock authorized for issuance under the2015 EIP from 3,200,000 to 4,700,000. The Third Amendment to the amendment and restatement of the2015 EIP was approved by the Company’s stockholders at the2023 Annual Meeting of Stockholders.

The purposes of the Company’s equity incentive plans are (a) to align the interests of the Company’s stockholders and recipients of awards by increasing the proprietary interest of such recipients in the Company’s growth and success; (b) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors and independent contractors; and (c) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the2015 EIP, the Company* maygrant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of Section422* of the IRC); (iii) stock appreciation rights; (iv) restricted stock and restrictive stock units; and (v) performance awards.

Stock Options. The exercise price of stock options granted under the2015 EIP is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that* may*range fromone tofive years from the date of grant. Additionally, stock options expireten years after the date of grant. The fair value of stock options granted is expensed ratably over their vesting term.

Restricted Stock Units (RSUs). The granting of RSUs is provided for under the2015 EIP. RSUs generally contain a vesting period ofone tofive years from the date of grant. The fair value of each RSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the vesting term of the RSU award.

Performance Awards (PSUs). The granting of PSUs is provided for under the2015 EIP. Vesting of PSUs is conditioned upon the Company meeting applicable performance measures over the performance period. The fair value of each PSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the term of the PSU award plan.

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The2015 EIP reserves 4,700,000** shares of the Company’s common stock. As of December 31, 2023,2,187,843 shares of common stock reserved for issuance pursuant to stock options and RSU awards granted under the2015 EIP had been issued in the form of common stock and 687,206 **shares of common stock are issued and unvested.

There wasno stock option activity during the years ended* December 31, 2023* and2022 andno stock options were outstanding as of* December 31, 2023and2022.*

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The following table summarizes information with respect to outstanding RSUs and PSUs accounted for as equity awards as of* December 31, 2023and2022*:

RSUs and PSUs are generally subject to ratable vesting over athree-year period. Compensation expense related to these service and performance based awards is generally recognized on a straight-line basis over the vesting period. During the years ended* December 31, 2023and2022*, the Company utilized a forfeiture rate of 25%, based on historical activity, for estimating the forfeitures of stock compensation granted.

During the year ended* December 31, 2022,the Company recorded share-based compensation expense in the amount of $619 for PSUs treated as liability awards that were settled in shares of the Company’s stock in2023.* The liability is recognized in the “Accrued liabilities” line item of the Company’s condensed consolidated balance sheet and has a balance of $619 as of* December 31, 2022.The following table summarizes share-based compensation expense, net of taxes withheld, included in the Company’s consolidated statements of operations for the years ended December 31, 2023and2022* as follows:

As of* December 31, 2023*, the Company estimates that pre-tax compensation expense for all unvested share-based RSUs and PSUs in the amount of approximately $1,467** will be recognized through the year **2025. The Company expects to satisfy the future distribution of shares of restricted stock by issuing new shares of common stock.

16. SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker.

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The Company’s segments and their product offerings are summarized below:

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. Thetwo facilities have a combined annual tower production capacity of up to approximately 550 towers (1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power. The Company has expanded its production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and OEM components utilized in surface and underground mining, construction, material handling, O&G and other infrastructure markets. The Company has designed and manufactures a mobile, modular pressure reducing system for the compressed natural gas virtual pipeline market. The Company manufactures components for buckets, shovels, car bodies, drill masts and other products that support mining and construction markets. In other industrial markets, the Company provides crane components, pressure vessels, frames and other structures.

Gearing

The Company provides gearing, gearboxes and precision machined components to a broad set of customers in diverse markets including; surface and underground mining, wind energy, steel, material handling, infrastructure, onshore and offshore oil and gas fracking and drilling, marine, and other industrial markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair in Neville Island, Pennsylvania.

Industrial Solutions

The Company provides supply chain solutions, light fabrication, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market. The Company has recently expanded into the U.S. wind power generation market, by providing tower internals kitting solutions for on-site installations, as OEMs domesticate their supply chain due to lead time and reliability issues. The Company leverages a global supply chain to provide instrumentation & controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes & wiring, energy storage services and electromechanical devices. The Company also provides packaging solutions and fabricates panels and sub-assemblies to reduce customers’ costs, improve manufacturing velocity and reliability.

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Corporate and Other

“Corporate” includes the assets and SG&A expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results.

The accounting policies of the reportable segments are the same as those referenced in Note1, “Description of Business and Summary of Significant Accounting Policies” of these consolidated financial statements. Summary financial information by reportable segment is as follows:

The Company generates revenues entirely from transactions completed in the U.S. and its long-lived assets are all located in the U.S. All intercompany revenue is eliminated in consolidation. During2023,one customer accounted for more than10% of total net revenues. The customer, reported within the Heavy Fabrications** segment, accounted for revenues of $88,144. During2022, two customers accounted for more than10% of total net revenues. The customers, reported within the Heavy Fabrications segment, accounted for revenues of $64,625 and $20,336, respectively. During the years ended December 31, 2023and2022, five customers accounted for 65% and 69%, respectively, of total net revenues.

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17. EMPLOYEE BENEFIT PLANS

Retirement Savings and Profit Sharing Plans

Retirement Savings and Profit Sharing Plans

The Company offers a401(k) retirement savings plan to all eligible employees who* mayelect to contribute a portion of their salary on a pre-tax basis, subject to applicable statutory limitations. As of December 31, 2023*, all employees were eligible to receive safe harbor matching contributions equal to 100% of thefirst 3% of the participant’s elective deferral contributions and 50% of the next 2% of the participant’s elective deferral contributions. The Company has the discretion, subject to applicable statutory requirements, to fund any matching contribution with a contribution to the plan of the Company’s common stock. The Company periodically evaluates whether to fund the matching contribution in cash or in the Company’s common stock. Under the plan, elective deferrals and basic Company matching is 100% vested at all times.

For the years ended* December 31, 2023and2022*, the Company recorded expense under these plans of approximately $1,394 and $1,247, respectively.

Deferred Compensation Plan

The Company maintains a deferred compensation plan for certain key employees and nonemployee directors, whereby certain wages earned, compensation for services rendered, and discretionary company-matching contributions* maybe deferred and deemed to be invested in the Company’s common stock. Changes in the fair value of the plan liability are recorded as charges or credits to compensation expense. Compensation income (expense) associated with the deferred compensation plan recorded during the years ended December 31, 2023and2022* was $8** and $(1). The fair value of the plan liability to the Company is included in accrued liabilities in the Company’s consolidated balance sheets. As of December 31, 2023and2022, the fair value of plan liability to the Company was $23** **and $15, respectively.

In addition to the employee benefit plans described above, the Company participates in certain customary employee benefits plans, including those which provide health and life insurance benefits to employees.

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18. QUARTERLY FINANCIAL SUMMARY (UNAUDITED)

The following table provides a summary of selected financial results of operations by quarter for the years ended* December 31, 2023and2022* as follows:

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INDEX TO EXHIBITS

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the fifth day of March, 2024 .

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons (including a majority of the board of directors) on behalf of the registrant and in the capacities and on the dates indicated.