BROADWIND INC

Previous wording

We received $28,996 in new orders in the first quarter of 2024, down from $39,602 in the first quarter of 2023. Within our Heavy Fabrications segment, wind tower orders decreased compared to the prior year quarter primarily due to the timing of tower orders. Partially offsetting this decrease was an 18% increase in industrial fabrication orders primarily due to improved demand from mining customers.** **Gearing segment orders decreased 16% from the prior year period primarily due to reduced demand from oil and gas (“O&G”) customers, partially offset by increased demand from mining customers and the timing of orders from aftermarket wind customers. Orders within our Industrial Solutions segment increased 5% as compared to the prior year quarter primarily due to an increase in orders associated with new gas turbine projects, partially offset by reduced orders associated with aftermarket projects.

Current wording

We received $18,372 in new orders in the second quarter of 2024, down from $25,361 in the second quarter of 2023. Within our Heavy Fabrications segment, industrial fabrication orders decreased 47%, primarily due to reduced demand for our Pressure Reducing Systems (“PRS”) units. Partially offsetting this was an increase in orders primarily due to the timing of orders associated with wind repowering projects. Gearing segment orders decreased 19% from the prior year period primarily due to reduced demand from industrial and steel customers. Orders within our Industrial Solutions segment decreased 37% compared to the prior year quarter primarily due to a reduction in orders associated with aftermarket projects.

Previous wording

We recognized revenue of $37,616 in the first quarter of 2024, down 23% compared to the first quarter of 2023.** Within the Heavy Fabrications segment wind tower revenue decreased 40% from the prior year period primarily due to a 44% decrease in tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Gearing segment revenue decreased 30% relative to the comparable prior year period primarily due to reduced shipments for industrial, mining, and O&G customers.**Industrial Solutions segment revenue increased by 47% from the prior year period primarily due to the timing of shipments of new and aftermarket gas turbine content.

Current wording

We recognized revenue of $36,452 in the second quarter of 2024, down 28% compared to the second quarter of 2023. Within the Heavy Fabrications segment wind tower revenue decreased 48% from the prior year period primarily due to a decrease in tower sections sold** **as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Gearing segment revenue decreased 5% relative to the comparable prior year period primarily due to reduced shipments within most markets served. Industrial Solutions segment revenue increased by 3% from the prior year period primarily due to increased shipments of aftermarket gas turbine content.

Previous wording

We recorded net income of $1,510 or $0.07** **per share in the first quarter of 2024, compared to net income of $769 or $0.04 per share in the first quarter of 2023. This increase in net income was primarily attributable to a more profitable mix of product sold, the absence of proxy-contest related expenses that were recognized in the prior year quarter and higher sales within our Industrial Solutions segment. Partially offsetting this increase was the impact of lower sales within our Gearing and Heavy Fabrication segments.

Current wording

We recorded net income of $482 or $0.02 per share in the second quarter of 2024, compared to net income of $1,415 or $0.07 per share in the second quarter of 2023. This decrease in net income was primarily attributable to lower tower sales within our Heavy Fabrications segment and the corresponding decrease in the Advanced Manufacturing Production tax credits (“AMP credits”) earned. This was partially offset by the absence of proxy-contest related expenses that were recognized in the prior year quarter.

Previous wording

Revenues decreased by** $11,257 **as compared to the prior year period primarily due to lower sales within the Heavy Fabrications and Gearing segments, partially offset by increased sales within the Industrial Solutions segment. Wind tower revenue decreased 40% from the prior year period primarily due to a 44% decrease in tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Industrial Solutions segment revenue increased 47% from the prior year period primarily due to the timing shipments of new and aftermarket gas turbine content. Gearing segment revenue decreased 30% relative to the comparable prior year period primarily due to reduced shipments for industrial, mining and O&G customers.

Current wording

Revenues decreased by $14,391 as compared to the prior year period primarily due to lower sales within the Heavy Fabrications and Gearing segments, partially offset by increased sales within the Industrial Solutions segment. Wind tower revenue decreased 48% from the prior year period primarily due to a 58% decrease in tower sections sold** **as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Industrial Solutions segment revenue increased 3% from the prior year period primarily due to the increased shipments of aftermarket gas turbine content. Gearing segment revenue decreased 5% relative to the comparable prior year period, reflective of reduced shipments within most markets served.

Previous wording

Gross profit decreased by $339 when compared to the prior year period, primarily due to lower sales, partially offset by a more profitable mix of product sold. Operating expenses decreased from the prior year period primarily as a result of the absence of proxy-contest related expenses that were recognized in the prior year quarter.

Current wording

Gross profit decreased by $3,106 when compared to the prior year period, primarily due to lower sales,** **partially offset by reduced overhead costs. Operating expenses decreased from the prior year period primarily as a result of the absence of proxy-contest related expenses that were recognized in the prior year period.

Previous wording

Within our Heavy Fabrications segment, wind tower orders decreased significantly compared to the prior year period primarily due to the timing of tower orders. Partially offsetting this decrease in wind tower orders was an 18% increase in industrial fabrication orders in the current year quarter primarily due to higher demand from mining customers. Segment revenues decreased by 30% during the three months ended March 31, 2024 primarily due to a 40% decrease in wind tower revenue as a result of a 44% decrease in tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Partially offsetting the impact of lower tower sales were higher shipments of our Pressure Reducing Systems (“PRS”)** **units in the current year quarter.

Current wording

Within our Heavy Fabrications segment, wind tower orders decreased compared to the prior year period primarily due to the timing of tower orders. Additionally, industrial fabrication orders decreased by 19% in the current year period primarily due to reduced demand for our PRS units, partially offset by improved demand from mining and industrial customers. Segment revenues decreased by 36% during the six months ended June 30, 2024 primarily due to a 44% decrease in wind tower revenue. The decrease in wind revenue was primarily a result of less tower sections sold as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025.

Previous wording

Heavy Fabrications segment operating results decreased by $744 as compared to the prior year period. The decrease in operating performance was primarily a result of lower tower sales and the corresponding reduction in Advanced Manufacturing Production tax credits (“AMP credits”) recognized. This was partially offset by higher shipments of PRS units in the current year quarter. Operating margin was 9.3% during the three months ended March 31, 2024 compared to 8.8% during the three months ended March 31, 2023 primarily due to the factors described above.

Current wording

Heavy Fabrications segment operating results decreased by $3,056 as compared to the prior year period. The decrease in operating performance was primarily a result of lower tower sales and the corresponding reduction in AMP credits recognized. These factors were partially offset by improved operating efficiencies. Operating margin was 8.7% during the six months ended June 30, 2024 compared to 10.2% during the six months ended June 30, 2023 primarily due to the factors described above.

Previous wording

Gearing segment orders decreased 16% from the prior year period primarily due to reduced demand from O&G customers, partially offset by increased demand from mining customers and the timing of orders from aftermarket wind customers. Gearing revenue was down 30% relative to the comparable prior year period primarily due to reduced shipments for industrial, mining, and O&G customers.

Current wording

Gearing segment orders decreased 17% from the prior year period primarily due to reduced demand from O&G customers, partially offset by increased demand from aftermarket wind customers. Gearing revenue was down 18% relative to the comparable prior year period reflective of reduced shipments within most markets served, partially offset by higher shipments to aftermarket wind customers.

Previous wording

Gearing segment operating income decreased by $556 from the prior year period. This decrease was primarily attributable to lower sales, partially offset by a more profitable product mix sold. Operating margin was 0.3% during the three months ended March 31, 2024, a decrease from 4.9% during the three months ended March 31, 2023, driven primarily by the items identified above.

Current wording

Gearing segment operating income decreased by $421 compared to the prior year period. This decrease was primarily attributable to lower sales, partially offset by a more profitable product mix sold and cost savings. Operating margin was 2.7% during the six months ended June 30, 2024, a decrease from 4.0% during the six months ended June 30, 2023, driven primarily by the items identified above.

Previous wording

Industrial Solutions segment orders increased from the prior year period primarily due to an increase in orders associated with new gas turbine projects, partially offset by reduced orders associated with aftermarket projects. Segment revenues increased from the prior year period primarily due to the timing of shipments of new and aftermarket gas turbine content.** **Operating income increased versus the prior-year period primarily as a result of higher sales and a more profitable mix of product sold.

Current wording

Industrial Solutions segment orders decreased from the prior year period primarily due to reduced orders associated with aftermarket projects. Segment revenues increased from the prior year period primarily due to increased shipments of aftermarket gas turbine content. Operating income increased versus the prior-year period primarily as a result of higher sales and a more profitable mix of product sold.

Previous wording

Corporate and Other expenses during the three months ended March 31, 2024 decreased from the prior year period primarily due to the professional fees associated with the contested proxy election recognized in the prior year quarter and lower medical costs.

Current wording

Corporate and Other expenses during the six months ended June 30, 2024 decreased from the prior year period primarily due to the absence of professional fees associated with the contested proxy election recognized in the prior year quarter and lower medical costs.

Previous wording

On August 4, 2022, we entered into a credit agreement (the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of March 31, 2024, cash totaled $1,073, a decrease of $26 from December 31, 2023. Debt and finance lease obligations at March 31, 2024 totaled $13,628. As of March 31, 2024, we had the ability to borrow up to an additional $21,326 under the 2022 Credit Facility.

Current wording

On August 4, 2022, we entered into a credit agreement (the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of June 30, 2024, cash totaled $938, a** **decrease of $161 from December 31, 2023. Debt and finance lease obligations at June 30, 2024 totaled $23,536. As of June 30, 2024, we had the ability to borrow up to an additional $17,509 under the 2022 Credit Facility.

Previous wording

We also have outstanding notes payable for capital expenditures in the amount of $1,826** and $1,361 as of March 31, 2024 and December 31, 2023, respectively, with $345 and $163 included in the “Line of Credit and current maturities of long-term debt” line item of our condensed consolidated financial statements as of March 31, 2024 and December 31, 2023, respectively. The notes payable have monthly payments that range from $3 to $20 **and an interest rate of approximately 6%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature in September 2028.

Current wording

We also have outstanding notes payable for capital expenditures in the amount of $1,793** and $1,361 as of June 30, 2024 and December 31, 2023, respectively, with $359 and $163 included in the “Line of Credit and current maturities of long-term debt” line item of our condensed consolidated financial statements as of June 30, 2024 and December 31, 2023, respectively. The notes payable have monthly payments that range from $1 to $20 and an interest rate of approximately 7%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from **September 2028 to May 2029.

Previous wording

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 us to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

Current wording

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

Previous wording

On September 12, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, we may sell from time to time through the Agents shares of our common stock with an aggregate sales price of up to $12,000. We will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. During the year ended December 31, 2022, we issued 100,379 shares of our common stock under the Sales Agreement and the net proceeds (before upfront costs) to us from the sale of our common stock were approximately $323 after deducting commissions paid of approximately $9. No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December 31, 2023 or three months ended March 31, 2024. As of March 31, 2024, shares of our common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement. Any additional shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and a 424(b) prospectus supplement.

Current wording

On September 12, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, we may sell from time to time through the Agents shares of our common stock with an aggregate sales price of up to $12,000. We will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December 31, 2023 or six months ended June 30, 2024. As of June 30, 2024, shares of our common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement. Any additional shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and a 424(b) prospectus supplement.

Previous wording

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2024 and 2023:

Current wording

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2024 and 2023:

Previous wording

During the three months ended March 31, 2024,** **net cash provided by operating activities totaled $5,857 compared to net cash used in operating activities of $25,984 during the prior year period. The increase in net cash provided by operating activities during the current year period was primarily attributable to a decrease in accounts receivable, proceeds from the sale of the 2023 AMP credits received during the current year period. In addition, customer deposits decreased more significantly during the prior year period.

Current wording

During the six months ended June 30, 2024,** net cash used in operating activities totaled $3,427 compared to net cash used in operating activities of $17,447 during the prior year period. The decrease in net cash used in operating activities during the current year period was primarily attributable to proceeds from the sale of the 2023 AMP credits received during the current year period and a significant increase in accounts receivable during the prior year period due to a change in payment terms with a major customer. This was partially offset by a more significant decrease in customer deposits during the current year period. **

Previous wording

During the three months ended March 31, 2024,** **net cash used in investing activities totaled $1,744, comp ared to net cash used in investing activities of $1,065 during the prior year period. The increase in net cash used in investing activities as compared to the prior-year period was primarily due to a net increase in purchases of property and equipment.

Current wording

During the six months ended June 30, 2024,** **net cash used in investing activities totaled $2,375, comp ared to net cash used in investing activities of $3,962 during the prior year period. The decrease in net cash used in investing activities as compared to the prior-year period was primarily due to a net decrease in purchases of property and equipment.

Previous wording

During the three months ended March 31, 2024, net cash used in financing activities totaled $4,139, compared to net cash provided by financing activities of $16,046 during the prior year period. The decrease was primarily due to decreased net borrowings under the 2022 Credit Facility in the current year period.

Current wording

During the six months ended June 30, 2024, net cash provided by financing activities totaled $5,641, compared to net cash provided by financing activities of $10,772 during the prior year period. The decrease was primarily due to decreased net borrowings under the 2022 Credit Facility in the current year period.

Previous wording

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

Current wording

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

Previous wording

The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2023. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward-looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) the impact of global health concerns on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants, including the advanced manufacturing tax credits (which remain subject to further technical guidance and regulations), and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (v) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary; (vi) our ability to continue to grow our business organically and through acquisitions; (vii) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (viii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security; (ix) the suff…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2023. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward-looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) the impact of global health concerns on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants, including the advanced manufacturing tax credits, and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (v) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary; (vi) our ability to continue to grow our business organically and through acquisitions; (vii) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (viii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security; (ix) the sufficiency of our liquidity and alternate sources of funding, if necessa…

Excerpt shortened here; the source contains the full paragraph.