BROADWIND, INC. 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 endedDecember 31, 2020 . 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 including those arising as a result of, or amplified by, the COVID-19 pandemic. As used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our," and the "Company" refer toBroadwind, Inc. , aDelaware corporation headquartered inCicero, 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 Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Net revenues $ 40,389 $ 54,614 $ 119,608 $ 158,174
Net (loss) income $ (2,105 ) $ (1,003 ) $ 6,937 $ 480
Adjusted EBITDA (1) $ 401 $ 1,297 $ 14,418 $ 7,766
Capital expenditures $ 604 $ 668 $ 1,369 $ 1,597
Free cash flow (2) $ (3,251 ) $ 7,256 $ (1,913 ) $ (1,737 )
Operating working capital (3) $ 19,554 $ 13,486 $ 19,554 $ 13,486
Total debt (4) $ 5,673 $ 17,673 $ 5,673 $ 17,673
Total orders $ 42,597 $ 39,555 $ 103,252 $ 112,922
Backlog at end of period (5) $ 76,531 $ 97,146 $ 76,531 $ 97,146
Book-to-bill (6) 1.1 0.7 0.9 0.7
(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, and other non-cash gains
and losses) as supplemental information regarding our business performance.
Our management uses adjusted EBITDA when they internally evaluate the
performance of our business, review financial trends and make 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) Total debt at
(5) Our backlog at
recognized over time.
(6) 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 Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Net (loss) income $ (2,105 ) $ (1,003 ) $ 6,937 $ 480
Interest expense 269 507 816 1,654
Income tax provision 24 20 101 103
Depreciation and amortization 1,594 1,567 4,758 4,761
Share-based compensation and other stock
payments 619 206 1,806 768
Adjusted EBITDA 401 1,297 14,418 7,766
Changes in operating working capital (2,555 ) 6,627 (14,492 ) (7,906 )
Employee retention credit receivable (503 ) - (503 ) -
Capital expenditures (604 ) (668 ) (1,369 ) (1,597 )
Proceeds from disposal of property and
equipment 10 - 33 -
Free Cash Flow $ (3,251 ) $ 7,256 $ (1,913 ) $ (1,737 )
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Table of Contents OUR BUSINESS Third Quarter Overview We booked$42,597 in new orders in the third quarter of 2021, up from$39,555 in the third quarter of 2020. Gearing segment orders increased 258% compared to the third quarter of 2020 primarily due to increased demand from oil and gas ("O&G") and mining customers. Within our Heavy Fabrications segment, wind tower orders decreased 38% versus the prior year quarter as customers continue to delay orders due to uncertainty regarding the timing and likelihood of potential wind energy incentives provided by the federal government and elevated steel prices. Consistent with the Company's diversification strategy, this reduction was partially offset by an increase in industrial fabrications product line orders of 262% primarily due to higher order intake within all markets served as customers resumed capital spending and inventory purchases. Orders within our Industrial Solutions segment decreased by 9% as compared to the prior year, primarily due to the timing of orders associated with aftermarket projects. We recognized revenue of$40,389 in the third quarter of 2021, down 26% compared to the third quarter of 2020, primarily due to a 37% decrease in tower sections sold as a result of project delays and lower industry wide activity levels. Industrial fabrications product line revenue within the Heavy Fabrications segment increased 14% primarily due to recognizing our first revenue associated with our Modular Pressure Reducing Systems ("PRS") units. Gearing revenue increased by$437 from the third quarter of 2020, driven by higher order intake in recent quarters from O&G and steel customers, partially offset by decreased revenue from other industrial customers. Industrial Solutions revenue increased$132 from the third quarter of 2020, representing a 3% increase compared to the prior year quarter, primarily due to the timing of new gas turbine projects. We recorded a net loss of$2,105 or$0.11 per share in the third quarter of 2021, compared to a net loss of$1,003 or$0.06 per share in the third quarter of 2020 primarily due to a 37% decrease in tower sections sold due to project delays and underutilization of plant capacity in the quarter. This was partially offset by higher sales and improved manufacturing efficiencies in the Gearing segment. OnMarch 27, 2020 , the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit ("ERC"), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available for wages paid throughDecember 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter of 2021, a maximum of$10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is$7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of the year because we experienced a reduction in gross receipts of more than 20% for the first quarter of 2021 compared to the first quarter of 2019, the relevant criteria for the ERC. Since we qualified for the ERC in the first quarter of 2021, we automatically qualified for the ERC in the second quarter of 2021. In the first and second quarters of 2021, we received ERC benefits of$3,372 and$3,593 , respectively, which were recorded in "Other income (expense), net" in our condensed consolidated statement of operations. During the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019, we did not qualify for the ERC benefit. The receivable for the remaining uncollected ERC benefit is$503 as ofSeptember 30, 2021 and is included in the "Employee retention credit receivable" line item in our condensed consolidated balance sheet atSeptember 30, 2021 . COVID-19 Pandemic InMarch 2020 , theWorld Health Organization recognized a novel strain of coronavirus (COVID-19) as a pandemic. In response to this pandemic,the United States and various foreign, state and local governments have, among other actions, imposed travel and business restrictions and required or advised communities in which we do business to adopt stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. The pandemic and the various governments' response have caused significant and widespread uncertainty, volatility and disruptions in theU.S. and global economies, including in the regions in which we operate. Our facilities continued to operate as essential businesses in light of the customers and markets served. However, throughSeptember 30, 2021 , we have experienced an adverse impact to our business, operations and financial results as a result of this pandemic due in part to a decline in order activity levels, manufacturing inefficiencies associated with supply chain disruptions and employee staffing constraints due to the spread of the COVID-19 pandemic. In response to the pandemic, we continue to right-size our workforce and delay certain capital expenditures. In future periods, we may experience weaker customer demand, requests for extended payment terms, customer bankruptcies, additional supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors that could negatively impact the Company and its business, operations and financial results. As we cannot predict the duration or scope of the pandemic, including in light of the emerging variants, or its impact on economic and financial markets, any negative impact to our results cannot be reasonably estimated, but it could be material. We continue to monitor closely the Company's financial health and liquidity and the impact of the pandemic on the Company, including emerging variants. We have been able to serve the needs of our customers while taking steps to protect the health and safety of our employees, customers, partners, and communities. Among these steps, we have followed the guidance provided by theU.S. Centers for Disease Control and Prevention to protect the continued safety and welfare of our employees. 18
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Table of Contents RESULTS OF OPERATIONS
Three months ended
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 endedSeptember 30, 2021 , compared to the three months endedSeptember 30, 2020 . Three Months Ended September 30, 2021 vs. 2020 % of Total % of Total 2021 Revenue 2020 Revenue $ Change % Change Revenues$ 40,389 100.0 %$ 54,614 100.0 %$ (14,225 ) (26.0 )% Cost of sales 38,315 94.9 % 50,876 93.2 % (12,561 ) (24.7 )% Gross profit 2,074 5.1 % 3,738 6.8 % (1,664 ) (44.5 )% Operating expenses Selling, general and administrative expenses 3,888 9.6 % 4,030 7.4 % (142 ) (3.5 )% Intangible amortization 183 0.5 % 183 0.3 % - 0.0 % Total operating expenses 4,071 10.1 % 4,213 7.7 % (142 ) (3.4 )% Operating loss (1,997 ) (4.9 )% (475 ) (0.9 )% (1,522 ) (320.4 )% Other (expense) income, net Interest expense, net (269 ) (0.7 )% (507 ) (0.9 )% 238 46.9 % Other, net 185 0.5 % (1 ) (0.0 )% 186 18600.0 % Total other (expense) income, net (84 ) (0.2 )% (508 ) (0.9 )% 424 83.5 % Net loss before provision for income taxes (2,081 ) (5.2 )% (983 ) (1.8 )% (1,098 ) (111.7 )% Provision for income taxes 24 0.1 % 20 0.0 % 4 20.0 % Net loss$ (2,105 ) (5.2 )%$ (1,003 ) (1.8 )%$ (1,102 ) (109.9 )% Consolidated Revenues decreased by$14,225 versus the prior year quarter, which was primarily driven by a 37% decrease in tower sections sold in our Heavy Fabrications segment, reflecting both project delays and an industry-wide reduction in activity. Partly offsetting this was a 14% increase in industrial fabrications product line revenue, primarily due to recognizing our first revenue associated with our PRS units. Gearing segment revenue was up$437 from the third quarter of 2020, primarily driven by higher order intake in recent quarters from O&G and steel customers, partially offset by decreased revenue from other industrial customers. Industrial Solutions segment revenue increased$132 representing a 3% increase compared to the prior year quarter, primarily due to the timing of new gas turbine customer projects. Gross profit decreased by$1,664 from the prior year quarter primarily due to reduced operating leverage associated with lower wind tower production. This decrease was partially offset by higher sales and improved manufacturing efficiencies within the Gearing segment. As a result, gross margin decreased to 5.1% during the three months endedSeptember 30, 2021 , from 6.8% during the three months endedSeptember 30, 2020 .
Due to lower revenue levels, higher commission expenses, and an increase in employee costs, operating expenses as a percentage of sales increased to 10.1% in the current-year quarter from 7.7% in the prior year quarter.
Net loss was$2,105 during the three months endedSeptember 30, 2021 , compared to$1,003 during the three months endedSeptember 30, 2020 . This erosion was primarily due to the factors described above, partially offset by a 47% reduction in interest expense. Heavy Fabrications Segment Three Months Ended September 30, 2021 2020 Orders$ 26,539 $ 31,391 Tower sections sold 197 312 Revenues 28,675 43,440 Operating (loss) income (445 ) 2,020 Operating margin (1.6 )% 4.7 % Heavy Fabrications segment wind tower orders decreased 38% as compared to the third quarter of 2020 as customers delayed orders due to uncertainty regarding the timing and likelihood of potentialU.S. federal wind energy incentives and elevated steel prices. Industrial fabrication product line orders increased 262% quarter-over-quarter as customers resumed capital spending and inventory purchases in all end markets. Segment revenues decreased$14,765 from the prior year quarter primarily due to a 37% decrease in tower sections sold due to the aforementioned project delays. This was partially offset by increased industrial fabrication revenues as we recognized our first revenue associated with our PRS units in the current year quarter. 19
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Heavy Fabrications segment operating income decreased by$2,465 compared to the prior year. The quarter-over-quarter degradation in operating performance reflects the adverse volume impacts described previously, manufacturing inefficiencies caused by supply chain disruptions, and the underutilization of plant capacity in the quarter. Operating margin was (1.6)% during the three months endedSeptember 30, 2021 , a decrease from 4.7% during the three months endedSeptember 30, 2020 . Gearing Segment Three Months Ended September 30, 2021 2020 Orders$ 11,546 $ 3,225 Revenues 7,562 7,125 Operating loss (219 ) (1,023 ) Operating margin (2.9 )% (14.4 )% Gearing segment orders increased 258% from the prior year period primarily due to increased demand from O&G and mining customers. Gearing revenue was up 6% relative to the comparable prior year period, a reflection of higher order intake in the current year, primarily from O&G and steel customers, partially offset by a decrease in revenue from other industrial customers. Gearing segment operating loss decreased$804 from the prior year period. This was primarily attributable to higher sales and improved manufacturing efficiencies. Operating margin was (2.9)% during the three months endedSeptember 30, 2021 , an improvement from (14.4)% during the three months endedSeptember 30, 2020 , driven primarily by the items identified above. Industrial Solutions Segment Three Months Ended September 30, 2021 2020 Orders$ 4,512 $ 4,939 Revenues 4,213 4,081 Operating (loss) income (108 ) 87 Operating margin (2.6 )% 2.1 % 20
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Industrial Solutions segment orders decreased by 9% from the prior year period primarily due to the timing of orders associated with aftermarket projects. Segment revenue increased by 3% from the prior year period primarily due to the timing of new gas turbine projects. The decrease in operating income versus the prior-year quarter was primarily a result of a lower margin sales mix sold. Corporate and Other
Corporate and Other expenses during the three months ended
Nine Months Ended
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 nine months endedSeptember 30, 2021 , compared to the nine months endedSeptember 30, 2020 . Nine Months Ended September 30, 2021 vs. 2020 % of Total % of Total 2021 Revenue 2020 Revenue $ Change % Change Revenues$ 119,608 100.0 %$ 158,174 100.0 %$ (38,566 ) (24.4 )% Cost of sales 115,054 96.2 % 142,847 90.3 % (27,793 ) (19.5 )% Gross profit 4,554 3.8 % 15,327 9.7 % (10,773 ) (70.3 )% Operating expenses Selling, general and administrative expenses 12,623 10.6 % 12,537 7.9 % 86 0.7 % Intangible amortization 550 0.5 % 550 0.3 % - - % Total operating expenses 13,173 11.0 % 13,087 8.3 % 86 0.7 % Operating (loss) income (8,619 ) (7.2 )% 2,240 1.4 % (10,859 ) (484.8 )% Other income (expense), net Paycheck Protection Program loan forgiveness 9,151 7.7 % - - % 9,151 100.0 % Interest expense, net (816 ) (0.7 )% (1,654 ) (1.0 )% 838 50.7 % Other, net 7,322 6.1 % (3 ) (0.0 )% 7,325 244166.7 % Total other income (expense), net 15,657 13.1 % (1,657 ) (1.0 )% 17,314 1044.9 % Net income before provision for income taxes 7,038 5.9 % 583 0.4 % 6,455 1107.2 % Provision for income taxes 101 0.1 % 103 0.1 % (2 ) (1.9 )% Net income$ 6,937 5.8 %$ 480 0.3 %$ 6,457 1345.2 % Consolidated Revenues decreased by$38,566 from the nine months endedSeptember 30, 2020 , primarily due to a 29% decrease in tower sections sold due to customer driven project delays and a lower average selling price due to the mix of tower designs sold. Gross profit decreased by$10,773 from the first nine months of 2020 primarily due to lower sales volumes and due to manufacturing inefficiencies caused by supply chain disruptions, and a temporary shut-down of ourAbilene, Texas plant due to a weather event in the first quarter of 2021. As a result, gross margin decreased to 3.8% during the nine months endedSeptember 30, 2021 , from 9.7% during the nine months endedSeptember 30, 2020 .
Due to lower revenue levels, higher legal expenses and an increase in professional service fees, operating expenses as a percentage of sales increased to 11.0% in the current year from 8.3% in the prior year period.
Net income was$6,937 during the nine months endedSeptember 30, 2021 , compared to$480 during the nine months endedSeptember 30, 2020 . The increase was primarily attributable to income of$9,151 recognized from the PPP Loan forgiveness and income of$6,965 recognized from the ERC benefit. Both of these items were recognized in "Other income (expense), net" in our condensed consolidated statements of operations. This was partially offset by adverse volume impacts in our Heavy Fabrications segment. Heavy Fabrications Segment Nine Months Ended September 30, 2021 2020 Orders$ 62,096 $ 78,306 Tower sections sold 668 944 Revenues 87,282 125,424 Operating (loss) income (1,873 ) 8,760 Operating margin (2.1 )% 7.0 % Heavy Fabrications segment wind tower orders decreased 34% compared to the prior year period as customers delayed orders due to uncertainty regarding the timing and likelihood of potential federal wind energy incentives and elevatedU.S. steel prices. Industrial fabrication product line orders, within the Heavy Fabrication segment, increased 48% year-over-year. Segment revenues decreased by$38,142 from the prior year period primarily due to a 29% decrease in tower sections sold and a lower average selling price due to the mix of tower designs sold. 21
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Heavy Fabrications segment operating income decreased by$10,633 compared to the prior year. The year-over-year degradation in operating performance reflects the adverse volume impacts described previously, the underutilization of plant capacity, manufacturing inefficiencies caused by supply chain disruptions and a temporary shut-down of ourAbilene, Texas plant due to a weather event in the first quarter of 2021. Operating margin was (2.1)% during the nine months endedSeptember 30, 2021 , a decrease from 7.0% during the nine months endedSeptember 30, 2020 . Gearing Segment Nine Months Ended September 30, 2021 2020 Orders$ 29,325 $ 19,376 Revenues 20,315 20,273 Operating loss (2,090 ) (1,935 ) Operating margin (10.3 )% (9.5 )% Gearing segment orders increased 51% from the nine months endedSeptember 30, 2020 primarily due to increased demand from O&G customers, partially offset by the timing of aftermarket wind gearing orders, which can fluctuate based on customer order patterns and market conditions. Gearing revenue was flat as lower order intake in the second half of the prior year from industrial and mining customers was offset by increased revenue from O&G and aftermarket wind customers. Gearing segment operating loss increased$155 from the prior year period. This was primarily attributable to increased manufacturing inefficiencies. Operating margin was (10.3)% during the nine months endedSeptember 30, 2021 , down from (9.5)% during the nine months endedSeptember 30, 2020 , driven primarily by the items identified above.
Industrial Solutions Segment
Nine Months Ended
September 30,
2021 2020
Orders $ 11,831 $ 15,240
Revenues 12,357 12,516
Operating (loss) income (169 ) 496
Operating margin (1.4 )% 4.0 %
Industrial Solutions segment orders decreased by 22% from the prior year period
primarily due to the timing of orders associated with new gas turbine and
aftermarket projects. Segment revenue decreased by 1% from the prior year period
primarily due to the timing of aftermarket installations. The decrease in
operating income versus the prior year was primarily a result of a lower margin
sales mix sold during the first nine months of 2021. Operating margin was (1.4)%
during the nine months ended September 30, 2021 , a decrease from 4.0% during the
nine months ended September 30, 2020 .
Corporate and Other
Corporate and Other expenses during the nine months ended
LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES
As ofSeptember 30, 2021 , cash totaled$2,335 , a decrease of$1,037 fromDecember 31, 2020 . Cash balances remain limited as operating receipts and disbursements flow through our Credit Facility (as defined in Note 7, "Debt and Credit Agreements," in the notes to our condensed consolidated financial statements), which is in a drawn position. Debt and finance lease obligations atSeptember 30, 2021 totaled$10,321 . As ofSeptember 30, 2021 , we had the ability to borrow up to an additional$18,743 under the Credit Facility. OnMarch 9, 2021 , we entered into a$10,000 Equity Distribution Agreement (the "Equity Distribution Agreement") withCraig-Hallum Capital Group, LLC (the "Manager"). Pursuant to the terms of the Equity Distribution Agreement, we issued 1,897,697 shares of the Company's common stock thereunder during the first two quarters of 2021. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately$9,725 after deducting commissions paid of approximately$275 and before deducting other expense of$396 . OnNovember 8, 2021 , we executed the Third Amendment to the Amended and Restated Loan Agreement (the "Third Amendment") which waived the fixed charge coverage ratio default for the quarter endedSeptember 30, 2021 , suspended testing of the fixed charge coverage ratio covenant throughSeptember 30, 2022 , added a minimum EBITDA covenant applicable to the three-month period endingDecember 31, 2021 , the six-month period endingMarch 31, 2022 , the nine-month period endingJune 30, 2022 and the twelve-month period endingSeptember 30, 2022 and added a reserve of$5,000,000 to the Revolving Loan Availability throughDecember 31, 2022 . We anticipate that current cash resources, amounts available under the Credit Facility, cash to be generated from operations and any potential proceeds from the sale of further securities under the Form S-3 will be adequate to meet our liquidity needs for at least the next twelve months. 22
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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, particularly in light of the COVID-19 pandemic, and emerging variants, and its effects on domestic and global economies, we may 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 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 us. 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, there can be no assurances that our operations will generate sufficient cash or that existing or new 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 nine months ended
Nine Months Ended
September 30,
2021 2020
Total cash (used in) provided by:
Operating activities $ (10,823 ) $ (2,475 )
Investing activities (1,336 ) (1,597 )
Financing activities 11,122 4,197
Net (decrease) increase in cash
Operating Cash Flows During the nine months endedSeptember 30, 2021 , net cash used in operating activities totaled$10,823 compared to net cash used in operating activities of$2,475 during the prior year period. The increase in net cash used was primarily due to our operating performance (excluding the PPP loan forgiveness), the timing of accruals and an increase in operating working capital in the current year period. Investing Cash Flows During the nine months endedSeptember 30, 2021 , net cash used in investing activities totaled$1,336 , compared to net cash used in investing activities of$1,597 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 decrease in net purchases of property and equipment. Financing Cash Flows During the nine months endedSeptember 30, 2021 , net cash provided by financing activities totaled$11,122 , compared to net cash provided by financing activities of$4,197 during the prior year period. The increase was primarily due to proceeds from the sale of securities under the Equity Distribution Agreement and increased net borrowings under our Credit Facility in the current year, partially offset by the absence of the PPP Loan (defined below) proceeds received in 2020. Other In 2016, we entered into a$570 loan agreement with theDevelopment Corporation of Abilene which is included in the "Long-term debt, less current maturities" line item of our condensed consolidated financial statements as ofSeptember 30, 2021 andDecember 31, 2020 . The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2020, 2019 and 2018,$114 of the loan was forgiven. As ofSeptember 30, 2021 , the loan balance was$228 . In addition, we have outstanding notes payable for capital expenditures in the amount of$161 and$163 as ofSeptember 30, 2021 andDecember 31, 2020 , respectively, with$161 included in the "Line of Credit and other notes payable" line item of our condensed consolidated financial statements as ofSeptember 30, 2021 andDecember 31, 2020 . The notes payable have monthly payments that range from$1 to$16 and an interest rate of approximately 4%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range fromMarch 2022 toSeptember 2024 . 23
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OnApril 15, 2020 , we received funds under notes and related documents executed under the Paycheck Protection Program ("PPP Loans") withCIBC Bank, USA under the PPP which was established under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") enacted onMarch 27, 2020 in response to the COVID-19 pandemic and is administered by theU.S. Small Business Administration (the "SBA"). We received total proceeds of$9,530 from the PPP Loans and made repayments of$379 onMay 13, 2020 . Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 enacted onJune 5, 2020 (the "Flexibility Act"), the PPP Loans, and accrued interest and fees are eligible to be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the "covered period") if they are used for qualifying expenses as described in the CARES Act including payroll costs and benefits (which must equal or exceed 60% of the amount requested to be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of full time equivalent employees and the level of compensation for employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. We used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses consistent with the terms of the PPP and submitted our forgiveness applications toCIBC Bank, USA during the first quarter of 2021. During the second quarter of 2021, all loans were forgiven by the SBA and a gain of$9,151 was recorded in Other income (expense), net in our condensed consolidated statements of operations. The CARES Act also provided for the ERC, which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available for wages paid throughDecember 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of$10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is$7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of the year because we experienced a reduction in gross receipts of more than 20% for the first quarter of 2021 compared to the first quarter of 2019, the relevant criteria for the ERC. Since we qualified for the ERC in the first quarter of 2021, we automatically qualified for the ERC in the second quarter of 2021. In the first and second quarters of 2021, we received ERC benefits of$3,372 and$3,593 , respectively, which were recorded in "Other income (expense), net" in our condensed consolidated statement of operations. During the third quarter of 2021 due to relatively higher revenues, we did not qualify for the ERC benefit. The remaining receivable for the uncollected ERC benefit is$503 as ofSeptember 30, 2021 and is included in the "Employee retention credit receivable" line item in our condensed consolidated balance sheet atSeptember 30, 2021 .
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 endedDecember 31, 2020 . 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, many of which are, and will be, amplified by the COVID-19 pandemic, including as a result of emerging variants: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported intothe 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) 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, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, 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 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 theU.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) our ability to utilize various relief options enabled by the CARES Act; (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) 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 endedDecember 31, 2020 . 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. 24
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