Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

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, 2025. 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

		Three Months Ended
		March 31,
		2026				2025
Net revenues		$	34,057			$	36,838
Net loss		$	(495	)		$	(370	)
Adjusted EBITDA (1)		$	2,209			$	2,368
Capital expenditures		$	2,778			$	916
Free cash flow (2)		$	(1,430	)		$	(8,100	)
Operating working capital (3)		$	38,746			$	28,839
Total debt		$	10,753			$	12,191
Total orders (4)		$	37,422			$	30,455
Backlog at end of period (4)		$	99,099			$	116,957
Book-to-bill (5)			1.1				0.8

(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, other non-cash gains and losses, and the gain from the sale of the Manitowoc industrial fabrication operations) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when it internally evaluates the performance of our business, reviews financial trends and makes operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

(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 March 31, 2026 and 2025 is net of revenue recognized over time. Backlog has been adjusted to reflect updated assumptions related to raw material pricing (which is a customer passthrough) and other variables.

(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:

		Three Months Ended
		March 31,
		2026				2025
Net loss		$	(495	)		$	(370	)
Interest expense			808				516
Income tax provision			74				36
Depreciation and amortization			1,479				1,702
Share-based compensation and other stock payments			343				484
Adjusted EBITDA			2,209				2,368
Changes in operating working capital			(951	)			(9,552	)
Capital expenditures			(2,778	)			(916	)
Proceeds from disposal of property and equipment			90				-
Free Cash Flow		$	(1,430	)		$	(8,100	)

OUR BUSINESS

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

The OBBBA also introduced new restrictions on foreign supply chains and foreign owners or investors in tax-credit-supported facilities, referred to as "Prohibited Foreign Entity" or "PFE" restrictions. Taxpayers cannot claim AMP credits in taxable years beginning after enactment of the OBBBA if the taxpayers source from Prohibited Foreign Entities (which are generally entities that are formed in or controlled by covered nations, including China, Russia, Iran, and North Korea, as well as entities determined to be under effective control as a result of contracts entered into with such entities). AMP credits are also disallowed in taxable years beginning after enactment of the OBBBA for eligible components that receive material assistance from a PFE. These restrictions generally took effect on January 1, 2026, and the Treasury Department is required to issue final regulations implementing them by December 31, 2026. On February 12, 2026, the Treasury Department released interim guidance that further clarified methods for calculating material assistance and included a request for comments by March 30. We cannot predict with certainty what the final guidance, or any other future guidance, will provide, or how the guidance might impact our AMP credits claimed in 2026 and future years.

Subsequent to the quarter end, on April 30, 2026, Broadwind Heavy Fabrications, Inc. a wholly owned subsidiary of the Company, entered into a Purchase and Sale Agreement with Freeman Enclosure Systems, LLC, a wholly-owned subsidiary of IES Holdings, Inc., pursuant to which BHF sold the real property and certain assets contained therein which comprise our production facility located in Abilene, Texas, including equipment, machinery, other personal property, specified service contracts, and permits for an aggregate purchase price of up to $19,500 in cash, subject to certain purchase price adjustments. We expect the sale of the Facility along with the disposition of Manitowoc to meet discontinued operations reporting criteria in the second quarter of 2026 and have determined that the sale represents a strategic shift for us that will have a major effect on our operations. As such, the results of operations of the wind business within the Heavy Fabrications segment will be reclassified to discontinued operations on our condensed consolidated statements of operations and retrospectively for all periods presented beginning in the second quarter of 2026. In addition, the assets and liabilities will be presented separately on our condensed consolidated balance sheets for both current and prior periods beginning in the second quarter of 2026.

First Quarter Overview

We received $37,422 in new orders in the first quarter, up from $30,455 in the first quarter of 2025. Gearing segment orders increased by 66% due to improved demand from most markets served, most notably in power generation which reflects significant orders from a leading Original Equipment Manufacturer ("OEM") of natural gas turbines. Industrial Solutions orders increased by 44% compared to the prior year quarter primarily due to an increase in demand associated with new gas turbine and aftermarket gas turbine projects. Additionally, wind tower orders within the Heavy Fabrications segment increased significantly as we recognized meaningful wind tower orders again after an extended period of production against a long-term customer agreement announced in the first quarter of 2023. These increases were partially offset by lower wind repowering orders, as well as lower industrial fabrication product line orders attributable to the wind down of our operations in Manitowoc.

We recognized revenue of $34,057 in the first quarter, which was an 8% decrease compared to the first quarter of 2025. Within the Heavy Fabrications segment, revenues associated with wind repowering, the Manitowoc industrial fabrication product line and pressure reducing system ("PRS ") units decreased in the current year period. Industrial Solutions segment revenue increased by 64% from the prior year period primarily due to increased shipments to aftermarket gas turbine customers. Gearing segment revenue increased 42% relative to the prior year period primarily due to increased shipments to power generation and mining customers.

We recorded a net loss of $495 or $0.02 per share in the first quarter of 2026, compared to a net loss of $370 or $0.02 per share in the first quarter of 2025. The increase was primarily due to lower sales and manufacturing inefficiencies experienced early in the first quarter within the Heavy Fabrications segment, partially offset by higher sales in the Gearing and Industrial Solutions segments.

RESULTS OF OPERATIONS

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

The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

		Three Months Ended March 31,																2026 vs. 2025
						% of Total								% of Total
		2026				Revenue				2025				Revenue				$ Change				% Change
Revenues		$	34,057				100.0	%		$	36,838				100.0	%		$	(2,781	)			(7.5	)%
Cost of sales			29,364				86.2	%			32,512				88.3	%			(3,148	)			(9.7	)%
Gross profit			4,693				13.8	%			4,326				11.7	%			367				8.5	%
Operating expenses
Selling, general and administrative expenses			4,182				12.3	%			3,977				10.8	%			205				5.2	%
Intangible amortization			122				0.4	%			165				0.4	%			(43	)			(26.1	)%
Total operating expense, net			4,304				12.6	%			4,142				11.2	%			162				3.9	%
Operating income			389				1.1	%			184				0.5	%			205				111.4	%
Other expense, net
Interest expense, net			(808	)			(2.4	)%			(516	)			(1.4	)%			(292	)			(56.6	)%
Other, net			(2	)			(0.0	)%			(2	)			(0.0	)%			-				0.0	%
Total other expense, net			(810	)			(2.4	)%			(518	)			(1.4	)%			(292	)			(56.4	)%
Net loss before provision for income taxes			(421	)			(1.2	)%			(334	)			(0.9	)%			(87	)			(26.0	)%
Provision for income taxes			74				0.2	%			36				0.1	%			38				105.6	%
Net loss		$	(495	)			(1.5	)%		$	(370	)			(1.0	)%		$	(125	)			(33.8	)%

Consolidated

Revenues decreased by $2,781 as compared to the prior year period primarily due to a 35% decrease in revenue within our Heavy Fabrications segment. This decrease was largely attributable to lower industrial fabrication product line revenues reflective of the wind down of the Manitowoc, Wisconsin operations. Wind repowering and PRS revenues also decreased. Partially offsetting this decrease was a 64% increase in Industrial Solutions segment revenue primarily due to higher shipments to aftermarket gas turbine customers. Gearing segment revenue increased 42% primarily reflective of increased shipments to power generation and mining customers.

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

We recorded a net loss of $495 during the three months ended March 31, 2026, compared to a net loss of $370 during the three months ended March 31, 2025. This increase in net loss was primarily due to an increase in interest expense.

Heavy Fabrications Segment

		Three Months Ended
		March 31,
		2026				2025
Orders		$	9,667			$	12,391
Revenues			16,367				25,248
Operating income			787				2,241
Operating margin			4.8	%			8.9	%

Heavy Fabrications segment orders decreased 22% from the prior year period reflective of lower wind repowering and industrial fabrication product line orders as we wound down operations in Manitowoc, partially offset by an increase in wind tower orders as we recognized meaningful wind tower orders again after an extended period of production against a long-term customer agreement announced in the first quarter of 2023. Segment revenues decreased by 35% compared to the prior year period due to lower wind repowering and industrial fabrication product line revenues, as well as lower PRS unit shipments.

Heavy Fabrications segment operating income decreased by $1,454 as compared to the prior year period. The decrease in operating income was primarily a result of lower sales and manufacturing inefficiencies associated with a raw material supply issue experienced early in the first quarter.

Gearing Segment

		Three Months Ended
		March 31,
		2026				2025
Orders		$	13,187			$	7,960
Revenues			8,454				5,966
Operating loss			(57	)			(892	)
Operating margin			(0.7	)%			(15.0	)%

Gearing segment orders increased by 66% versus the prior year period primarily due to higher demand from customers in most markets served, most notably in power generation which reflects significant orders from a leading OEM of natural gas turbines. Gearing revenues were up 42% relative to the prior year primarily reflective of increased shipments to power generation and mining customers.

The Gearing segment's operating loss decreased by $835 from the prior year period. This decrease was primarily attributable to higher sales in the current year period, partially offset by the absence of a favorable property tax adjustment recognized in the prior year period.

Industrial Solutions Segment

		Three Months Ended
		March 31,
		2026				2025
Orders		$	14,568			$	10,104
Revenues			9,236				5,647
Operating income			1,626				330
Operating margin			17.6	%			5.8	%

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

Corporate and Other

Corporate and Other expenses increased during the three months ended March 31, 2026 compared to the prior year period primarily due to higher self-insured medical expenses.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

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, 2026, cash totaled $943, an increase of $487 from December 31, 2025. Debt and finance lease obligations at March 31, 2026 totaled $14,993. As of March 31, 2026, we had $9,603 outstanding under the 2022 Credit Facility and had the ability to borrow up to an additional $15,436, after considering the requirement to maintain minimum excess availability under the Credit Agreement equal to or greater than 25% of the revolving loan limit thereunder. On April 30, 2026, in addition to the normal required progress payments, we made a repayment of $1,420 on the outstanding senior secured term loan under the 2022 Credit Agreement in conjunction with the sale of the Abilene production facility.

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 $1,150 and $1,618 as of March 31, 2026 and December 31, 2025, respectively, with $402 and $396 included in the "Line of Credit and current maturities of long-term debt" line item of our condensed consolidated financial statements as of March 31, 2026 and December 31, 2025, respectively. 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, 2025 or three months ended March 31, 2026. As of March 31, 2026, shares of our common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement. 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, 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 three months ended March 31, 2026 and 2025:

		Three Months Ended
		March 31,
		2026				2025
Total cash provided by (used in):
Operating activities		$	2,905			$	(8,037	)
Investing activities			(2,688	)			(916	)
Financing activities			270				2,436
Net increase (decrease) in cash		$	487			$	(6,517	)

Operating Cash Flows

During the three months ended March 31, 2026, net cash provided by operating activities totaled $2,905 compared to net cash used in operating activities of $8,037 during the prior year period. The increase in net cash provided by operating activities during the current year period was primarily attributable to the absence of a significant decrease in customer deposits and a less significant increase in inventory in the current year period. This was partially offset by a less significant increase in accounts payable in the current year period.

Investing Cash Flows

During the three months ended March 31, 2026, net cash used in investing activities totaled $2,688, compared to net cash used in investing activities of $916 during the prior year period. The increase in net cash provided by investing activities as compared to the prior year period was primarily due to a net increase in purchases of property and equipment.

Financing Cash Flows

During the three months ended March 31, 2026, net cash provided by financing activities totaled $270, compared to net cash provided by financing activities of $2,436 during the prior year period. The decrease was primarily due to decreased net borrowings under the 2022 Credit Facility in the current year period.

CRITICAL ACCOUNTING ESTIMATES

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

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, 2025. 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 our sale of the Abilene, Texas production facility and its effect on our financial results, (ii) our expectations and beliefs with respect to the Company's financial guidance as set forth in our press releases from time to time, (iii) the impact of global health concerns on the economies and financial markets and the demand for our products; (iv) 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; (v) 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; (vi) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (vii) 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; (viii) our ability to continue to grow our business organically and through acquisitions; (ix) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (x) information technology failures, network disruptions, cybersecurity attacks or breaches in data security; (xi) the sufficiency of our liquidity and alternate sources of funding, if necessary; (xii) our ability to realize revenue from customer orders and backlog; (xiii) the economy and the potential impact it may have on our business, including our customers; (xiv) 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; (xv) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xvi) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xvii) the effects of the change of administrations in the U.S. federal government; (xviii) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xix) the potential loss of tax benefits if we experience an "ownership change" under Section 382 of the Internal Revenue Code of 1986, as amended; (xx) the effects of proxy contests and actions of activist stockholders; (xxi) the limited trading market for our securities and the volatility of market price for our securities; (xxii) our outstanding indebtedness and its impact on our business activities (including our ability to incur additional debt in the future); and (xxiii) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. 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, 2025. 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.