BWEN 10-K & 10-Q changes, risk factors and insider trading

Changes of administration in the U.S. federal government may affect our business in a manner that currently cannot be reliably predicted, especially given the potentially significant changes to various laws and regulations that affect us.our business. These uncertainties may include changes in laws and policies in areas such as corporate taxation, taxation and tariffs on imports of internationally sourced products, international trade including trade treaties such as the United States-Mexico-Canada Agreement, environmental protection and workplace safety laws, labor and employment law, immigration and health care. For example, during 2025, President TrumpTrump's administration has indicated that his administration is likely to imposeimposed significant tariffs on goods imported goods.into the United States from many countries around the world. The imposition of such tariffs has strained and may continue to strain international trade relations orand has impacted and may continue to impact the costs of raw materials. Additionally, an advisory commission, the “Department of Government Efficiency” was announced to reform federal government processes and reduce expenditures. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential change in budgetary priorities could adversely affect individual programs including programs that incentivize the development of wind power generation capacity, and may delay purchasing or payment decisions by certain of our customers. All of these uncertainties may individually or in the aggregate materially and adversely affect our business, results of operations or financial condition.

We depend on the services of unionized labor and have collective bargaining agreements with certain of our operations workforce at our Cicero, Illinois and Neville Island, Pennsylvania Gearing facilities. The loss of the services of these and other personnel, whether through terminations, attrition, labor strike or otherwise, or a material change in our collective bargaining agreements, including a significant increase in labor costs, could have a material adverse impact on us and our future profitability. In November 2022, a four-year collective bargaining agreement was ratified by the collective bargaining union in our Neville Island facility and will remain in effect through October 2026. AOn March 6, 2026, we agreed to a new four-year collective bargaining agreement in regard towith the union representing the workforce at our Cicero, Illinois facility wasreplacing negotiateda inprevious Februaryagreement. 2022,The andnew four-year collective bargaining agreement is expected to remain in effect through February 2026.2030. Any failure to negotiate and conclude a new collective bargaining agreement with a union when the applicable agreement expires could result in strikes, boycotts, or other labor disruptions. As of December 31, 2024,2025, these collective bargaining units represented approximately 18%20% of our workforce.

Recent increases in inflation and high interest rates in the United States and elsewhere could adversely affect our business.

We are exposed to fluctuations in inflation and interest rates, which could negatively affect our business, financial condition and results of operations. The United States and other jurisdictions have recently experienced high levels of inflation. If the inflation rate continues to increase, it will likely continue to affect our expenses, including, but not limited to, employee compensation and labor expenses and increased costs for supplies, and we may not be successful in offsetting such cost increases. In addition, historically we have carried a significant amount of variable rate debt which is subject to fluctuations in interest rates. Certain government agencies, including the U.S. Treasury, have previously implemented and may implement policies that have resulted and may continue to result in significantlyhistorically increasedhigh interest rates and borrowing costs. RecentEven increasesthough inthe Federal Funds Effective Rate was cut on multiple occasions during 2025, the cuts were relatively small and interest rates willremain relatively high on a historical basis. These relatively high interest rates may continue to result in increasedsignificant interest expense to the extent we cannot limit our debt balances. A severe or prolonged economic downturn, whether due to inflationary pressures, increasedhistorically high interest rates, or otherwise, could result in a variety of risks to our business, including weakened demand for our products.

Our businesses are subject to risks associated with competition from new or existing industry participants who may have more resources and better access to capital. Certain of our competitors and potential competitors may have substantially greater financial resources, customer support, technicaltechnical, market intelligence and marketing resources, faster and more effective adoption of new technologies including artificial intelligence and machine learning, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we do. Among other things, these industry participants compete with us based upon price, quality, location and available capacity. We cannot be sure that we will have the resources or expertise to compete successfully in the future. We also cannot be sure that we will be able to match cost reductions by our competitors or that we will be able to succeed in the face of current or future competition.

We continue to seek to strategically diversify and grow the business to improve operational efficiency and meet customer demand. Our diversification efforts into natural gas turbine power generation (also known as aeroderivatives),generation, defense, mining, precision machining, O&G and other power generation markets may require additional investments in personnel, equipment and operational infrastructure. Moreover, although we have historically participated in most of these lines of business, there is no assurance that we will be able to grow our presence in these markets at a rate sufficient to compensate for a potentially weaker wind energy market. If we are unable to further penetrate these markets, our plans to diversify our operations may not be successful and our anticipated future growth may be adversely affected.

We may not be able to utilize all of our NOLs. For financial statement presentation, all benefits associated with the NOL carryforwards have been reserved; therefore, this potential asset is not reflected on our balance sheet. To the extent available, we will use any NOL carryforwards to reduce the U.S. corporate income tax liability associated with our operations. However, if we do not achieve sufficient profitability prior to their expiration, we will not be able to fully utilize our NOLs to offset income. Section 382 of the IRC (“Section 382”) generally imposes an annual limitation on the amount of NOL carryforwards that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. Our ability to utilize NOL carryforwards and built-in losses may be limited, under Section 382 or otherwise, by our issuance of common stock or by other changes in ownership of our stock. After analyzing Section 382 in 2010, we determined that aggregate changes in our stock ownership had triggered an annual limitation of NOL carryforwards and built-in losses available for utilization to $14,284 per annum. Although this event limited the amount of pre ownership change date NOLs and built- in losses we can utilize annually, it does not preclude us from fully utilizing our current NOL carryforwards prior to their expiration. However, subsequent changes in our stock ownership could further limit our ability to use our NOL carryforwards and our income could be subject to taxation earlier than it would if we were able to use NOL carryforwards and built-in losses without an annual limitation, which could result in lower profits. To address these concerns, in February 2013 we adopted a Section 382 Stockholder Rights Plan, which was subsequently approved by our stockholders and extended in 2016, 2019, 2022, and 20222025 for additional three-year periods (as amended, the “Rights Plan”), designed to preserve our substantial tax assets associated with NOL carryforwards under Section 382. The Rights Plan is intended to deter any person or group from being or becoming the beneficial owner of 4.9% or more of our common stock and thereby triggering a further limitation of our available NOL carryforwards. On February 3, 2025, the Board approved an amendment which included an extension of the Rights Plan for an additional three years. The amendment is subject to approval by our stockholders at our 2025 Annual Meeting of Stockholders. See Note 14,15, “Income Taxes” of our consolidated financial statements for further discussion of our Rights Plan. There can be no assurance that the Rights Plan will be effective in protecting our NOL carryforwards or that it will be approved by our stockholders at our 2025 Annual Meeting of Stockholders.carryforwards. Additionally, because the Rights Plan subjects any person that acquires 4.9% of our common stock without the Board’s permission to significant dilution, it could make it harder for a third party to acquire us without the consent of the Board. In particular, the Rights Plan may deter a third party from completing or even initiating an acquisition of the Company, which may prevent stockholders from realizing a control premium from a potential acquirer, or from otherwise maximizing stockholder value.

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

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

Additionally, the ongoing war in Ukraine has led to economic sanctions imposed against Russia by the U.S. and certain European nations, including a prohibition on doing business with certain Russian companies which may have led to, or may lead to, certain retaliatory trade restrictions from Russia. Such sanctions may impact companies in many sectors and has leadled to volatility of prices in the global energy industry and disruption and volatility in the U.S. and global markets. There is a possibility that such sanctions or trade restrictions may be expanded, or new sanctions or trade restrictions may be imposed by the U.S., Russia, China or other countries, which could further disrupt supply chains and increase volatility of pricing. The extent and duration of the war and extent and strength of the sanctions are still developing, and the corresponding effect on the Company remains uncertain. Certain other geopolitical conflicts, including the war between Israel and Hamas has also lead to material disruptions to certain supply chains and volatility in prices.

We recognized revenue of $158,052 in 2025, up 10% from revenue of $143,136 in 2024, down 30% from revenue of $203,477 in 2023.2024. Heavy Fabrications segment revenues decreasedincreased 38%22% primarily due to a 41%36% decreaseincrease in wind revenue as awe globalcompleted the limited tower production run at our Manitowoc facility we began earlier in the year and recognized increased wind turbinerepowering manufacturerrevenue. shiftedThis approximatelywas halfpartially ofoffset itsby contracteda towerdecrease sectionin ordersPRS initially planned for 2024 into 2025. Additionally,and industrial fabrication product line revenues decreased primarily due to lower shipments of our PRS units in the current year. Gearing segment revenue decreased 22% relative to 2023 primarily due to reduced shipments to O&G and steel customers, partially offset by increased shipments to aftermarket wind customers. Industrial Solutions segment revenue increased 4%16% from the prior year primarily due to increased shipments to new and aftermarket gas turbine customers,customers. Gearing segment revenue decreased 23% relative to 2024 reflective of reduced shipments within most markets served, partially offset by decreasedincreased shipmentspower togeneration international customers.shipments.

During 20242025 and 2023,2024, we recognized gross AMP credits totaling $9,588$13,059 and $14,493,$9,588, respectively, within the Heavy Fabrications segment. These AMP credits were introduced as part of the IRA, which was enacted on August 16, 2022. The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components. Manufacturers of wind components qualify for the AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed. The credit applies to each component produced and sold in the U.S. beginning in 2023 through 2032. The OBBBA enacted on July 4, 2025, eliminates the credit for components produced and sold after 2027. Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $0.03 per watt for each wind tower produced. In calculating the eligible credit, we relied on the megawatt rating provided by the customer. Manufacturers who qualify for the AMP credits can apply to the Internal Revenue Service for cash refunds of the AMP credits or sell the AMP credits to third parties for cash, or apply the AMP credits against taxable income. We recognized the AMP credits as a reduction to cost of sales in our consolidated statements of operations for the years ended December 31, 20242025 and 2023.2024. The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in our consolidated balance sheets as of December 31, 20242025 and 2023.2024.

OnDuring December 21, 2023,2025, we enteredrecognized into an agreement to sell 2023 and 2024gross AMP credits tototaling a third party. At that time, we sold a portion of the gross 2023 credits in the amount of $6,952$13,059 and recognized a 6.5% discount on the salecredits intotaling the amount of $452$849, which was recognized in cost of sales. In addition, we wrote down the remaining receivable of $7,541 to net realizable value and recorded the expected loss on sale of $490 in cost of sales. The remaining 2023 AMP credit receivable was collected during the first quarter of 2024. We also incurred other miscellaneous administrative costs related to selling the credits in the amount of $254, $197 of$98, which hashave been recorded as cost of sales,sales. withAdditionally, thecosts remainingtotaling capitalized$7 andare included in the “Prepaid expenses and other current assets” line item of our consolidated financial statements at December 31, 2023.2025.

We use our credit facility to fund working capital requirements and believe that our credit facility, together with the operating cash generated by our businesses, and any potential proceeds from access to the public or private debt or equity markets, are sufficient to meet all cash obligations over the next twelve months. On December 31, 2024,2025, we had no amounts$3,901 outstanding under our senior secured revolving credit facility, $7,578$4,982 outstanding under our senior secured term loan, $7,721$456 of cash on hand, with the ability to borrow an additional $24,901.$24,456. For a further discussion of our capital resources and liquidity, including a description of recent amendments and waivers under our credit facility, please see the discussion under “Liquidity, Financial Position and Capital Resources” in this Annual Report on Form 10-K.

In addition to measures of financial performance presented in our consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”), we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation and other stock payments, restructuring costs, impairment charges, proxy contest-related expenses, and other non-cash gains and losseslosses, and the gain from the sale of the Manitowoc industrial fabrication operations) 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.

GrossDespite the increase in revenue described above, gross profit decreased by $11,319$5,056 during the year ended December 31, 20242025 as compared to the prior year primarily due to lower sales volumes within the HeavyGearing Fabricationssegment and Gearingmanufacturing segmentsinefficiencies andexperienced the corresponding reduction in AMP credits recognized inwithin the Heavy Fabrications segment, partially offset by reduced overhead costs.segment. As a result, our gross margin decreased from 16.0% for the year ended December 31, 2023, to 14.8% for the year ended December 31, 2024.2024, to 10.2% for the year ended December 31, 2025.

Net income decreasedincreased from $7,649 for the year ended December 31, 2023 to $1,152 for the year ended December 31, 2024.The2024 decreaseto $5,242 for the year ended December 31, 2025.The increase in net income was primarily due to the $8,200 gain on the sale of the Manitowoc industrial fabrication operations partially offset by the factors described above.

Heavy Fabrications segment operating resultsincome decreasedincreased by $7,878$7,491 as compared to the prior year. The decreaseincrease in operating performance was primarily a result of lowerthe tower$8,200 salesgain on the sale of the Manitowoc industrial fabrication operations, higher segment revenue and the corresponding reductionincrease in AMP credits recognized, as well as lower industrial fabrication revenues.recognized. These factors were partially offset by reducedmanufacturing overheadinefficiencies costs.associated with the production of a new, larger size wind tower model as well as inefficiencies associated with the wind down of the Manitowoc operations. Operating profit margin was 14.5% during the year ended December 31, 2025 compared to 8.6% during the year ended December 31, 2024 compared to 11.3% during the year ended December 31, 2023.2024.

Gearing segment orders for the year ended December 31, 20242025 increased 7%52% compared to the year ended December 31, 20232024 primarilymost duenotably toin improvedpower demandgeneration which reflects significant orders from industriala leading OEM of natural gas turbines and aftermarketincreased wind customers, partially offset by reduced demandorders from O&G customers. Revenues decreased 22%23% during the year ended December 31, 2024 from the prior year2025 primarily due to reduced shipments towithin O&Gmost andmarkets steel customers,served, partially offset by increased shipmentspower togeneration aftermarket wind customers.shipments.

Industrial Solutions segment orders increased by 6%79% for the year ended December 31, 20242025 fromversus the prior year primarily due to an increase in orders associated with new and aftermarket gas turbine projects,projects partiallyas offsetwell byas reducedan demandincrease forin aftermarketother projects.markets served. Segment revenue increased 4%16% from the prior year primarily due to increased shipments to new and aftermarket gas turbine customers, partially offset by reduced shipments to internationalaftermarket customers. The improvementdecrease in operating income during the year ended December 31, 20242025 was a result of higher sales and a moreless profitable mix of product sold.sold and increased fixed costs to support higher production levels. The operating margin decreased from 12.6% during the year ended December 31, 2023, to 12.5% during the year ended December 31, 2024.2024, to 8.5% during the year ended December 31, 2025.

Corporate and Other expenses decreased by $2,854$681 during the year ended December 31, 20242025 primarily due to reduced professional fees associated with the contested proxy election and lower incentiveemployee compensation.

We review property and equipment and other long-lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Due to triggering events identified within our segments at various times in the past, we continue to evaluate the recoverability of certain of the long-lived assets. DuringOn September 30, 2025, we identified a triggering event associated with operating losses within the Gearing segment. We relied upon an undiscounted cash flow analysis and concluded that no impairment to this asset group was indicated as of September 30, 2025. No impairment charges were recorded for the year ended December 31, 2024, we did not identify any triggering events within our segments and no impairment expense was recorded.2025.

On August 4, 2022, we entered into a credit agreement (as amended, the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, as amended, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of December 31, 2024,2025, cash totaled $7,721.$456, Debtdebt and finance lease obligations at December 31, 2024 totaled $15,239$14,723, and we had the ability to borrow up to $24,901$24,456 under the 2022 Credit Facility.

During the year ended December 31, 2024,2025, net cash used in operating activities was $15,385 compared to net cash provided by operating activities wasof $13,806 compared to net cash used by operating activities of $6,946 for the year ended December 31, 2023.2024. The increasedecrease in net cash provided by operating activities was primarily attributable to ana increasedecrease in cash related to customer deposits in the current year, versus aan significant decrease in cash related to customer depositsincrease in the prior year. Additionally,There wewas receivedan proceedsincrease fromin theaccounts salereceivable of the 2023 AMP credits duringin the current year compared to a decrease in the prior year. Partially offsetting this was an increase in inventoryaccounts payable during the current year as compared to a decrease in the prior year.

During the year ended December 31, 2024,2025, net cash usedprovided inby investing activities was $3,459$8,892 compared to net cash used in investing activities of $6,384$3,459 for the year ended December 31, 2023.2024. The decreaseincrease was primarily due to a decrease inthe net purchasesproceeds received from the sale of propertythe andManitowoc equipment.industrial fabrication operations.

During the year ended December 31, 2024,2025, net cash used in financing activities totaled $3,725$772 compared to net cash providedused byin financing activities of $1,697$3,725 for the year ended December 31, 2023.2024. The decrease was primarily due to decreasedincreased net borrowings under the 2022 Credit Facility into thefund currentour yearincreased period.net operating working capital level.

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. Except as otherwise indicated, the totals below are net of discontinued operations.

Subsequent to the quarter end, onOn 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,Texas (the “Facility”), 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 theThe 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 representsrepresented a strategic shift for us that will have a major effect on our operations.operations and qualify for discontinued operations treatment in the second quarter of 2026. As such, the results of operations of the wind businessand withinindustrial thefabrication Heavyoperations Fabricationsincluding segmentoperations willhistorically bein Manitowoc, Wisconsin, have been reclassified to discontinued operations on our condensed consolidated statements of operations and retrospectively for all periods presented beginning in the second quarter of 2026. InOur addition,discontinued operations exclude the assets and liabilities will be presented separately on our condensed consolidated balance sheets for both current and prior periods beginning in the second quarterresults of 2026.pressure reducing system (“PRS”) operations.

FirstSecond Quarter Overview

WeExcluding discontinued operations, we received $37,422$35,240 in new orders in the firstsecond quarter, up from $30,455$20,991 in the firstsecond quarter of 2025. Gearing segment orders increased by 66%138% due to improved demand from mostall markets served, most notably in oil and gas (“O&G”) and power generation which reflects significant orders from a leading Original Equipment Manufacturer (“OEM”) of natural gas turbines. Industrial Solutions orders increased by 44%24% 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$24,303 in the firstsecond quarter, which was ana 8%67% decreaseincrease compared to the firstsecond 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%79% from the prior year period primarily due to increased shipments to new and aftermarket gas turbine customers. Gearing segment revenue increased 42%24% relative to the prior year period primarily due to increased shipments to power generation and mining customers.

We recorded a net loss of $495$639 or $0.02($0.03) per share in the firstsecond quarter of 2026, compared to a net loss of $370$989 or $0.02($0.04) per share in the firstsecond quarter of 2025. The increasedecrease 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.segments, partially offset by higher transaction costs and the loss on the sale of the Abilene facility.

Three months ended MarchJune 31,30, 2026, Compared to Three months ended MarchJune 31,30, 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 MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Revenues decreasedincreased by $2,781$9,783 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%79% increase in Industrial Solutions segment revenue primarily due to higher shipments to new and aftermarket gas turbine customers. Gearing segmentrevenue revenuealso increased 42%24% primarily reflective of increased shipments to power generation and mining customers.

Despite the overall decrease in revenue described above, grossGross profit increased versus the prior year due primarily to higher sales within the Gearing and Industrial Solutions segments,segments partiallyand offseta bymore manufacturingprofitable inefficienciesmix experiencedof earlyproduct sold in the firstIndustrial quarter within the Heavy FabricationsSolutions segment.

We recorded a net loss of $495$639 during the three months ended MarchJune 31,30, 2026, compared to a net loss of $370$989 during the three months ended MarchJune 31,30, 2025. This increasedecrease in net loss was primarily due to anthe increasefactors indescribed interestabove, expense.partially offset by higher transaction costs and the loss on the sale of the Abilene facility.

Gearing segment orders increased by 66%138% versus the prior year period primarily due to higher demand from customers in mostall markets served, most notably in O&G and power generation which reflects significant orders from a leading OEM of natural gas turbines. Gearing revenues were up 42%24% 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$595 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 orders increased from the prior year period primarily due to an increase in ordersdemand associated with new and aftermarket gas turbine projects. Segment revenues increased from the prior year period primarily due to higher shipments to new and 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.

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 MarchJune 31,30, 2026, cash and cash equivalents totaled $943,$17,043 an increase of $487$16,586 from December 31, 2025. Debt and finance lease obligations at MarchJune 31,30, 2026 totaled $14,993.$6,333. As of MarchJune 31,30, 2026, we had $9,603$3,194 outstanding under the 2022 Credit Facility and had the ability to borrow up to an additional $15,436,$23,014, or $14,264 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.

We also have outstanding notes payable for capital expenditures in the amount of $1,150$109 and $1,618$130 as of MarchJune 31,30, 2026 and December 31, 2025, respectively, with $402$43 and $396$42 included in the “Line of Credit and current maturities of long-term debt” line item of our condensed consolidated financial statements as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The notes payable have monthly payments that range from $1 to $20$3 and an interest rate of approximately 7%.6%. 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 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 threesix months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 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,markets, and proceeds from sales of AMP credits will be adequate to meet our liquidity needs for at least the next twelve months.

The following table summarizes our cash flows from operating, investing, and financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025:

During the threesix months ended MarchJune 31,30, 2026, net cash providedused byin operating activities totaled $2,905$871 compared to net cash used in operating activities of $8,037$3,516 during the prior year period. The increasedecrease in net cash providedused byin operating activities during the current year period was primarily attributable to the absence of a significant decrease in customerthe depositsloss andfrom continuing operations, a less significant increase in inventoryinventory, and an increase in accrued liabilities in the current year period. This was partially offset by a less significantan increase in cash used to fund accounts payablereceivable in the current year period.

During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities totaled $2,688,$3,142, compared to net cash used in investing activities of $916$430 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.

During the threesix months ended MarchJune 31,30, 2026, net cash providedused byin financing activities totaled $270,$6,485, compared to net cash provided by financing activities of $2,436$16,273 during the prior year period. The decrease was primarily due to decreaseddebt net borrowingsrepayments under the 2022 Credit Facility in the current year period.period versus net borrowings in the prior year.

There have been no material changes in our critical accounting estimates during the threesix months ended MarchJune 31,30, 2026 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2025.