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, 2021 . 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,
2022 2021 2022 2021
Net revenues $ 44,843 $ 40,389 $ 136,699 $ 119,608
Net (loss) income $ (1,772 ) $ (2,105 ) $ (6,879 ) $ 6,937
Adjusted EBITDA (1) $ 1,897 $ 401 $ 2,259 $ 14,418
Capital expenditures $ 1,060 $ 604 $ 2,757 $ 1,369
Free cash flow (2) $ 223 $ (3,251 ) $ (8,169 ) $ (1,913 )
Operating working capital (3) $ 26,306 $ 19,554 $ 26,306 $ 19,554
Total debt $ 24,118 $ 5,673 $ 24,118 $ 5,673
Total orders $ 84,457 $ 42,597 $ 163,196 $ 103,252
Backlog at end of period (4) $ 132,213 $ 76,531 $ 132,213 $ 76,531
Book-to-bill (5) 1.9 1.1 1.2 0.9
(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 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
time.
(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 Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Net (loss) income $ (1,772 ) $ (2,105 ) $ (6,879 ) $ 6,937
Interest expense 1,234 269 2,355 816
Income tax provision 14 24 36 101
Depreciation and amortization 1,486 1,594 4,581 4,758
Share-based compensation and other stock
payments 935 619 2,166 1,806
Adjusted EBITDA 1,897 401 2,259 14,418
Changes in operating working capital (614 ) (2,555 ) (7,671 ) (14,492 )
Employee retention credit receivable - (503 ) - (503 )
Capital expenditures (1,060 ) (604 ) (2,757 ) (1,369 )
Proceeds from disposal of property and
equipment - 10 - 33
Free Cash Flow $ 223 $ (3,251 ) $ (8,169 ) $ (1,913 )
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Table of Contents OUR BUSINESS Third Quarter Overview We booked$84,457 in new orders in the third quarter of 2022, up significantly from$42,597 in the third quarter of 2021. Within our Heavy Fabrications segment, wind tower orders increased 223% compared to the prior year quarter as tower customers secured 2022 and 2023 production capacity to support ongoing wind turbine tower installation projects. Partially offsetting the increase in tower orders within the Heavy Fabrication segment was a 41% decrease in industrial fabrication orders. Gearing segment orders increased 34% compared to the prior year quarter primarily due to higher demand from oil and gas ("O&G"), industrial, and mining customers. Orders within our Industrial Solutions segment increased by 34% as compared to the prior year quarter, primarily due to an increase in new gas turbine orders. We recognized revenue of$44,843 in the third quarter of 2022, up 11% compared to the third quarter of 2021, primarily due to a 95% increase in industrial fabrications product line revenue within the Heavy Fabrications segment and a 35% increase in Gearing segment revenue. The increase in industrial fabrication revenue is primarily attributable to strong recent order intake from industrial customers and revenue recognized on our Pressure Reducing Systems ("PRS") units. This increase was partially offset by a 26% decrease in tower sections sold. The Gearing revenue increase was primarily driven by strong order intake in recent quarters from O&G customers, partially offset by a decrease in aftermarket wind revenue. Industrial Solutions segment revenue decreased 5% compared to the prior year quarter, primarily due to global logistics delays.
We recorded a net loss of
COVID-19 Pandemic The COVID-19 pandemic has disrupted business, trade, commerce and financial markets in theU.S. and globally. ThroughSeptember 30, 2022 , we experienced an adverse impact to our business, operations and financial results as a result of the COVID-19 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 follow the guidance provided by theU.S. Centers for Disease Control and Prevention . 19
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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, 2022 , compared to the three months endedSeptember 30, 2021 . Three Months Ended September 30, 2022 vs. 2021 % of Total % of Total 2022 Revenue 2021 Revenue $ Change % Change Revenues$ 44,843 100.0 %$ 40,389 100.0 %$ 4,454 11.0 % Cost of sales 41,095 91.6 % 38,315 94.9 % 2,780 7.3 % Gross profit 3,748 8.4 % 2,074 5.1 % 1,674 80.7 % Operating expenses Selling, general and administrative expenses 4,085 9.1 % 3,888 9.6 % 197 5.1 % Intangible amortization 183 0.4 % 183 0.5 % - 0.0 % Total operating expenses 4,268 9.5 % 4,071 10.1 % 197 4.8 % Operating loss (520 ) (1.2 )% (1,997 ) (4.9 )% 1,477 74.0 % Other (expense) income, net Interest expense, net (1,234 ) (2.8 )% (269 ) (0.7 )% (965 ) (358.7 )% Other, net (4 ) (0.0 )% 185 0.5 % (189 ) (102.2 )% Total other (expense) income, net (1,238 ) (2.8 )% (84 ) (0.2 )% (1,154 ) (1373.8 )% Net loss before provision for income taxes (1,758 ) (3.9 )% (2,081 ) (5.2 )% 323 15.5 % Provision for income taxes 14 0.0 % 24 0.1 % (10 ) (41.7 )% Net loss$ (1,772 ) (4.0 )%$ (2,105 ) (5.2 )%$ 333 15.8 % Consolidated Revenues increased by$4,454 versus the prior year quarter. This increase was primarily due to a 95% increase in industrial fabrications product line revenue within the Heavy Fabrications segment compared to the prior year quarter primarily as a result of strong recent order intake from industrial customers and revenue recognized on our PRS units. This increase was partially offset by a 26% decrease in tower sections sold compared to the prior year quarter. Gearing segment revenue was up 35% from the third quarter of 2021, primarily driven by higher recent order intake from O&G customers, partially offset by a decrease in aftermarket wind revenue. Industrial Solutions segment revenue decreased by 5% from the third quarter of 2021 primarily due to global logistics delays.
Gross profit increased by
Due primarily to higher revenue levels, operating expenses as a percentage of sales decreased to 9.5% in the current-year quarter from 10.1% in the prior year quarter. Net loss was$1,772 during the three months endedSeptember 30, 2022 , compared to a net loss of$2,105 during the three months endedSeptember 30, 2021 . This decrease in net loss was primarily due to the factors described above, partially offset by higher interest expense. Heavy Fabrications Segment Three Months Ended September 30, 2022 2021 Orders$ 62,873 $ 26,539 Tower sections sold 145 197 Revenues 30,640 28,675 Operating income 372 (445 ) Operating margin 1.2 % (1.6 )% Wind tower orders increased 223% compared to the prior year quarter as tower customers secured 2022 and 2023 production capacity to support ongoing wind turbine tower installation projects. Industrial fabrications product line orders decreased 41% from the prior year quarter primarily due to lower mining demand. Heavy Fabrications segment revenues increased 7% compared to the prior year primarily due to a 95% increase in industrial fabrication line revenues, which was partially offset by a 26% decrease in tower sections sold. 20
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Heavy Fabrications segment operating income increased by$817 compared to the prior year quarter. The quarter-over-quarter improvement in operating performance is primarily a result of higher sales volumes and labor efficiencies, partially offset by higher material costs. Operating margin was 1.2% during the three months endedSeptember 30, 2022 , an increase from (1.6)% during the three months endedSeptember 30, 2021 . Gearing Segment Three Months Ended September 30, 2022 2021 Orders$ 15,523 $ 11,546 Revenues 10,190 7,562 Operating income (loss) 624 (219 ) Operating margin 6.1 % (2.9 )% Gearing segment orders increased 34% from the prior year period primarily due to increased demand from industrial, mining, and O&G customers. Gearing revenue was up 35% relative to the comparable prior year period primarily due to higher order intake in recent quarters from O&G customers, partially offset by a decrease in aftermarket wind revenue. Gearing segment operating income improved by$843 from the prior year period. This improvement was primarily attributable to higher sales partially offset by increased fixed costs to support volumes. Operating margin was 6.1% during the three months endedSeptember 30, 2022 , an improvement from (2.9)% during the three months endedSeptember 30, 2021 , driven primarily by the items identified above. Industrial Solutions Segment Three Months Ended September 30, 2022 2021 Orders$ 6,061 $ 4,512 Revenues 4,020 4,213 Operating loss (191 ) (108 ) Operating margin (4.8 )% (2.6 )% 21
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Industrial Solutions segment orders increased by 34% from the prior year period primarily due to the timing of orders associated with new gas turbine orders. Segment revenue decreased by 5% from the prior year period primarily due to global logistics delays. Operating loss increased versus the prior-year quarter primarily as a result of lower sales and higher freight and packaging costs. 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, 2022 , compared to the nine months endedSeptember 30, 2021 . Nine Months Ended September 30, 2022 vs. 2021 % of Total % of Total 2022 Revenue 2021 Revenue $ Change % Change Revenues$ 136,699 100.0 %$ 119,608 100.0 %$ 17,091 14.3 % Cost of sales 128,545 94.0 % 115,054 96.2 % 13,491 11.7 % Gross profit 8,154 6.0 % 4,554 3.8 % 3,600 79.1 % Operating expenses Selling, general and administrative expenses 12,109 8.9 % 12,623 10.6 % (514 ) (4.1 )% Intangible amortization 550 0.4 % 550 0.5 % - - % Total operating expenses 12,659 9.3 % 13,173 11.0 % (514 ) (3.9 )% Operating loss (4,505 ) (3.3 )% (8,619 ) (7.2 )% 4,114 47.7 % Other (expense) income, net Paycheck Protection Program loan forgiveness - - % 9,151 7.7 % (9,151 ) (100.0 )% Interest expense, net (2,355 ) (1.7 )% (816 ) (0.7 )% (1,539 ) (188.6 )% Other, net 17 0.0 % 7,322 6.1 % (7,305 ) (99.8 )% Total other (expense) income, net (2,338 ) (1.7 )% 15,657 13.1 % (17,995 ) (114.9 )% Net (loss) income before provision for income taxes (6,843 ) (5.0 )% 7,038 5.9 % (13,881 ) (197.2 )% Provision for income taxes 36 0.0 % 101 0.1 % (65 ) (64.4 )% Net (loss) income$ (6,879 ) (5.0 )%$ 6,937 5.8 %$ (13,816 ) (199.2 )% Consolidated Revenues increased by$17,091 versus the prior year period. Gearing segment revenue was up 52% from 2021, primarily driven by strong recent order intake from O&G, mining, and industrial customers, partially offset by a decrease in aftermarket wind revenue. Heavy Fabrications segment revenues increased by 7% as lower tower demand was more than offset by a 101% increase in industrial fabrications product line revenue. The industrial fabrications product line revenue increase was primarily attributable to higher recent order intake from industrial and mining customers, in addition to revenue recognized on our PRS units. Industrial Solutions segment revenue increased by 6%, primarily due to an increase in revenue from aftermarket projects, partially offset by a decrease in revenue from new gas turbine projects. Gross profit increased by$3,600 when compared to the prior year period primarily due to higher sales volumes in the Gearing and the Heavy Fabrications segments, partially offset by higher material costs and ramp-up costs. As a result, gross margin increased to 6.0% during the nine months endedSeptember 30, 2022 , from 3.8% during the nine months endedSeptember 30, 2021 .
Due primarily to higher revenue levels and reduced legal and professional fees, operating expenses as a percentage of sales decreased to 9.3% in the current-year period from 11.0% in the prior year period.
Net loss was$6,879 during the nine months endedSeptember 30, 2022 , compared to net income of$6,937 during the nine months endedSeptember 30, 2021 primarily due to the factors described above and the absence of the$6,965 employee retention credit ("ERC") benefit and the$9,151 Payroll Protection Program ("PPP") loan forgiveness recorded in the prior year. Heavy Fabrications Segment Nine Months Ended September 30, 2022 2021 Orders$ 110,022 $ 62,096 Tower sections sold 474 668 Revenues 93,486 87,282 Operating loss (11 ) (1,873 ) Operating margin (0.0 )% (2.1 )% Wind tower orders increased 106% versus the prior year period as tower customers secured 2022 and 2023 production capacity to support ongoing wind turbine tower installation projects. Industrial fabrications product line orders increased 10% from the prior year period primarily due to increased demand for PRS units and industrial products, partially offset by a reduction in mining demand. Heavy Fabrications segment revenues increased 7% primarily due to a 101% increase in industrial fabrication revenue primarily due to higher recent order intake from industrial and mining customers, in addition to revenue recognized from our PRS units in the current year. The increase in industrial fabrications revenue was partially offset by a 29% decrease in tower sections sold. 22
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Heavy Fabrications segment operating loss improved by$1,862 compared to the prior year period. The improvement in operating performance was primarily a result of higher sales in the current year and the absence of one-time events that occurred during the prior year period including a weather-related event and a customer driven project delay, partially offset by higher material costs and costs associated with transitioning a portion of the workforce to support growth in the industrial fabrications product line. Operating margin was 0.0% during the nine months endedSeptember 30, 2022 , an improvement from (2.1)% during the nine months endedSeptember 30, 2021 . Gearing Segment Nine Months Ended September 30, 2022 2021 Orders$ 38,526 $ 29,325 Revenues 30,890 20,315 Operating loss (73 ) (2,090 ) Operating margin (0.2 )% (10.3 )% Gearing segment orders increased 31% from the prior year period primarily due to increased demand from O&G, mining, and industrial customers. Gearing revenue was up 52% relative to the comparable prior year period primarily due to higher order intake in recent quarters from O&G, industrial, and mining customers, partially offset by a decrease in aftermarket wind revenue. Gearing segment operating loss improved by$2,017 from the prior year period. This improvement was primarily attributable to higher sales, partially offset by higher material costs, ramp-up costs, and increased fixed costs to support higher volumes. Operating margin was (0.2)% during the nine months endedSeptember 30, 2022 , an improvement from (10.3)% during the nine months endedSeptember 30, 2021 , driven primarily by the items identified above. Industrial Solutions Segment Nine Months Ended September 30, 2022 2021 Orders$ 14,648 $ 11,831 Revenues 13,142 12,357 Operating loss (368 ) (169 ) Operating margin (2.8 )% (1.4 )% 23
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Industrial Solutions segment orders increased by 24% from the prior year period primarily due to the timing of orders associated with aftermarket projects. Segment revenue increased by 6% from the prior year period primarily due to an increase in revenue from aftermarket projects. The increased operating loss versus the prior year was primarily a result of higher variable expenses including freight costs. Corporate and Other
Corporate and Other expenses during the nine months ended
LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES
As ofSeptember 30, 2022 , cash totaled$1,509 , an increase of$657 fromDecember 31, 2021 . Cash balances remain limited as operating receipts and disbursements flow through our 2022 Credit Facility (as defined in Note 7, "Debt and Credit Agreements," in the notes to our condensed consolidated financial statements), which was in a drawn position as ofSeptember 30, 2022 . Debt and finance lease obligations atSeptember 30, 2022 totaled$28,966 . As ofSeptember 30, 2022 , we had the ability to borrow up to an additional$13,315 under the 2022 Credit 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. 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$411 . OnSeptember 12, 2022 , we entered into a Sales Agreement (the "Sales Agreement") withRoth Capital Partners, LLC andHC 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 . Any shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and the 424(b) prospectus supplement relating to the offering datedSeptember 12, 2022 . We will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. During the quarter endedSeptember 30, 2022 , we issued 100,379 shares of our common stock under the Sales Agreement and the net proceeds (before upfront costs) to us from the sale of our common stock were approximately$323 after deducting commissions paid of approximately$9 . As ofSeptember 30, 2022 , shares of our common stock having a value of approximately$11,667 remained available for issuance under the Sales Agreement. OnAugust 4, 2022 , we executed the 2022 Credit Agreement (as defined in Note 7, "Debt and Credit Agreements" in the notes to our condensed consolidated financial statements) withWells Fargo Bank, National Association , as lender ("Wells Fargo"), providing us with a$35,000 senior secured revolving credit facility (which may be further increased by up to an additional$10,000 upon our request 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. The 2022 Credit Facility replaces the 2016 Credit Facility (as defined in Note 7, "Debt and Credit Agreements" in the notes to our condensed consolidated financial statements). All obligations outstanding under the 2016 Credit Facility were refinanced by the 2022 Credit Facility onAugust 5, 2022 . For more information on the 2022 Credit Facility, please see Note 7, "Debt and Credit Agreement" in the notes to our condensed consolidated financial statements. We anticipate that current cash resources, amounts available under the 2022 Credit Facility, cash to be generated from operations and equipment financing, proceeds from the sale of securities under the Sales Agreement 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. 24
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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 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 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,
2022 2021
Total cash (used in) provided by:
Operating activities $ (10,271 ) $ (10,823 )
Investing activities (2,757 ) (1,336 )
Financing activities 13,685 11,122
Net increase (decrease) in cash
Operating Cash Flows During the nine months endedSeptember 30, 2022 , net cash used in operating activities totaled$10,271 compared to net cash used in operating activities of$10,823 during the prior year period. The decrease in net cash used was primarily due to improved operating performance in the current year and less operating working capital build, partially offset by the ERC and PPP loan forgiveness benefits which were recognized in the prior year period. Investing Cash Flows During the nine months endedSeptember 30, 2022 , net cash used in investing activities totaled$2,757 , compared to net cash used in investing activities of$1,336 during the prior year period. The increase in net cash used in investing activities as compared to the prior-year period was primarily due to an increase in net purchases of property and equipment. Financing Cash Flows During the nine months endedSeptember 30, 2022 , net cash provided by financing activities totaled$13,685 , compared to net cash provided by financing activities of$11,122 during the prior year period. The increase was primarily due to increased net borrowings under our 2022 Credit Facility in the current year, partially offset by the proceeds from the sale of securities under the Equity Distribution Agreement received in the prior year. In 2016, we entered into a$570 loan agreement with theDevelopment Corporation of Abilene which is included in the "Line of credit and other notes payable" line item of our condensed consolidated financial statements as ofSeptember 30, 2022 andDecember 31, 2021 . The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021, 2020, 2019 and 2018,$114 of the loan was forgiven. As ofSeptember 30, 2022 , the loan balance was$114 . In addition, we have outstanding notes payable for capital expenditures in the amount of$2,111 and$363 as ofSeptember 30, 2022 andDecember 31, 2021 , respectively, with$26 and$186 included in the "Line of Credit and other notes payable" line item of our condensed consolidated financial statements as ofSeptember 30, 2022 andDecember 31, 2021 . The notes payable have monthly payments that range from$3 to$16 and an interest rate of approximately 6%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature inSeptember 2028 . The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") provided for the ERC, which is a refundable tax credit against certain employment taxes. The ERC is available for wages paid throughSeptember 30, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. The maximum tax credit that could be claimed by an eligible employer in 2021 was$7,000 per employee per calendar quarter. 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. We did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019. The receivable for the remaining uncollected ERC benefit was$497 as ofDecember 31, 2021 and was included in the "Employee retention credit receivable" line item in our condensed consolidated balance sheet atDecember 31, 2021 . The remaining balance of$497 for the uncollected ERC benefit was collected duringJanuary 2022 . CRITICAL ACCOUNTING ESTIMATES There have been no material changes in our critical accounting estimates during the three months endedSeptember 30, 2022 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the year endedDecember 31, 2021 . 25
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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, 2021 . 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: (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, 2021 . 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. 26
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