Broadwind, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report 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, 2024. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries, as appropriate.

(Dollars are presented in thousands except share, per share and per employee data or unless otherwise stated)

KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE

In addition to measures of financial performance presented in our consolidated financial statements in accordance with GAAP, we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (as defined below) and free cash flow which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance.

Key Financial Measures

(1) We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, proxy contest-related expenses, and other non-cash gains and losses) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when it internally evaluates the performance of our business, reviews financial trends and makes operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

(2) We define free cash flow as adjusted EBITDA plus or minus changes in operating working capital less capital expenditures net of any proceeds from disposals of property and equipment. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding future investments.

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

(4) Our backlog at June 30, 2025 and 2024 is net of revenue recognized over time. Backlog has been adjusted to reflect updated assumptions related to raw material pricing (which is a customer passthrough) and other variables. Additionally, orders and backlog at June 30, 2025 have been adjusted for orders totaling $2,320 received in prior periods that we do not plan to recognize as revenue as a result of the transaction described in the Manitowoc Purchase Agreement (defined below).

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

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

OUR BUSINESS

The One Big Beautiful Bill Act (the “OBBBA”), which was signed into law on July 4, 2025, eliminates AMP credits for components produced and sold after December 31, 2027. The OBBBA shortened the time period in which we could benefit from the AMP credits, which could have a material adverse effect on our business in the near term. Under the OBBBA, wind projects that begin construction after July 4, 2026, must be placed in service by December 31, 2027, to qualify for the production tax credit (“PTC”) or the investment tax credit (“ITC”). Any wind project that begins construction after July 4, 2026, and is not placed in service by December 31, 2027, will not qualify for the PTC or the ITC. The PTC and ITC drive demand for new wind projects by providing financial incentives to developers. We expect the changes to the PTC and the ITC could lead to a decrease in the number of new wind projects, which would cause a corresponding decrease in demand for our wind products. Lower demand for our wind products, coupled with the expedited phase out of the AMP credits, would adversely impact the profitability of our Heavy Fabrications segment.

Second Quarter Overview

We received $20,956 in new orders in the second quarter, up from $18,372 in the second quarter of 2024. Industrial Solutions orders increased by over 200% compared to the prior year quarter primarily due to an increase in demand associated with new gas turbine and aftermarket gas turbine projects. Additionally, Gearing segment orders increased 45% versus the prior year period primarily due to improved demand from most markets served. Partially offsetting this was a significant decrease in orders within our Heavy Fabrications segment as orders were muted as we wind down operations in our Manitowoc facility in conjunction with the pending sale of the Manitowoc facility (described below).

We recognized revenue of $39,235 in the second quarter, which was an 8% increase compared to the second quarter of 2024.Within the Heavy Fabrications segment, wind revenue increased 52% as we restarted tower production with a limited run at our Manitowoc facility and recognized increased wind repowering revenue. This was partially offset by a decrease in industrial fabrication product line revenue as we experienced reduced shipments to mining customers. Industrial Solutions segment revenue increased by 14% from the prior year period primarily due to increased shipments to new gas turbine customers. Gearing segment revenue decreased 30% relative to the comparable prior year period primarily due to reduced shipments to oil and gas (“O&G”) customers.

We recorded a net loss of $989 or ($0.04) per share in the second quarter of 2025, compared to net income of $482 or $0.02 per share in the second quarter of 2024. Despite an increase in revenue, net income decreased due primarily to manufacturing inefficiencies experienced within the Heavy Fabrications segment and increased fixed costs to support higher production levels.

On June 4, 2025, we entered into a definitive agreement (the “Manitowoc Purchase Agreement”) with Wisconsin Heavy Fabrication, LLC to sell certain assets used in our industrial fabrication operations in Manitowoc, Wisconsin including specified contracts, equipment, machinery and other personal property, and permits for an aggregate purchase price of up to $13,800 in cash, subject to certain purchase price adjustments. The transaction is expected to close during the third quarter of 2025, subject to the satisfaction of customary closing conditions. As such, within the Heavy Fabrications segment we have only reported orders and backlog which we believe will be recorded as revenue.

RESULTS OF OPERATIONS

Three months ended June 30, 2025, Compared to Three months ended June 30, 2024

The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Consolidated

Revenues increased by $2,783 as compared to the prior year period primarily due to a 27% increase in revenue within our Heavy Fabrications segment. Wind revenue increased 52% from the prior year period as we restarted tower production with a limited run at our Manitowoc facility and recognized increased wind repowering revenue. This was partially offset by a decrease in industrial fabrication product line revenues as we experienced reduced shipments to mining customers. Industrial Solutions segment revenue increased 14% from the prior year period primarily due to higher shipments to new gas turbine customers. Gearing segment revenue decreased 30% relative to the comparable prior year period, reflective of reduced shipments to O&G customers.

Despite the increase in revenue described above, gross profit decreased versus the prior year due primarily to manufacturing inefficiencies experienced within Heavy Fabrications and increased fixed costs to support higher volumes. Operating expenses decreased from the prior year period primarily due to lower professional expenses and incentive compensation, partially offset by higher medical costs in the current year quarter.

We recorded a net loss of $989 during the three months ended June 30, 2025, compared to net income of $482 during the three months ended June 30, 2024. This decrease in net income was primarily due to the factors described above.

Heavy Fabrications Segment

Within our Heavy Fabrications segment, orders decreased 97% from the prior year period as orders were muted as we wind down certain operations due to the pending sale of the Manitowoc facility. Segment revenues increased by 27% compared to the prior year period as we restarted tower production with a limited run at our Manitowoc facility and recognized increased wind repowering revenue. This was partially offset by a 20% decrease in industrial fabrication product line revenue as we experienced reduced shipments to mining customers.

Heavy Fabrications segment operating income increased by $154 as compared to the prior year period. The increase in operating income was primarily a result of higher segment revenue and the corresponding increase in Advanced Manufacturing Production tax credits (“AMP credits”) recognized. This was partially offset by manufacturing inefficiencies associated with the production of a new, larger size wind tower model and restarting tower production on a limited run within our Manitowoc facility.

Gearing Segment

Gearing segment orders increased 45% from the prior year period primarily due to higher demand from customers from most markets served. Gearing revenue was down 30% relative to the prior year period reflective of reduced shipments to O&G customers.

The Gearing segment’s operating income decreased by $1,301 from the prior year period. This decrease was primarily attributable to lower sales in the current year period.

Industrial Solutions Segment

20

Industrial Solutions segment orders increased from the prior year period primarily due to an increase in orders associated with new and aftermarket gas turbine projects. Segment revenues increased from the prior year period primarily due to higher shipments to new gas turbine customers. Operating income decreased versus the prior-year period primarily as a result of a less profitable mix of product sold and increased fixed costs to support higher volumes.

Corporate and Other

Corporate and Other expenses increased during the three months ended June 30, 2025 compared to the prior year period primarily due to higher insurance and medical expenses, partially offset by lower employee compensation.

Six months ended June 30, 2025, Compared to Six months ended June 30, 2024

The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Consolidated

Revenues for the six months ending June 30, 2025, increased by $2,005 as compared to the prior year period primarily due to an increase in revenue within our Heavy Fabrications segment. Wind revenue increased 39% from the prior year period primarily due to restarting tower production with a limited run at our Manitowoc facility and increased wind repowering revenue. Partially offsetting this was a 17% decrease in industrial fabrication product line revenues due primarily to lower sales of our Pressure Reducing Systems (“PRS”) units and reduced shipments to mining customers. Gearing segment revenue decreased 29% compared to the prior year period, reflective of reduced shipments to O&G customers. Industrial Solutions segment revenue decreased 10% from the prior year period primarily due to reduced shipments to aftermarket gas turbine customers, partially offset by higher shipments to new gas turbine customers.

Despite the increase in revenue described above, gross profit decreased versus the prior year period due primarily to manufacturing inefficiencies experienced within Heavy Fabrications and increased fixed costs to support higher volumes. Operating expenses decreased from the prior year period primarily due to lower incentive compensation and commission expenses in the current year period.

We recorded a net loss of $1,359 during the six months ended June 30, 2025, compared to net income of $1,992 during the six months ended June 30, 2024. This decrease in net income was primarily due to the factors described above.

Heavy Fabrications Segment

Within our Heavy Fabrications segment, orders decreased 49% from the prior year period primarily due to a 75% decrease in industrial fabrication product line orders as we wind down certain operations in conjunction with the pending sale of the Manitowoc facility and lower demand for our PRS units. Partially offsetting this decrease was a 92% increase in wind orders primarily due to the timing of orders associated with wind repowering projects. Segment revenues increased by 21% compared to the prior year period primarily due to a 39% increase in wind revenue as we restarted tower production with a limited run at our Manitowoc facility and recognized increased wind repowering revenue. This was partially offset by a 17% decrease in industrial fabrication product line revenues due to reduced shipments to mining customers and fewer shipments of our PRS units.

Heavy Fabrications segment operating income increased by $351 as compared to the prior year period. The improved operating performance was primarily a result of higher segment revenue and the corresponding increase in AMP credits recognized, partially offset by manufacturing inefficiencies associated with the production of a new, larger size wind tower model and restarting tower production on a limited run within our Manitowoc facility.

Gearing Segment

Gearing segment orders decreased 3% from the prior year period primarily due to the timing of orders from aftermarket wind customers. Gearing revenue was down 29% relative to the prior year period reflective of reduced shipments to O&G customers.

The Gearing segment’s operating income decreased by $2,219 from the prior year period. This decrease was primarily attributable to lower sales, partially offset by a favorable $482 property tax adjustment in the current year period.

Industrial Solutions Segment

22

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

Corporate and Other

Corporate and Other expenses decreased compared to the prior year period primarily due to lower employee compensation, partially offset by higher medical costs in the current year period.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

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, 2025, cash totaled $1,037, a decrease of $6,684 from December 31, 2024. Debt and finance lease obligations at June 30, 2025 totaled $31,423. As of June 30, 2025, we had $24,671 outstanding under the 2022 Credit Facility and had the ability to borrow up to an additional $13,831.

In addition to the 2022 Credit Facility, we also utilize supply chain financing arrangements as a component of our funding for working capital, which accelerates receivable collections and helps to better manage cash flow. Under these agreements, we have agreed to sell certain of our 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 consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense.

We also have outstanding notes payable for capital expenditures in the amount of $1,434 and $1,618 as of June 30, 2025 and December 31, 2024, respectively, with $383 and $371 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, 2025 and December 31, 2024, 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 June 2029.

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. The Form S-3 will expire on October 12, 2026. 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.

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, 2024 or six months ended June 30, 2025. As of June 30, 2025, shares of our common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement. Any additional shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and a 424(b) prospectus supplement.

We anticipate that current cash resources, amounts available under the 2022 Credit Facility, cash to be generated from operations and equipment financing, potential proceeds from the sale of securities under the Sales Agreement, access to the public or private debt and/or equity markets including any potential proceeds from the sale of further securities under the Form S-3, and proceeds from sales of AMP credits will be adequate to meet our liquidity needs for at least the next twelve months.

If assumptions regarding our production, sales and subsequent collections from certain of our large customers, our ability to finalize the terms of the remaining obligations under a supply agreement with a leading global wind turbine manufacturer, as well as receipt of customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, we may in the future encounter cash flow and liquidity issues.

If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the 2022 Credit Facility. This could limit our operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on our stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity-linked financing, if available, will be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on the Company and could be on less favorable terms than the 2022 Credit Facility. While we believe that we will continue to have sufficient cash available to operate our businesses and to meet our financial obligations and debt covenants for the next twelve months, there can be no assurances that our operations will generate sufficient cash, or that credit facilities or equity or equity-linked financings will be available in an amount sufficient to enable us to meet these financial obligations.

Sources and Uses of Cash

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024:

Operating Cash Flows

During the six months ended June 30, 2025, net cash used in operating activities totaled $20,498 compared to net cash used in operating activities of $3,427 during the prior year period. The increase in net cash used in operating activities during the current year period was primarily attributable to a more significant increase in inventory, decreased proceeds from the sale of AMP credits, and an increase in cash used to fund accounts receivable in the current year period. Partially offsetting this was an increase in accounts payable during the current year period as compared to a decrease in the prior year period.

Investing Cash Flows

During the six months ended June 30, 2025, net cash used in investing activities totaled $2,115, compared to net cash used in investing activities of $2,375 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.

Financing Cash Flows

During the six months ended June 30, 2025, net cash provided by financing activities totaled $15,929, compared to net cash provided by financing activities of $5,641 during the prior year period. The increase was primarily due to increased net borrowings under the 2022 Credit Facility in the current year period, partially offset by proceeds from long-term debt received in the prior year period.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes in our critical accounting estimates during the six months ended June 30, 2025 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2024.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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, 2024. 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 phase out, 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 necessary; (x) our ability to realize revenue from customer orders and backlog (including our ability to finalize the terms of the remaining obligations under a supply agreement with a leading global wind turbine manufacturer); (xi) the economy and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally, including the availability of tax credits, and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) the effects of proxy contests and actions of activist stockholders; (xix) the limited trading market for our securities and the volatility of market price for our securities; (xx) our outstanding indebtedness and its impact on our business activities (including our ability to incur additional debt in the future); (xxi) the impact of future sales of our common stock or securities convertible into our common stock on our stock price; (xxii) our ability to complete the sale of our industrial fabrication operations in Manitowoc, Wisconsin (the “Manitowoc Sale”) in a timely manner, if at all; and (xxiii) the impact that the Manitowoc Sale may have on our current plans and operations. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K under the Securities Act and as such are not required to provide information under this Item pursuant to Item 305I of Regulation S-K.

Evaluation of Disclosure Controls and Procedures

We seek to maintain disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15I under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal quarter reported on herein. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2025.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Risk Factors identified in our Annual Report on Form 10-K for the year ended December 31, 2024 continue to represent the most significant risks to the Company’s future results of operations and financial conditions except for the updated risk factor set forth below.

The U.S. wind energy industry is significantly impacted by tax and other economic incentives. Recent changes in these incentives could significantly impact our results of operations and growth.

We sell towers to wind turbine manufacturers who supply wind energy generation facilities. The U.S. wind energy industry is significantly impacted by federal tax incentives and state Renewable Portfolio Standards (“RPSs”). Despite recent reductions in the cost of wind energy, due to variability in wind quality and consistency, and other regional differences, wind energy may not be economically viable in certain parts of the country absent such incentives. These programs have provided material incentives to develop wind energy generation facilities and thereby impact the demand for our products. The increased demand for our products that generally results from the credits and incentives could be impacted by the expiration or curtailment of these programs. The One Big Beautiful Bill Act (the “OBBBA”), which was signed into law on July 4, 2025, significantly shortens the eligibility windows for certain of these federal tax incentives. The expedited phase out of the production tax credit (“PTC”) for new wind energy projects, investment tax credit (“ITC”) created for offshore wind projects, and the AMP credits could have a material adverse impact on our business, results of operations, financial performance and future development efforts.

The PTC provides a supplemental payment based on electricity produced from each qualifying wind turbine. Legislative support for the PTC has been intermittent since its introduction in 1992, which has caused volatility in the demand for new wind energy projects.

The Consolidated Appropriations Act of 2021 (“COVID IV”) was signed into law on December 27, 2020. As part of COVID IV, the PTC was extended for an additional year, allowing for a 60% credit for projects that start construction by the end of 2021. In order to benefit from the PTC, qualifying projects must either be completed within four years from their start of construction, or the developer must demonstrate that its projects are in continuous construction between start of construction and completion. The PTC tax benefits are available for the first ten years of operation of a wind energy facility, and also apply to significant redevelopment of existing wind energy facilities. Included in COVID IV is the addition of a new 30% ITC created for offshore wind projects that start construction by the end of 2025. The provision will be retroactively applied to projects that started production in 2016.

On August 16, 2022, the IRA was enacted to reduce inflation and promote clean energy in the United States. The IRA modified and extended the PTC until the later of 2032 or when greenhouse gas emissions have been reduced by 75% compared to 2022. It provides for tax credits up to a maximum of 30%, adjusted for inflation annually, for electricity generated from qualified renewable energy sources where taxpayers meet prevailing wage standards and employ a sufficient proportion of qualified apprentices from registered apprenticeship programs. It also provides a bonus credit for qualifying clean energy production in energy communities.

Under the OBBBA, wind projects that begin construction after July 4, 2026, must be placed in service by December 31, 2027, to qualify for the PTC or the ITC. Any wind project that begins construction after July 4, 2026, and is not placed in service by December 31, 2027, will not qualify for the PTC or the ITC. Wind projects that begin construction prior to July 4, 2026 may take advantage of the four-year construction safe harbor provision in COVID IV. In addition, the PTC and ITC will not be available for wind projects that are owned by, or receive material assistance from, entities from covered nations, including China, Iran, North Korean or Russia. The PTC and ITC also face heightened compliance requirements under executive orders issued alongside the OBBBA. These executive orders instruct the U.S. Treasury Department to issue stricter guidance and oversight regarding qualification standards, including the “beginning of construction” tests. These changes to the PTC and the ITC may lead to a decrease in the number of new wind projects, which could have a material adverse effect on our business.

The IRA also includes AMP credits for manufacturers of eligible components, including wind and solar components. Under the IRA, manufacturers qualified for the AMP credits based on the electricity output for each component produced and sold in the US starting in 2023 through 2032. The OBBBA eliminates the AMP credits for wind components produced and sold after December 31, 2027. The credit amount varies based on the eligible component, which includes solar components, wind energy components, inverters, qualifying battery components, and critical minerals. Tower manufacturers are eligible for credits of $0.03 per watt for applicable components produced. Manufacturers can elect a direct pay option where they can receive a payment equal to the full value of the tax credits from the Internal Revenue Service anytime during the ten-year period. That election lasts for five years, after which the AMP credits can be used against tax obligations or transferred to third parties in exchange for cash. We expect certain financial benefits as a result of tax incentives provided by the IRA. If these expected financial benefits vary significantly from our assumptions, our business, financial condition, and results of operations could be adversely affected. The OBBBA significantly shortened the time period in which we could benefit from the AMP credits, which could have a material adverse effect on our business in the near term. Any further modifications to the AMP credits or its effects arising, for example, through (i) technical guidance and regulations from the IRS and U.S. Treasury Department, (ii) subsequent amendments to or interpretations of the law, and/or (iii) future laws or regulations rendering certain provisions of the IRA less effective or ineffective, in whole or in part, could result in material adverse changes to the benefits we have recognized and expect to recognize.

Several significant administrative law cases were decided by the U.S. Supreme Court in 2024, most notably Loper Bright Enterprises V. Raimondo. In Loper Bright, the U.S. Supreme Court held that the U.S. Administrative Procedure Act requires that courts exercise their independent judgment when deciding whether a federal agency has acted within its statutory authority, and not to defer to an agency interpretation solely because a statute is ambiguous. These decisions may result in additional legal challenges to regulations and guidance issued by federal regulatory agencies, including the IRS, which the Company relies on and intends to rely on in the future. Successful challenges of certain regulations, any increased regulatory uncertainty, or delays or other impacts to the federal agency rulemaking process could adversely impact our business and operations.

RPSs generally require or encourage state regulated electric utilities to supply a certain proportion of electricity from renewable energy sources or to devote a certain portion of their plant capacity to renewable energy generation. Typically, utilities comply with such standards by qualifying for renewable energy credits evidencing the share of electricity that was produced from renewable sources. Under many state standards, these renewable energy credits can be unbundled from their associated energy and traded in a market system, allowing generators with insufficient credits to meet their applicable state mandate. These standards have spurred significant growth in the wind energy industry and a corresponding increase in the demand for our products. Currently, the majority of states have RPSs in place and certain states have voluntary utility commitments to supply a specific percentage of their electricity from renewable sources. The enactment of RPSs in additional states or any changes to existing RPSs (including changes due to the failure to extend or renew the federal incentives described above), or the enactment of a federal RPS or imposition of other greenhouse gas regulations, may impact the demand for our products. We cannot assure that government support for renewable energy will continue including any assurance regarding the adoption of any of the clean energy provisions of former President Biden’s Build Back Better agenda. The elimination of, or reduction in, state or federal government policies that support renewable energy could have a material adverse impact on our business, results of operations, financial performance and future development efforts.