BROADWIND INC

Previous wording

We booked $101,060 in net new orders in 2023, down from $368,027 in 2022. Heavy Fabrications orders decreased by 83% from the prior year primarily due to the timing of tower orders as a major wind tower customer secured relatively longer-term capacity during the fourth quarter of 2022 instead of ordering in more regular intervals consistent with how orders are typically placed. Partially offsetting this decrease in wind tower orders was a 14% increase in industrial fabrication product line orders primarily due to improved demand for our Pressure Reducing Systems (“PRS”) units. Gearing segment orders decreased 54% from the prior year primarily due to reduced demand from O&G and mining customers. Industrial Solutions segment orders increased by 26% in 2023 from the prior year primarily due to an increase in orders associated with new gas turbine and aftermarket projects.

Current wording

We booked $107,813 in net new orders in 2024, up from $101,060 in 2023. Within our Heavy Fabrications segment, orders increased 7% over the prior year reflecting an increase in orders associated with wind repowering projects, partially offset by a decrease in industrial fabrication product line orders primarily due to reduced demand for our PRS units. Gearing segment orders increased 7% from the prior year primarily due to improved demand from industrial and aftermarket wind customers, partially offset by reduced demand from O&G customers. Industrial Solutions segment orders increased by 6% in 2024 from the prior year primarily due to an increase in orders associated with new gas turbine projects, partially offset by reduced demand for aftermarket projects.

Previous wording

We recognized revenue of $203,477 in 2023, up 15% from revenue of $176,759 in 2022. Heavy Fabrications segment revenues increased by 14% primarily due to a 18% increase in wind tower revenue as a result** of a 30 section increase in tower sections sold, **less customer supplied materials in the current year and increased steel content, which is generally a pass-through to customers. Additionally, industrial fabrication product line revenues increased primarily due to higher shipments of our PRS units in the current year. Gearing segment revenue increased 7% relative to 2022 primarily due to higher shipments for industrial and steel customers, partially offset by a decrease in revenue from mining and O&G customers. Industrial Solutions segment revenue increased 41% from the prior year primarily due to increased demand for new and aftermarket gas turbine content, and increased revenue from international customers.

Current wording

We recognized revenue of $143,136 in 2024, down 30% from revenue of $203,477 in 2023. Heavy Fabrications segment revenues decreased 38% primarily due to a 41% decrease in wind revenue as a global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025. Additionally, industrial fabrication product line revenues decreased primarily due to lower shipments of our PRS units in the current year. Gearing segment revenue decreased 22% relative to 2023 primarily due to reduced shipments to O&G and steel customers, partially offset by increased shipments to aftermarket wind customers. Industrial Solutions segment revenue increased 4% from the prior year primarily due to increased shipments to new and aftermarket gas turbine customers, partially offset by decreased shipments to international customers.

Previous wording

We reported net income of $7,649, or $0.36 per share in 2023, compared to a net loss of $9,730 or $0.48 per share in 2022 primarily due to higher sales and $14,493 of gross AMP credits (discussed below) recognized in the current year.

Current wording

We reported net income of $1,152 or $0.05 per share in 2024, compared to net income of $7,649 or $0.36 per share in 2023 primarily due to lower sales and the corresponding decrease in the “AMP credits” recognized in the current year.

Previous wording

In January 2023, we announced that we 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 in 2023 through year-end 2024. In early November 2023, the parties discussed their joint intent to shift approximately half of the contracted tower section orders initially planned for 2024 into 2025, while maintaining the total number of tower sections stipulated under the supply agreement.

Current wording

In January 2023, we announced that we 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 was to occur beginning in 2023 through year-end 2024. In early November 2023, the parties jointly agreed to shift approximately half of the contracted tower section orders initially planned for 2024 into 2025, while maintaining the total number of tower sections stipulated under the supply agreement.

Previous wording

During 2023, we 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 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, we 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 to third parties for cash, or apply the AMP credits against taxable income. We recognized the AMP credits as a reduction to cost of sales in our consolidated statements 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 our consolidated balance sheet as of December 31, 2023.

Current wording

During 2024 and 2023, we recognized gross AMP credits totaling $9,588 and $14,493, respectively, 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 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, we 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 to third parties for cash, or apply the AMP credits against taxable income. We recognized the AMP credits as a reduction to cost of sales in our consolidated statements of operations for the years ended December 31, 2024 and 2023. The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in our consolidated balance sheets as of December 31, 2024 and 2023.

Previous wording

We use our credit facility to fund working capital requirements and believe that our credit facility, together with the operating cash generated by our businesses, and any potential proceeds from access to the public or private debt or equity markets, are sufficient to meet all cash obligations over the next twelve months. On December 31, 2023, we had $4,657 outstanding under our senior secured revolving credit facility, $6,135 outstanding under our senior secured term loan, $1,099 of cash on hand, with the ability to borrow an additional $21,714. For a further discussion of our capital resources and liquidity, including a description of recent amendments and waivers under our credit facility, please see the discussion under “Liquidity, Financial Position and Capital Resources” in this Annual Report on Form 10-K.

Current wording

We use our credit facility to fund working capital requirements and believe that our credit facility, together with the operating cash generated by our businesses, and any potential proceeds from access to the public or private debt or equity markets, are sufficient to meet all cash obligations over the next twelve months. On December 31, 2024, we had no amounts outstanding under our senior secured revolving credit facility, $7,578 outstanding under our senior secured term loan, $7,721 of cash on hand, with the ability to borrow an additional $24,901. For a further discussion of our capital resources and liquidity, including a description of recent amendments and waivers under our credit facility, please see the discussion under “Liquidity, Financial Position and Capital Resources” in this Annual Report on Form 10-K.

Previous wording

Operating expenses as a percentage of sales increased to 10.5% in 2023 from 9.8% in 2022 primarily due to proxy-contest related expenses, higher medical costs, and increased incentive compensation.

Current wording

Operating expenses as a percentage of sales increased to 11.9% in 2024 from 10.5% in 2023 primarily due to lower sales, partially offset by reduced proxy-contest related expenses, and decreased incentive compensation.

Previous wording

Net income increased from a net loss of $9,730 for the year ended December 31, 2022 to net income of $7,649 for the year ended December 31, 2023.The increase in net income was primarily due to the factors described above.

Current wording

Net income decreased from $7,649 for the year ended December 31, 2023 to $1,152 for the year ended December 31, 2024.The decrease in net income was primarily due to the factors described above.

Previous wording

Heavy Fabrications segment operating results improved by $16,050 as compared to the prior year. The improvement in operating performance was primarily a result of reduced wind tower costs as a result of the AMP credits recognized of $14,493 in the current year. Operating profit margin was 11.3% during the year ended December 31, 2023 compared to (0.9%) during the year ended December 31, 2022.

Current wording

Heavy Fabrications segment operating results decreased by $7,878 as compared to the prior year. The decrease in operating performance was primarily a result of lower tower sales and the corresponding reduction in AMP credits recognized, as well as lower industrial fabrication revenues. These factors were partially offset by reduced overhead costs. Operating profit margin was 8.6% during the year ended December 31, 2024 compared to 11.3% during the year ended December 31, 2023.

Previous wording

Gearing segment orders for the year ended December 31, 2023 decreased 54% compared to the year ended December 31, 2022 primarily due to reduced demand from O&G and mining customers. Revenues increased 7% during the year ended December 31, 2023 from the prior year primarily due to higher shipments of industrial and steel customers, partially offset by a decrease in revenue from mining and O&G customers.

Current wording

Gearing segment orders for the year ended December 31, 2024 increased 7% compared to the year ended December 31, 2023 primarily due to improved demand from industrial and aftermarket wind customers, partially offset by reduced demand from O&G customers. Revenues decreased 22% during the year ended December 31, 2024 from the prior year primarily due to reduced shipments to O&G and steel customers, partially offset by increased shipments to aftermarket wind customers.

Previous wording

The Gearing segment's operating income improved by $1,803** during the year ended December 31, 2023 from the year ended December 31, 2022 primarily due to higher sales, improved operational efficiencies, a more profitable product mix sold, and the absence of ramp-up costs incurred in the prior year. Operating margin was **4.1% for the year ended December 31, 2023 compared to 0.1% during the year ended December 31, 2022.

Current wording

The Gearing segment's operating income decreased by $1,984 during the year ended December 31, 2024 from the year ended December 31, 2023 primarily due to lower sales, partially offset by a** **more profitable product mix sold and cost savings. Operating margin was (0.4%) for the year ended December 31, 2024 compared to 4.1% during the year ended December 31, 2023.

Previous wording

Industrial Solutions segment orders increased by 26% for the year ended December 31, 2023 primarily due to an increase in orders associated with new gas turbine and aftermarket projects. Segment revenue increased 41% from the prior year primarily due to increased demand for new and aftermarket gas turbine content, in addition to revenue recognized from international customers. The improvement in operating income during the year ended December 31, 2023 was a result of higher sales and a more profitable mix of product sold. The operating margin improved from 0.7% during the year ended December 31, 2022, to 12.6% during the year ended December 31, 2023.

Current wording

Industrial Solutions segment orders increased by 6% for the year ended December 31, 2024 from the prior year primarily due to an increase in orders associated with new gas turbine projects, partially offset by reduced demand for aftermarket projects. Segment revenue increased 4% from the prior year primarily due to increased shipments to new and aftermarket gas turbine customers, partially offset by reduced shipments to international customers. The improvement in operating income during the year ended December 31, 2024 was a result of higher sales and a more profitable mix of product sold. The operating margin decreased from 12.6% during the year ended December 31, 2023, to 12.5% during the year ended December 31, 2024.

Previous wording

Corporate and Other expenses increased by $3,162 during the year ended December 31, 2023 primarily due to higher medical costs, increased incentive compensation, and increased professional fees associated with the contested proxy election.

Current wording

Corporate and Other expenses decreased by $2,854 during the year ended December 31, 2024 primarily due to reduced professional fees associated with the contested proxy election and lower incentive compensation.

Previous wording

We recognize revenue 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 and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers, like those made for liquidated damages, are presumed to be classified as reductions of revenue in our statement of operations.

Current wording

We recognize revenue 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. Control is typically transferred upon shipment or delivery depending on the terms of the contract or under the terms of the bill and hold arrangements discussed below. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. Customer deposits and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers, like those made for liquidated damages, are presumed to be classified as reductions of revenue in our statement of operations.

Previous wording

In many instances within our Heavy Fabrications segment, wind towers as well as certain 2023 sales within our Gearing segment, are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment, due to our customers’ preference to ship products in batches to support efficient construction of wind farms. We recognize revenue under these arrangements when there is a substantive reason for the arrangement (i.e., the buyer requests the arrangement), the ordered goods are segregated from inventory and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and we do not 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.

Current wording

In many instances within our Heavy Fabrications segment, wind towers as well as certain sales within our Gearing segment, are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment, due to our customers’ preference to ship products in batches to support efficient construction of wind farms. We recognize revenue under these arrangements when there is a substantive reason for the arrangement (i.e., the buyer requests the arrangement), the ordered goods are segregated from inventory and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and we do not 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.

Previous wording

On August 4, 2022, we entered into a credit agreement (as amended, 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, as amended, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of December 31, 2023, cash totaled $1,099, a decrease of $11,633** **from December 31, 2022. Debt and finance lease obligations at December 31, 2023 totaled $17,678, and we had the ability to borrow up to $21,714 under the 2022 Credit Facility.

Current wording

On August 4, 2022, we entered into a credit agreement (as amended, 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, as amended, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of December 31, 2024, cash totaled $7,721. Debt and finance lease obligations at December 31, 2024 totaled $15,239 and we had the ability to borrow up to $24,901 under the 2022 Credit Facility.

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, par value $0.001 per share 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 and before deducting other expenses of $93. No shares of our common stock were issued under the Sales Agreement during the year ended December 31, 2023. As of December 31, 2023, 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, par value $0.001 per share 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 and before deducting other expenses of $93. No shares of our common stock were issued under the Sales Agreement during the years ended December 31, 2024 and 2023. As of December 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.

Previous wording

We have outstanding notes payable for capital expenditures in the amount of $1,361 and $1,094 as of December 31, 2023 and 2022, respectively, with $163 and $88 included in the “Line of credit and current maturities of long-term debt” line item of our consolidated financial statements as of December 31, 2023 and 2022, 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.

Current wording

We have outstanding notes payable for capital expenditures in the amount of $1,618 and $1,361 as of December 31, 2024 and 2023, respectively, with $371 and $163 included in the “Line of credit and current maturities of long-term debt” line item of our consolidated financial statements as of December 31, 2024 and 2023, respectively. The notes payable have monthly payments that range from $1 to $20 and a weighted average interest rate of 7%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from September 2028 to June 2029.

Previous wording

During the year ended December 31, 2023, net cash used in operating activities was $6,946 compared to net cash provided by operating activities of $16,643 for the year ended December 31, 2022. The decrease in net cash provided by operating activities was primarily attributable to the new AMP credit receivable and a decrease in customer deposits in 2023, versus an increase in the prior year. Partially offsetting this was a decrease in inventory during 2023 as compared to an increase in the prior year.

Current wording

During the year ended December 31, 2024, net cash provided by operating activities was $13,806 compared to net cash used by operating activities of $6,946 for the year ended December 31, 2023. The increase in net cash provided by operating activities was primarily attributable to an increase in cash related to customer deposits in the current year, versus a significant decrease in cash related to customer deposits in the prior year. Additionally, we received proceeds from the sale of the 2023 AMP credits during the current year. Partially offsetting this was an increase in inventory during the current year as compared to a decrease in the prior year.

Previous wording

During the year ended December 31, 2023, net cash used in investing activities was $6,384 compared to net cash used in investing activities of $3,098 for the year ended December 31, 2022. The increase was primarily due to an increase in net purchases of property and equipment.

Current wording

During the year ended December 31, 2024, net cash used in investing activities was $3,459 compared to net cash used in investing activities of $6,384 for the year ended December 31, 2023. The decrease was primarily due to a decrease in net purchases of property and equipment.

Previous wording

During the year ended December 31, 2023, net cash provided by financing activities totaled $1,697 compared to net cash used in financing activities of $1,665 for the year ended December 31, 2022. The increase was primarily due to increased net borrowings under the 2022 Credit Facility in the current year period.

Current wording

During the year ended December 31, 2024, net cash used in financing activities totaled $3,725 compared to net cash provided by financing activities of $1,697 for the year ended December 31, 2023. The decrease was primarily due to decreased net borrowings under the 2022 Credit Facility in the current year period.