Broadwind Inc.

Company Overview

Business Model: Broadwind, Inc. is a precision manufacturer specializing in structures, equipment, and components for power generation, critical infrastructure, and other specialized applications. The Company provides technologically advanced, high-value products to customers with complex systems and stringent quality standards, primarily operating in the energy, mining, and infrastructure sectors within the United States of America. Its core capabilities include heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, gearbox manufacturing and repair, heat treatment, precision machining, assembly, engineering, and packaging solutions. Broadwind, Inc. rebranded in 2020 from Broadwind Energy, Inc. to reflect its strategic diversification beyond wind energy.

Market Position: Broadwind, Inc. maintains a significant presence in the U.S. wind energy industry, supplying steel towers and repowering adapters primarily to wind turbine manufacturers. The Company is actively diversifying its market focus into natural gas turbine power generation, defense, mining, precision machining, oil and gas, and other power generation markets. The wind turbine market is highly concentrated, with the top two manufacturers comprising approximately 88% of the U.S. market in 2025. Broadwind, Inc. faces competition from both domestic and international companies across its segments, including Arcosa Inc., C.S. Wind, Marmen Industries, GRI Renewable Industries in Heavy Fabrications; Overton Chicago Gear, Cincinnati Gearing Systems, Milwaukee Gear, and Horsburgh & Scott in Gearing; and Gexpro and other small independent companies in Industrial Solutions.

Recent Strategic Developments: In 2025, Broadwind, Inc. streamlined its Heavy Fabrications segment by selling its industrial fabrication operations in Manitowoc, Wisconsin, and consolidating remaining operations to its Abilene, Texas production facility. The Company is pursuing a strategy of customer and product line diversification, aiming to improve capacity utilization and broaden its market reach. It also seeks opportunistic acquisitions and organic growth. Operationally, the Gearing segment achieved AS9100D certification in August 2024, enabling aerospace component production, and both Gearing and Heavy Fabrications segments completed International Traffic in Arms Regulations registrations in 2024 to support defense customers.

Geographic Footprint: Broadwind, Inc. operates exclusively within the United States of America. Its corporate headquarters is located in Cicero, Illinois. Key operational facilities include an owned Heavy Fabrications plant in Abilene, Texas; leased and owned Gearing facilities in Cicero, Illinois, and Neville Island, Pennsylvania, respectively; and a leased Industrial Solutions facility in Sanford, North Carolina. All of the Company's revenues and long-lived assets are located in the U.S.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 10.2% (2025) vs 14.8% (2024)
• Operating Margin: 5.5% (2025) vs 3.0% (2024)
• Net Margin: 3.3% (2025) vs 0.8% (2024)

Investment in Growth:

• R&D Expenditure: Not explicitly stated as a separate line item.
• Capital Expenditures: $3.6 million (2025) vs $3.6 million (2024)
• Strategic Investments: In 2025, the Company received net proceeds of $12.5 million from the sale of its Manitowoc industrial fabrication operations, which resulted in an $8.2 million gain. The Company is also evaluating the implementation of emerging technologies such as generative artificial intelligence and machine learning.

Business Segment Analysis

Heavy Fabrications

Financial Performance:

• Revenue: $101.2 million (+22% YoY)
• Operating Income: $14.6 million
• Operating Margin: 14.5%
• Key Growth Drivers: The 22% increase in revenue was primarily driven by a 36% increase in wind revenue, resulting from the completion of a limited tower production run at the Manitowoc facility and increased wind repowering revenue. Operating income benefited from an $8.2 million gain on the sale of the Manitowoc industrial fabrication operations and higher Advanced Manufacturing Production (AMP) credits recognized ($13.1 million in 2025 vs $9.6 million in 2024). These positive factors were partially offset by manufacturing inefficiencies associated with the production of a new, larger wind tower model and the wind-down of Manitowoc operations. Orders decreased 22% year-over-year to $42.2 million, primarily due to reduced industrial fabrication and wind repowering orders, and lower Pressure Reducing System (PRS) orders, partially offset by a significant increase in wind tower orders.

Product Portfolio:

• Steel towers and repowering adapters for the U.S. wind energy industry.
• Proprietary mobile, modular Pressure Reducing Systems (PRS) for the compressed natural gas virtual pipeline market.
• Large, complex, and precision fabrications.

Market Dynamics:

• The segment's Abilene, Texas facility has an annual wind tower production capacity of up to approximately 220 towers (660 tower sections), capable of supporting turbines generating over 800 MW of power (assuming a 3 MW tower). The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, eliminated AMP credits for components produced and sold after 2027 and limited the applicability of Production Tax Credits (PTC) and Investment Tax Credits (ITC) for wind projects, which is expected to negatively impact demand for future wind projects and the segment's profitability.

Gearing

Financial Performance:

• Revenue: $27.4 million (-23% YoY)
• Operating Loss: $(3.2) million
• Operating Margin: -11.6%
• Key Growth Drivers: Orders increased 52% year-over-year to $40.3 million, driven by significant orders from a leading OEM of natural gas turbines within the power generation market and increased orders from oil and gas customers. Despite strong order growth, revenue decreased due to reduced shipments across most markets. The operating loss was primarily a result of lower sales volumes and associated production inefficiencies, partially offset by a favorable $0.5 million property tax adjustment.

Product Portfolio:

• Gearing, gearboxes, and precision machined components.
• Gearbox repair services.
• Loose gearing, gearboxes, and systems.
• Heat treat services.
• Custom products designed to customer specifications.

Market Dynamics:

• Serves diverse markets including power generation, onshore and offshore oil and gas fracking and drilling, material handling, wind energy, surface and underground mining, steel, infrastructure, marine, and defense. The segment achieved AS9100D certification in August 2024, enabling production of aerospace components, and completed International Traffic in Arms Regulations registrations in 2024.

Industrial Solutions

Financial Performance:

• Revenue: $30.3 million (+16% YoY)
• Operating Income: $2.6 million
• Operating Margin: 8.5%
• Key Growth Drivers: Orders increased 79% year-over-year to $48.9 million, primarily due to an increase in orders associated with new and aftermarket gas turbine projects, as well as growth in other markets. Revenue increased due to increased shipments to new gas turbine customers. The decrease in operating income and margin was attributed to a less profitable mix of products sold and increased fixed costs incurred to support higher production levels.

Product Portfolio:

• Supply chain solutions, light fabrication, inventory management, kitting, and assembly services.
• Tower internals kitting solutions for the U.S. wind power generation market.
• Instrumentation & controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes & wiring, and electromechanical devices.
• Packaging solutions and fabricated panels and sub-assemblies.

Market Dynamics:

• Primarily serves the combined cycle natural gas turbine market and supports the U.S. wind power generation market by providing tower internals kitting solutions. The segment leverages a global supply chain.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Broadwind, Inc. did not repurchase shares in 2025 or 2024. However, on September 10, 2025, the Board authorized a program to repurchase up to $3.0 million of outstanding common stock, with the full amount remaining available as of December 31, 2025.
• Dividend Payments: The Company has never paid cash dividends on its common stock and has no current plan to do so, with a policy to reinvest cash generated in operations to promote future growth and fund potential investments.
• Dividend Yield: Not applicable.
• Future Capital Return Commitments: $3.0 million authorized for share repurchases.

Balance Sheet Position:

• Cash and Equivalents: $0.5 million (2025) vs $7.7 million (2024)
• Total Debt: $10.1 million (2025) vs $9.2 million (2024)
• Net Cash Position: $(9.7) million (2025) vs $(1.5) million (2024)
• Credit Rating: Not disclosed.
• Debt Maturity Profile: Total debt of $10.1 million as of December 31, 2025, includes $5.0 million due in 2026, $4.7 million in 2027, $0.4 million in 2028, and $0.05 million in 2029. The senior secured revolving credit facility and term loan under the 2022 Credit Facility mature on August 4, 2027. Other notes payable for capital expenditures mature between September 2028 and June 2029.

Cash Flow Generation:

• Operating Cash Flow: $(15.4) million (2025) vs $13.8 million (2024). The decrease in 2025 was primarily due to a decrease in customer deposits and an increase in accounts receivable, partially offset by an increase in accounts payable.
• Free Cash Flow: $(0.9) million (2025) vs $10.0 million (2024)
• Cash Conversion Metrics: Operating working capital (OWC) increased to $37.8 million in 2025 from $19.3 million in 2024, representing 25% of trailing three months of sales annualized in 2025, up from 14% in 2024. This increase was primarily driven by lower customer deposit balances. The Company utilizes supply chain financing arrangements, selling accounts receivable without recourse, with $77.4 million sold in 2025 compared to $56.6 million in 2024.

Operational Excellence

Production & Service Model: Broadwind, Inc. operates on a build-to-order model, rather than producing to stock. Its manufacturing approach integrates machining, finishing, gearbox repair, and heat treatment processes. For wind towers and certain gearing products, the Company utilizes bill and hold sales arrangements. Revenue for Heavy Fabrications products with no alternative use and an enforceable right to payment is recognized over time, with progress measured by labor hours.

Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials: The primary raw material is steel (plate, bar stock, forgings, and castings). The market for tower steel and internal packages has become increasingly globalized.
• Procurement Strategy: Broadwind, Inc. generally procures its own raw materials but often purchases under "directed buy" agreements where global tower customers negotiate prices and terms. Outside of these agreements, the Company employs a multiple supplier sourcing strategy, sourcing from various suppliers in the U.S. and abroad.
• Risk Management: The Company does not have long-term supply agreements with raw material suppliers and closely matches terms with customer contracts to limit exposure to commodity price fluctuations.

Facility Network:

• Manufacturing:
  • Heavy Fabrications: Abilene, Texas (owned, 175,000 sq ft), with an annual wind tower production capacity of up to approximately 220 towers (660 tower sections), supporting over 800 MW of power.
  • Gearing: Cicero, Illinois (leased, 301,000 sq ft for machining and coating), and Neville Island, Pennsylvania (owned, 52,000 sq ft for heat treatment and gearbox repair).
  • Industrial Solutions: Sanford, North Carolina (leased, 105,000 sq ft).
• Research & Development: The Company employs design and metallurgical engineers to improve product performance, reliability, and develop custom products.
• Distribution: Industrial Solutions provides supply chain solutions, inventory management, kitting, and assembly services.

Operational Metrics:

• Backlog: $95.8 million as of December 31, 2025, a 24% decrease from $125.5 million at December 31, 2024.
• New Orders: $131.4 million in 2025, a 22% increase from $107.8 million in 2024.
• Book-to-bill Ratio: 0.8 for both 2025 and 2024.
• Quality Control: The Company implements strict and extensive quality control and inspections throughout its production processes, maintaining internal quality controls and conducting quality assurance inspections at each major manufacturing step. All core operating facilities are ISO 9001:2015 certified. The Gearing segment is AS9100D certified as of August 2024, and both Gearing and Heavy Fabrications segments completed International Traffic in Arms Regulations registrations in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Broadwind, Inc. markets its products and solutions through a direct sales force.
• Channel Partners: Independent sales agents supplement the direct sales force in certain markets.
• Digital Platforms: The business development team utilizes internet research and website marketing to identify and target new customers.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: GE Vernova represented greater than 10% of Broadwind, Inc.'s consolidated revenues for both 2025 and 2024.
• Strategic Partnerships: The Company's five largest customers accounted for 80% of its consolidated revenues in 2025, up from 73% in 2024.
• Customer Concentration: The Company's customer base is highly concentrated, particularly within the wind energy industry where a limited number of wind turbine manufacturers dominate the market. Broadwind, Inc. has an ongoing initiative to diversify its customer base.

Geographic Revenue Distribution:

• United States of America: Broadwind, Inc. generates 100% of its revenues from transactions completed in the U.S.
• Growth Markets: The Company's strategic objectives include expanding its presence in North American markets for wind energy, gas turbines, oil and gas, mining, and other industrial verticals.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics:

• Wind Energy Market: The global wind turbine market is rapidly evolving technologically, with turbines growing in size, particularly for offshore windfarms. This requires continuous investment in new manufacturing equipment. The market is significantly influenced by federal tax incentives (PTC, ITC, AMP credits) and state Renewable Portfolio Standards (RPSs).
• Industrial Gearing Industry: This industry has experienced consolidation and strong international competition, though recent tariffs and supply chain uncertainties have led to a shift towards domestic gear manufacturers.
• Technological Evolution: Broadwind, Inc. must keep pace with technological developments and changing customer standards, including the potential use of alternative materials like concrete for wind turbine towers. The Company is also evaluating the implementation of emerging technologies such as generative artificial intelligence and machine learning.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Heavy Fabrications (Wind Towers): Arcosa Inc., C.S. Wind, Marmen Industries, and GRI Renewable Industries, all with production facilities in the U.S. The segment also faces competition from imported towers, although trade cases have periodically reduced this.
• Gearing: Overton Chicago Gear, Cincinnati Gearing Systems, Milwaukee Gear, and Horsburgh & Scott. Competition also arises from the internal gear manufacturing capacity of relevant equipment manufacturers and foreign competitors.
• Industrial Solutions: Gexpro and other small independent companies.

Emerging Competitive Threats:

• New or existing industry participants with greater financial, technical, and marketing resources.
• Competitors adopting new technologies, including artificial intelligence and machine learning, more effectively.
• Increased vertical integration by customers who may decide to produce components internally.
• Development of alternative materials for wind turbine towers, such as concrete.

Competitive Response Strategy:

• Broadwind, Inc.'s strategy includes diversifying its customer and product line concentration, improving capacity utilization, and broadening its market reach. The Company also focuses on streamlining front-end processes to enhance operational efficiency and pursuing opportunistic acquisitions and organic growth.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Wind Energy Market Volatility: The U.S. wind energy industry is significantly impacted by federal tax incentives (PTC, ITC, AMP credits) and state Renewable Portfolio Standards (RPSs). The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, limited these incentives for wind projects starting construction after July 4, 2026, and eliminated AMP credits for components produced and sold after 2027, which is expected to decrease demand for wind products and adversely impact profitability.
• Technology Disruption: The global markets for wind turbines and industrial components are rapidly evolving. Failure to keep pace with technological changes (e.g., larger turbines, concrete towers) or to make necessary capital investments could adversely affect the business. The Company is also evaluating emerging technologies like generative artificial intelligence, which present unique business opportunities alongside rapidly changing legal and regulatory risks.
• Customer Concentration: Broadwind, Inc. is substantially dependent on a few significant customers, with GE Vernova accounting for over 10% of consolidated revenues and the top five customers accounting for 80% in 2025. Changes in relationships, reduced demand, or customers scaling back agreements could materially impact operating and financial results.
• Consolidation: Further consolidation among wind turbine manufacturers could intensify customer concentration, lead to pricing pressures, and disrupt supply chain relationships.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: The Company is dependent on raw materials, primarily steel, which are subject to price fluctuations. Limitations on availability or increases in costs (steel, energy, transportation) may negatively impact operating results if costs cannot be fully passed on to customers.
• Geographic Concentration: The increasingly global nature of the supply chain introduces complexity and risks from events such as natural disasters, pandemics, shipping delays, power outages, and labor strikes.
• Capacity Constraints: The absence of long-term contracts and firm production schedules from most customers leads to volatile lead-times and makes it difficult to optimize manufacturing capacity. Unexpected increases in demand may exceed current capacity and workforce capabilities.
• Labor Relations: Approximately 20% of the workforce is covered by collective bargaining agreements. The loss of unionized labor or significant increases in labor costs could materially impact profitability. A new four-year collective bargaining agreement for the Cicero, Illinois facility was agreed upon on March 6, 2026, effective through February 2030.
• Talent Management: Competition for skilled labor has increased, and a significant increase in wages could lead to insufficient labor availability or higher labor costs, impacting profit margins and growth potential.

Financial & Regulatory Risks

Market & Financial Risks:

• Indebtedness: Broadwind, Inc. has significant indebtedness under its 2022 Credit Facility, requiring substantial cash flow for debt service and increasing vulnerability to adverse economic conditions. The credit agreements contain customary covenants, including minimum EBITDA and fixed charge coverage ratio requirements.
• Liquidity: The Company's ability to meet cash obligations depends on cash from operations, available cash balances, the 2022 Credit Facility, and access to capital markets. Insufficient cash generation could necessitate asset sales, debt restructuring, or dilutive equity issuance.
• Net Operating Losses (NOLs): The Company has substantial NOL carryforwards ($298.2 million as of December 31, 2025), but their utilization is subject to annual limitations under Section 382 of the IRC due to past ownership changes. A Stockholder Rights Plan is in place to deter further ownership changes that could trigger additional limitations.
• Cybersecurity Incidents: The Company relies on information systems and is at risk from information security incidents (e.g., unauthorized access, ransomware). Such incidents could disrupt business, compromise confidential information, and lead to legal or regulatory liabilities.

Regulatory & Compliance Risks:

• Industry-Specific Regulations: Operations are subject to U.S. Occupational Safety and Health Administration regulations, federal, state, and local environmental laws, and industry standards (e.g., American Gear Manufacturers Association, American Welding Society). Changes in these regulations or non-compliance could result in substantial costs, fines, or operational restrictions.
• Trade & Export Controls: The Company is exposed to risks from changes in trade regulations, quotas, duties, and tariffs. Existing antidumping and countervailing duties on wind towers from various countries are subject to periodic review. A Section 232 investigation on wind turbine imports, commenced in August 2025, could lead to new import restrictions or tariffs. The OBBBA introduced "Prohibited Foreign Entity" (PFE) restrictions on AMP credits for taxable years beginning after January 1, 2026, impacting components receiving material assistance from or produced by entities controlled by covered nations.
• Environmental, Social, and Governance (ESG) Risks: Increasing focus on ESG practices by investors and regulators. Non-compliance with evolving ESG laws or failure to meet stakeholder expectations could negatively impact brand, reputation, and employee retention.

Geopolitical & External Risks

Geopolitical Exposure:

• Trade Relations: Geopolitical events, such as the war in Ukraine and the Israel-Hamas conflict, can lead to economic sanctions, retaliatory trade restrictions, supply chain disruptions, and volatility in commodity prices.
• Sanctions & Export Controls: Compliance with international sanctions and export controls is required, which can limit business activities in certain regions or with specific entities. The PFE restrictions under the OBBBA specifically target foreign supply chains and investors from covered nations (China, Russia, Iran, North Korea).

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Design and Metallurgical Engineering: Broadwind, Inc. employs design and metallurgical engineers to meet stringent quality requirements, enhance product performance and reliability, and develop custom products that integrate into customer offerings.
• Manufacturing Process Innovation: The Company invests in industry-leading heat treatment, high precision machining, specialized grinding technologies, and cutting-edge welding to ensure high product reliability and consistent performance.
• Innovation Pipeline: The Company is evaluating the implementation of emerging technologies, such as generative artificial intelligence and machine learning, into its products and services.

Intellectual Property Portfolio:

• Patent Strategy: Broadwind, Inc. aims to protect its proprietary system-level technologies, systems designs, and manufacturing processes.
• IP Litigation: The Company may need to pursue legal actions to enforce its intellectual property rights or defend against claims of infringement.
• Confidentiality: Efforts are made to safeguard customer intellectual property and the Company's own trade secrets through confidentiality agreements.

Technology Partnerships:

• Broadwind, Inc. engages consultants and third-party advisors to conduct independent assessments of its cybersecurity readiness and control effectiveness, gaining insights into emerging threats and leading practices.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Not explicitly detailed in the filing.

Board Composition: The Board of Directors exercises direct oversight of strategic risks. The Audit Committee has delegated responsibility for cybersecurity oversight, reviewing and discussing strategies, processes, and controls with management. The Board receives regular updates on cybersecurity matters.

Human Capital Strategy

Workforce Composition:

• Total Employees: As of December 31, 2025, Broadwind, Inc. had 341 U.S.-based employees, with 304 in manufacturing-related functions and 37 in administrative functions.
• Geographic Distribution: Employees are located across the Company's facilities in Cicero, Illinois; Neville Island, Pennsylvania; Abilene, Texas; and Sanford, North Carolina.
• Skill Mix: The Company requires skilled labor in its manufacturing facilities.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The Company acknowledges a decline in labor availability and increased competition for skilled labor.
• Employee Value Proposition: Broadwind, Inc. offers a 401(k) retirement savings plan with safe harbor matching contributions (100% of the first 3% and 50% of the next 2% of elective deferral contributions), with discretion to fund matching in cash or common stock.
• Retention: The Company believes its relationship with employees is generally positive.

Diversity & Development:

• Diversity Metrics: Not disclosed.
• Development Programs: Not explicitly detailed.
• Culture & Engagement: Not explicitly detailed beyond the general positive relationship with employees.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Not explicitly stated.
• Carbon Neutrality: Not explicitly stated.
• Renewable Energy: Broadwind, Inc. supports the U.S. wind power generation market and the combined cycle natural gas turbine market.

Supply Chain Sustainability:

• Supplier Engagement: Not explicitly stated.
• Responsible Sourcing: The Company's operations are subject to environmental laws governing the use, handling, transportation, and disposal of hazardous materials.

Social Impact Initiatives:

• Community Investment: Not explicitly stated.
• Product Impact: The Company's products are integral to power generation and critical infrastructure.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: The majority of Broadwind, Inc.'s business is not affected by seasonality.
• Economic Sensitivity: The Company's results of operations are subject to general economic conditions. The growth and development of the wind energy market are influenced by factors such as the availability and cost of financing, electricity costs, raw material costs, and the costs of competing power sources. Certain markets, such as oil and gas, are cyclical.
• Industry Cycles: The wind energy industry's demand is significantly impacted by federal tax incentives and state Renewable Portfolio Standards, which have historically caused volatility.

Planning & Forecasting:

• Broadwind, Inc. plans its production and inventory levels based on customer advance orders, commitments, forecasts, and internal assessments of demand. The Company frequently experiences volatile lead-times in customer orders, and customers may change production quantities or delay production with little advance notice.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Energy Sector: The U.S. wind energy industry is significantly impacted by federal tax incentives (PTC, ITC, AMP credits) and state Renewable Portfolio Standards (RPSs). The OBBBA, enacted July 4, 2025, introduced limitations on these incentives, which are expected to decrease demand for wind products.
• Environmental, Health, and Safety (EHS): Operations are subject to U.S. Occupational Safety and Health Administration regulations and numerous federal, state, and local environmental laws governing air emissions, wastewater discharges, hazardous materials, and employee safety.
• Industry Standards: The Company adheres to industry standards set by authorities such as the American Gear Manufacturers Association and the American Welding Society.
• Defense: The Gearing and Heavy Fabrications segments completed International Traffic in Arms Regulations registrations in 2024.

Trade & Export Controls:

• Antidumping and Countervailing Duties: Broadwind, Inc. operates in an environment affected by existing antidumping and countervailing duty orders on wind towers from countries including China, Vietnam, Canada, Indonesia, Korea, India, Malaysia, and Spain. The U.S. Department of Commerce extended duties on China and Vietnam in October 2024, and a "five-year review" is ongoing for other countries.
• Section 232 Investigation: In August 2025, the U.S. Department of Commerce Bureau of Industry and Security commenced a Section 232 investigation into wind turbine imports, which could lead to new import restrictions or tariffs.
• Sanctions Compliance: The Company is exposed to risks from economic sanctions imposed against Russia due to the war in Ukraine, and potential retaliatory trade restrictions.
• Prohibited Foreign Entity (PFE) Restrictions: The OBBBA introduced PFE restrictions on AMP credits for taxable years beginning after January 1, 2026, disallowing credits for components produced by or receiving material assistance from entities formed in or controlled by covered nations (China, Russia, Iran, North Korea). Interim guidance was released on February 12, 2026, with final regulations expected by December 31, 2026.

Legal Proceedings: Broadwind, Inc. is party to various legal proceedings in the ordinary course of business. As of December 31, 2025, management believes the final outcome of these proceedings will not have a material adverse effect on its results of operations, financial condition, or cash flows.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 1.6% in 2025, compared to 6.0% in 2024.
• Geographic Tax Planning: In 2025, taxes were primarily incurred in Texas and North Carolina.
• Tax Reform Impact:
  • Advanced Manufacturing Production (AMP) Credits: The Inflation Reduction Act (IRA), enacted August 16, 2022, introduced AMP credits for manufacturers of eligible components, including wind towers ($0.03 per watt). These credits are recognized as a reduction to cost of sales. The OBBBA, enacted July 4, 2025, eliminated these credits for components produced and sold after 2027.
  • Net Operating Loss (NOL) Carryforwards: As of December 31, 2025, the Company had federal and unapportioned state NOL carryforwards of approximately $298.2 million. A 2010 ownership change triggered an annual limitation of $14.3 million on NOL utilization under Section 382 of the IRC. A Stockholder Rights Plan, extended to 2028, is in place to preserve these tax assets.
  • Regulatory Uncertainty: The U.S. Supreme Court's 2024 decision in Loper Bright Enterprises V. Raimondo may lead to increased legal challenges to federal agency regulations, including those from the IRS, potentially impacting tax benefits.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Broadwind, Inc. maintains product liability insurance. It also self-insures for health insurance liabilities, establishing reserves based on historical loss experience and actuarial evaluation methods.
• Risk Transfer Mechanisms: In certain customer contracts, the Company has recourse provisions for warranty items, allowing it to pursue recovery from third parties for amounts paid. To mitigate commodity price risk, the Company generally attempts to match raw material purchases to sales contracts or incorporates price adjustment clauses in its agreements.