Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included in Part II, Item 8 of this Annual Report on Form 10-K and other financial information appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly those under “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K.
OVERVIEW
Our Company
We are an independent manufacturer of composite wind blades for the wind energy market with a manufacturing footprint currently in the U.S., Mexico, and India. We deliver high-quality, cost-effective composite solutions through long-term relationships with leading original equipment manufacturers in the wind market. We also provide field service inspection and repair services to our OEM customers and wind farm owners and operators. We are headquartered in Scottsdale, Arizona and operate wind blade manufacturing facilities in the U.S., Mexico, and India. We operate additional engineering development centers in Denmark and Germany, and field services facilities in the U.S. and Spain. For a further overview of our Company, refer to the discussion in “Business—Overview” included in Part I, Item 1 of this Annual Report on Form 10-K.
We completed the divestiture of our automotive business in June 2024, our tooling business in August 2025, and our Türkiye business in September 2025. The Company determined that the sale of the Türkiye and automotive businesses represented strategic shifts that had major effects on the Company’s operations and financial results. Accordingly, the historical results of the Türkiye and automotive businesses have been reclassified as discontinued operations for all periods presented in the consolidated financial statements.
The following discussion reflects continuing operations only, unless otherwise indicated. For further information regarding our discontinued operations, refer to Note 4 – Discontinued Operations of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Voluntary Petitions for Reorganization under Chapter 11 and Section 363 Sale Process
The Chapter 11 Cases were filed in order to facilitate a financial and operational restructuring of the Company’s business and balance sheet. The Company continues to operate its business as “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Debtors filed customary “first-day” motions with the Bankruptcy Court seeking authorization to support ongoing operations during the Chapter 11 Cases, including to (i) pay employee wages and benefits, (ii) pay certain critical vendors and suppliers for goods and services provided before the commencement of the Chapter 11 Cases, (iii) establish procedures for trading the Company’s stock, and (iv) continue honoring insurance and tax obligations as they come due.
The Debtors also filed a motion seeking approval of procedures for the sale of all or any of the Debtors’ assets pursuant to section 363 of the Bankruptcy Code. The Transaction Committee of the Company’s Board of Directors engaged third parties to advise on the Company’s strategic options, including a potential sale of all, substantially all, or a portion of the Debtors’ assets in connection with the Chapter 11 Cases. The Company has incurred, and continues to incur, material reorganization expenses as a result of the Chapter 11 Cases.
Automatic Stay
The commencement of the Chapter 11 Cases constituted an event of default that accelerated all of the Company’s obligations under the documents governing the 11% Senior Secured Term Loan (“the Term Loan”) and the 5.25% Convertible Senior Unsecured Notes (the “Convertible Notes”), amounting to borrowings of approximately $471.8 million and $135.3 million, respectively, as of the petition date, including accrued but unpaid
interest in respect thereof, as well as obligations under other Company agreements. As a result of the commencement of the Chapter 11 Cases, the principal amount, together with accrued and unpaid fees and interest thereon, and in the case of the indebtedness outstanding under the Senior Secured Term Loan, the paid-in-kind interest, became immediately due and payable. Any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors’ rights in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code. As a result of the forgoing acceleration event, all of the Company's outstanding indebtedness, including indebtedness subject to cross default provisions, has been classified as current debt in the accompanying consolidated balance sheet as of December 31, 2025.
DIP Financing
In connection with the filing of the Chapter 11 Cases, the Debtors entered into a DIP Credit Agreement, pursuant to which, the DIP Lenders have agreed to provide the Company with a multiple draw term loan facility in an aggregate principal amount not to exceed $82.5 million (the “DIP Facility”).
Under the DIP Facility, (i) $7.5 million of new money (the “DIP Tranche 1”) became available following Bankruptcy Court approval of the DIP Credit Agreement on an interim basis (the “Interim DIP Order”) on August 13, 2025, and (ii) up to $20 million of new money (the “DIP Tranche 2”) will become available, subject to the satisfaction of certain other funding conditions, following Bankruptcy Court approval of the DIP Facility on a final basis (the “Final DIP Order”) on October 14, 2025, and (iii) up to $55 million of the principal amount outstanding under the senior secured term loan (“Senior Secured Term Loan”) issued under the existing Credit Agreement and Guaranty, dated as of December 14, 2023, by and among the Company, as the borrower, the Companies parties thereto as guarantors, the senior secured lenders party thereto, as the lenders, and Oaktree Fund Administration, LLC, as the administrative agent (as amended, restated, or otherwise modified from time to time prior to the date thereof, the “Existing Credit Agreement”), may be rolled into the DIP Facility, subject to the terms of the DIP Credit Agreement and approval from the Bankruptcy Court.
The DIP Facility will mature nine months from the Petition Date. The interest on the loans shall accrue at a per annum rate equal to SOFR + 9%, which interest shall be payable in kind. Upon the occurrence and during the continuance of an event of default, unless otherwise waived by the DIP Lenders, the interest rate on all obligations (including interest on overdue principal, interest and other amounts) shall accrue at an additional 2% per annum. The DIP Credit Agreement contains mandatory and voluntary prepayment provisions customary for transactions of this type (including with respect to proceeds of debt, asset sales, and insurance/condemnation events), which provide that, among other things, voluntary prepayments are permitted without prepayment premiums or penalties. The DIP Credit Agreement also contains certain restrictive loan covenants and events of default customary for credit facilities of this type.
On August 14, 2025, the Company received $7.5 million in DIP Tranche 1 borrowings under the DIP Facility, which was used (i) to pay amounts, fees, costs and expenses related to the Chapter 11 Cases and (ii) for working capital and general corporate purposes. Concurrently with the funding of the DIP Tranche 1, the DIP Lenders rolled up their ratable share of Senior Secured Term Loan obligations in an amount equal to two times the amount of new money borrowed under such DIP Tranche 1, or $15.0 million (the “Initial Roll-Up Loan”). The Initial Roll-Up Loan was deemed funded pursuant to the DIP Credit Agreement on a cashless, dollar-for-dollar basis and constituted DIP Financing obligations on the day such roll-up became effective, and satisfied and discharged an equal amount of Senior Secured Term Loan obligations as if a payment in such amount had been made under the Existing Credit Agreement on such date. In addition, an upfront commitment fee in an amount equal to 3.00% of the aggregate amount of the DIP Tranche 1 borrowing was fully earned and payable to the DIP Lenders in the form of additional DIP Financing obligations on the funding date of the DIP Tranche 1. As of December 31, 2025, the Company had outstanding borrowings of $23.9 million under the DIP Facility, consisting of $7.5 million of DIP Tranche 1 borrowings, $15.0 million of Initial Roll-Up Loans, $0.2 million of commitment fees, and $1.2 million of paid in kind interest.
DIP Default
On March 1, 2026, the Company received a letter from the DIP Lenders regarding an Event of Default occurring under the DIP Credit Agreement. The letter notified and confirmed to the Company that, because, among other things, as of the date of the letter, the Bankruptcy Court has not entered a Disclosure Statement Order (nor any
other order approving the adequacy of a disclosure statement in connection with a chapter 11 plan for the Debtors), an Event of Default under the DIP Credit Agreement has occurred and is continuing pursuant to Section 11.01(g) (Events of Default) of the DIP Credit Agreement (the “DIP Default”). On March 16, 2026, the DIP Lenders agreed to waive the DIP Default, extend the maturity date under the DIP Credit Agreement and consent to the Vestas Sale Transactions, ECP Sale Transaction and GEV Transaction as set forth in more detail in the Oaktree Consent Term Sheet filed with the Bankruptcy Court.
KEY TRENDS AND RECENT DEVELOPMENTS AFFECTING OUR BUSINESS
Market update
Geopolitical events around the world have accelerated regional needs for energy independence and security. Climate change also continues to drive the need for renewable energy solutions and net-zero carbon emissions. The global demand for clean energy continues to rise, driven by factors such as the growing need for data centers dedicated to artificial intelligence, semiconductor chip manufacturers, the adoption of electric vehicles, and the electrification of buildings.
The U.S. continues to be our most important market. However, the U.S. market has been impacted by recent government policy uncertainty for renewable energy coming from the current administration, which has resulted in a reduction in orders and investment dollars flowing into wind projects. In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S., which significantly changes the current wind energy tax credits, and phases out certain tax credits for wind components produced and sold after December 31, 2027. While this may result in higher near-term demand for wind blades in order for our customers to qualify for tax credits prior to expiration, these changes could have long-term implications that contribute to an overall lower outlook in the U.S. wind market.
We continue to monitor the global tariffs announced by the U.S. and assess the impacts of such tariffs on our business. Currently, the wind blades manufactured in our Mexico facilities that are imported into the U.S. are exempt from tariffs as they qualify under the U.S.-Mexico-Canada Agreement (USMCA) that has been in effect since July 2020. The wind blades manufactured in our India facilities are typically transferred to our customers once they have left our facilities and any import duties at the final installation destination are borne by our customers. We are subject to current tariffs on certain raw materials imported into the U.S. and/or Mexico for use in production at our recently started Iowa manufacturing facility as well as our Mexico manufacturing facilities, but these are not expected to have a material impact on our business and can generally be passed on to our customers. In addition, on August 13, 2025, the U.S. Department of Commerce initiated an investigation into the national security implications of importing wind turbines, parts, and components under Section 232 of the Trade Expansion Act of 1962 (“Section 232”). This Section 232 investigation is still ongoing and may potentially lead to new tariffs on our wind blade products that are imported into the U.S. and the materials we source to manufacture such wind blades. The current environment in the U.S. surrounding tariffs has been extremely fluid under the current presidential administration, and potential revisions to the U.S. tariff structure could materially affect the company’s results of operations.
During the year ended December 31, 2025, our results of operations in Mexico were significantly impacted by lower than expected production volume due to temporary production stoppages subsequent to the Petition Date due to material shortages and supply chain challenges as a result of the Chapter 11 Cases. Our liquidity and results of operations were also significantly impacted in the fourth quarter of 2025, due to temporary delays on the import of finished wind blades from Mexico into the U.S.
Ongoing inflationary pressures have caused and may continue to cause many of our production expenses to increase, which adversely impacts our results of operations. The government of Mexico increased minimum wages approximately 13% and 22%, effective January 1, 2026 and 2025, respectively. In March 2025, we agreed to an amendment to our collective bargaining agreement with our associates in Matamoros, Mexico, and extended such agreement through March 2027. While our customer contracts allow us to pass a portion of these increases to our customers, we will not be able to recover 100% of the increased labor costs caused by this wage inflation. If our manufacturing facilities in Mexico continue to experience wage inflation and the increased costs in local currency are not offset with favorable foreign currency fluctuations, such elevated wages will have a material impact on our results of operations.
Customs Review
U.S. Customs and Border Protection (“CBP”) is currently reviewing certain of the wind blade models that are manufactured at our facilities in Mexico pursuant to the Uyghur Forced Labor Prevention Act (“UFLPA”). As a result of these reviews, CBP has restricted the importation of these wind blades into the U.S. while the matter remains under investigation. Although we are confident that our wind blade supply chain does not source materials from the Xinjiang Uyghur Autonomous Region of China, the UFLPA establishes a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China, or by certain identified entities, are made with forced labor and are therefore prohibited from entry into the U.S. unless the importer can demonstrate otherwise to the satisfaction of CBP.
Because of the current CBP actions, a substantial portion of the wind blades manufactured at our Mexico facilities are unable to be imported into the U.S. market. The inability to import these wind blades has significantly disrupted, and may continue to disrupt, our supply chain, reduce available inventory for U.S. customers, delay deliveries, and result in lost sales. In addition, these CBP reviews have required and may continue to require significant management attention, internal resources, and legal and compliance costs as we work to respond to CBP’s inquiries and further demonstrate compliance with applicable laws.
The outcome and duration of the CBP reviews are uncertain. If we are unable to satisfactorily resolve the matter, CBP may continue to detain, exclude, or seize affected wind blades, which could further restrict our ability to serve customers in the U.S. and may require us to modify our sourcing, manufacturing, or supply chain practices. Any prolonged disruption in our ability to import wind blades into the U.S., or any adverse findings by CBP, will have a further, material adverse effect on our business, financial condition, and results of operations.
Sale of Turkish Operations
While long-term onshore market growth in Europe remains in sight, the economic viability of pursuing that demand with European-based manufacturing is becoming increasingly challenging. Historically, we have serviced the European market with our plants in Türkiye. However, the hyperinflationary environment in Türkiye and Türkiye’s monetary policy continues to limit Turkish Lira devaluation, resulting in a very challenging environment to export goods out of Türkiye. Furthermore, while we have successfully competed with Chinese wind blade manufacturers for years, their recent aggressive push to expand their presence in Europe and other regions outside of North America, supported by the Chinese government, has added to the challenging competitive environment outside of the U.S. Unlike the U.S., which has implemented tariffs to protect against unfair competition and tax laws to encourage near shoring and domestic manufacturing, European governments have not taken similar steps to meaningfully help suppliers like us that supply components to our OEM customers. The implementation of the Foreign Subsidies Regulation (FSR) by the EU and its recent more aggressive actions to combat unfairly subsidized Chinese products are , but their focus to date has been on protecting OEMs and active parts of wind turbines that could potentially be controlled remotely versus passive parts, such as the blades that we manufacture for our customers. As a result of these market factors and the ongoing labor strike by the manufacturing production employees at the two facilities in Türkiye, the Company began pursuing strategic alternatives with respect to its operations in Türkiye. On September 10, 2025, the Company completed the sale and transfer of its equity interests in the Turkish business on an “as-is” basis, whereby the purchaser acquired all assets and assumed all liabilities, including the debt obligations of the Turkish subsidiaries, recognizing a $10.3 million on sale of operations.
Vestas Transaction
On March 4, 2026, following a competitive marketing process to sell all or part of the Debtors’ asset pursuant to section 363 of the Bankruptcy Code, the Company and certain of its direct and indirect subsidiaries (collectively, the “Sellers”), entered into various agreements with Vestas Wind Systems A/S and certain of its subsidiaries (collectively, “Vestas”), pursuant to which the Company will sell and transfer its manufacturing business in Chennai, India for a purchase price of approximately $10.0 million, and its manufacturing business in Matamoros, Mexico for a purchase price of approximately $14.0 million (collectively, the “Vestas Sale Transactions”). The Sellers currently manufacture wind blades for Vestas at these facilities. In each instance, the Vestas Sale Transactions are subject to certain purchase price adjustments and the assumption of certain liabilities and are subject to a number of closing conditions and may be terminated by either party under certain circumstances,
including among others, if the Vestas Sale Transactions are not closed by June 30, 2026. Refer to Note 24 – Subsequent Events for further information regarding the Vestas Sale Transactions.
ECP Transaction
Further, on March 6, 2026, the Company and certain of its direct and indirect subsidiaries (collectively, the “ECP Seller Parties”) entered into a Stock and Asset Purchase Agreement (the “ECP Purchase Agreement”) with ECP Blade Holdings LLC (“ECP Buyer”). Pursuant to the ECP Purchase Agreement, the ECP Seller Parties will sell and transfer to ECP Buyer (i) all of the equity interests of certain foreign indirect subsidiaries of the Company, and (ii) substantially all of the assets primarily related to the Company’s wind blade manufacturing business at facilities located in the U.S. and Mexico, other than the assets to be sold pursuant to the Vestas Sale Transaction (the “ECP Business”) in exchange for approximately $20.0 million in cash, subject to certain purchase price adjustments and the assumption of certain liabilities, each as set forth in the ECP Purchase Agreement (the “ECP Sale Transaction”). The ECP Sale Transaction is subject to a number of closing conditions and may be terminated by either party under certain circumstances, including among others, if the ECP Sale Transaction has not been consummated by June 30, 2026, subject to extension in certain circumstances. Refer to Note 24 – Subsequent Events for further information regarding the ECP Sale Transaction.
GE Vernova Transaction
Additionally, on March 16, 2026, the Company and certain of its direct and indirect subsidiaries (collectively, the “Back-Up Bidder Seller Parties”) entered into a Term Sheet (the “GE Vernova Term Sheet”) with GE Vernova International LLC (“GE Vernova”), setting forth the terms of definitive documentation to be entered into among the Back-Up Bidder Seller Parties and GE Vernova (the “Back-Up Bidder Documentation”). Pursuant to the GE Vernova Term Sheet, in the event that the ECP Purchase Agreement is terminated and subject to other conditions set forth in the GE Vernova Term Sheet, the Back-Up Bidder Seller Parties will sell and transfer to GE Vernova, free and clear of all liens, interests, and encumbrances (except as will be set forth in the Back-Up Bidder Documentation) pursuant to section 363 of the Bankruptcy Code certain assets of the Back-Up Bidder Seller Parties, including assets related to wind blade manufacturing at our Iowa facility and all related storage facilities used in connection with such manufacturing and other intellectual property related to wind blade manufacturing of the blade types (including, but not limited to, design, technical support, and other items) (the “GEV Business”), in exchange for approximately $21.0 million in cash (the “GE Vernova Transaction”). Pursuant to the GE Vernova Term Sheet, the consummation of the GE Vernova Transaction shall be subject to a number of closing conditions, including, among other things, (i) entry by the Court of an order approving the GE Vernova Transaction, (ii) of the ECP Purchase Agreement, and (iii) conditions with respect to the accuracy of representations and warranties and compliance with covenants to be set forth in the Back-Up Bidder Documentation. If the ECP Purchase Agreement is and the GE Vernova Transaction is not consummated prior to August 31, 2026, GE Vernova is obligated to purchase the certain obligations of the DIP Lenders under the DIP Credit Agreement from the DIP Lenders. Refer to Note 24 – Subsequent Events for further information regarding the GE Vernova Transaction.
Going Concern
Overall, the various economic challenges presented in the markets where we operate, as discussed above, continue to create uncertainty in the industry’s near-term outlook and continue to challenge our operations. Based on our evaluation of our current forecast and liquidity assessment, we have concluded that these factors raise substantial doubt about the Company’s ability to continue as a going concern. On August 11, 2025, the Company filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in the Bankruptcy Court, which is an event of default that accelerated our debt obligations. While the Company is actively undergoing a restructuring, there can be no assurance that such restructuring will be successfully implemented or that it will be sufficient to mitigate the financial conditions raising substantial doubt about our ability to continue as a going concern. As a result, substantial exists that the Company will be to continue as a going for a period of at least twelve months from the issuance date of this Annual Report on Form 10-K. The consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.
COMPONENTS OF RESULTS OF OPERATIONS
Net Sales
We recognize revenue from the majority of our manufacturing services over time as our customers control the product as it is produced, and we may not use or sell the product to fulfill other customers’ contracts. Net sales include amounts billed to our customers for our products as well as the progress towards the completion of the performance obligation for products in progress, which is determined on a ratio of direct costs incurred to date in fulfillment of the contract to the total estimated direct costs required to complete the performance obligation.
Cost of Goods Sold
Cost of goods sold includes the costs we incur at our production facilities to make products saleable on both products invoiced during the period as well as products in progress towards the satisfaction of the related performance obligations for which we have an enforceable right to payment upon termination and we may not use or sell the product to fulfill other customers’ contracts. All costs incurred at our production facilities, as well as the allocated portion to our production facilities of costs incurred at our corporate headquarters and our research facilities, are directly or indirectly related to the manufacturing of products or services and are presented in cost of goods sold. Cost of goods sold includes such items as raw materials, direct and indirect labor and facilities costs, including purchasing and receiving costs, plant management, inspection costs, production process improvement activities, product engineering and internal transfer costs. In addition, all depreciation associated with assets used in the production of our products is also included in cost of goods sold. Direct labor costs consist of salaries, benefits and other personnel related costs for associates engaged in the manufacturing of our products and services. All direct labor costs, excluding non-productive labor costs, are included in the measure of progress towards completion of the relevant performance obligation when determining revenue to be recognized during the period.
Startup and transition costs are primarily unallocated fixed overhead costs and underutilized direct labor costs incurred during the period production facilities are transitioning wind blade models and ramping up manufacturing. The cost of sales for the initial products from a new model manufacturing line is generally higher than when the line is operating at optimal production volume levels due to inefficiencies during ramp-up related to labor hours per blade, cycle times per blade and raw material usage. Additionally, these costs as a percentage of net sales are generally higher during the period in which a facility is ramping up to full production capacity due to underutilization of the facility. Manufacturing overhead at each of our facilities includes virtually all indirect costs (including share-based compensation costs) incurred at the plants, including engineering, finance, information technology, human resources and plant management.
General and Administrative Expenses
General and administrative expenses primarily relate to the unallocated portion of costs incurred at our corporate headquarters and our research facilities and include salaries, benefits and other personnel related costs for associates engaged in research and development, engineering, finance, internal audit, information technology, human resources, business development, global operational excellence, global supply chain, in-house legal and executive management. Other costs include outside legal and accounting fees, risk management (insurance), share-based compensation and certain other administrative and global resources costs.
The unallocated research and development expenses incurred at our Kolding, Denmark advanced engineering center and our Berlin, Germany engineering center are also included in general and administrative expenses. For the years ended December 31, 2025, 2024 and 2023, research and development expenses totaled $1.6 million, $1.3 million and $1.4 million, respectively.
Loss on Sale of Assets and Asset Impairments
Loss on sale of assets represents the losses on the sale of certain receivables, on a non-recourse basis under accounts receivable assignment agreements with our customers, to financial institutions and losses on the sale of other assets at our corporate and manufacturing facilities. Asset impairments represent the losses on the impairment of our assets at our corporate and manufacturing facilities.
Gain on extinguishment of Series A Preferred Stock
Gain on extinguishment of Series A Preferred Stock, par value $0.01 per share (the Series A Preferred Stock), represents the gain recognized as a result of the cashless exchange of all of the outstanding Series A Preferred Stock for the senior secured term loan (the Term Loan) under the Credit Agreement that we entered into in December 2023. See Note 14 – Debt for further discussion of the gain recognized.
Restructuring Charges, net
Restructuring charges, net primarily consist of associate severance, one-time termination benefits and ongoing benefits related to the reduction of our workforce and other costs associated with exit activities, which may include costs related to leased facilities to be abandoned and facility and associate relocation costs. For the year ended December 31, 2025, restructuring charges, net also includes approximately $23.2 million of professional fees related to our debt restructuring efforts prior to the filing of the Chapter 11 Cases (the “pre-petition professional fees”).
Other Income (Expense)
Other income (expense) consists of interest expense on our debt borrowings, the amortization of deferred financing costs on such borrowings, the amortization of the debt discount on our Term Loan, foreign currency income and losses, interest income on money market accounts, losses on extinguishment of debt and miscellaneous income and expense.
Reorganization items, net
Reorganization items, net consists of costs associated with the Chapter 11 Cases, primarily related to professional fees. For the year ended December 31, 2025, we incurred approximately $54.5 million of post-petition professional fees, $3.9 million of employee retention costs, $2.5 million of interest expense related to the write-off of debt issuance costs and $0.3 million of other bankruptcy-related costs, offset by $11.6 million of gains on adjustments to liabilities subject to compromise.
Income Taxes
Income taxes consists of federal, state, provincial, local and foreign taxes based on income in jurisdictions in which we operate, including in the U.S., Mexico, India and various countries within Europe. The income tax rate, tax provisions, deferred tax assets and liabilities vary according to the jurisdiction in which the income or loss arises. Tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities and require us to exercise judgment in determining our income tax provision, our deferred tax assets and liabilities and the valuation allowance recorded against our net deferred tax assets.
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 and operating metrics to analyze our performance. These “non-GAAP” financial measures consist of EBITDA, adjusted EBITDA, free cash flow and net cash (debt), which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance. The key operating metrics consist of wind blade sets produced, estimated megawatts of energy capacity to be generated by wind blade sets produced, utilization, dedicated manufacturing lines, manufacturing lines installed, and weighted-average sales price (ASP) per wind blade, all of which help us evaluate our operational performance. We believe that these measures are useful to investors in evaluating our performance.
Key Financial Measures
The following discussion reflects continuing operations only, unless otherwise indicated. Certain prior period amounts have been reclassified to conform to the current period's presentation.
The key financial measures as of and for the years ended December 31 are as follows:
(in thousands)
Net sales
Net loss from continuing operations
EBITDA (1)
Adjusted EBITDA (1)
Net cash provided by (used in) operating activities
Capital expenditures (2)
Free cash flow (1)(2)
Total debt, net of debt issuance costs
and debt discount
Net cash (debt) (1)
See below for more information and a reconciliation of EBITDA, adjusted EBITDA, free cash flow and net cash (debt) to net loss from continuing operations attributable to common stockholders, net cash provided by (used in) operating activities and total debt, net of debt issuance costs and debt discount, respectively, the most directly comparable financial measures calculated and presented in accordance with GAAP.
Capital expenditures and free cash flow include amounts from discontinued operations. Refer to consolidated statements of cash flows for more information.
EBITDA and adjusted EBITDA
We define EBITDA, a non-GAAP financial measure, as net income or loss from continuing operations plus interest expense, income taxes and depreciation and amortization. We define adjusted EBITDA as EBITDA plus any share-based compensation expense, plus or minus any foreign currency losses or income, plus or minus any losses or gains from the sale of assets and asset impairments, plus any restructuring charges, plus any reorganization items. Adjusted EBITDA is the primary metric used by our management and our board of directors to establish budgets and operational goals for managing our business and evaluating our performance. We monitor adjusted EBITDA as a supplement to our GAAP measures, and believe it is useful to present to investors, because we believe that it facilitates evaluation of our period-to-period operating performance by eliminating items that are not operational in nature, allowing comparison of our recurring core business operating results over multiple periods unaffected by differences in capital structure, capital investment cycles and fixed asset base. In addition, we believe adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and debt-service capabilities.
Our use of adjusted EBITDA has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
adjusted EBITDA does not reflect the net income or loss from discontinued operations;
adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments;
adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
adjusted EBITDA does not reflect the dividends to our extinguished Series A Preferred Stockholders or accretion of the Series A Preferred Stock;
adjusted EBITDA does not reflect the gain on extinguishment of our Series A Preferred Stock;
adjusted EBITDA does not reflect losses on extinguishment of debt relating to prepayment penalties, termination fees and the write off of any remaining debt discount and debt issuance costs upon the repayment or refinancing of our debt;
adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect capital expenditure requirements relating to the future need to augment or replace those assets;
adjusted EBITDA does not reflect share-based compensation expense on equity-based incentive awards to our officers, associates, directors and consultants;
adjusted EBITDA does not reflect the foreign currency income or losses in our operations;
adjusted EBITDA does not reflect the gains or losses on the sale of assets and asset impairments;
adjusted EBITDA does not reflect restructuring charges;
adjusted EBITDA does not reflect reorganization items; and
other companies, including companies in our industry, may calculate EBITDA and adjusted EBITDA differently, which reduces their usefulness as comparative measures.
In evaluating EBITDA and adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments noted herein. Our presentations of EBITDA and adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider EBITDA and adjusted EBITDA alongside other financial performance measures, including our net income (loss) and other GAAP measures.
Free cash flow
We define free cash flow as net cash provided by (used in) operating activities less capital expenditures. 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 accrued interest paid in kind on debt and funding business acquisitions.
Net cash (debt)
We define net cash (debt) as total unrestricted cash and cash equivalents less the total amount of debt outstanding. The total amount of debt outstanding is comprised of the long-term debt and current maturities of long-term debt, net of debt issuance costs and debt discounts, as presented in our consolidated balance sheets. We believe that the presentation of net cash (debt) provides useful information to investors because our management reviews net cash (debt) as part of our oversight of overall liquidity, financial flexibility and leverage. Net cash (debt) is important when we consider opening new manufacturing facilities and expanding existing manufacturing facilities, as well as for capital expenditure requirements.
The following tables reconcile our non-GAAP key financial measures to the most directly comparable GAAP measures:
EBITDA and adjusted EBITDA for the years ended December 31 are reconciled as follows:
(in thousands)
Net loss attributable to common stockholders
Net loss (income) from discontinued operations
Net loss from continuing operations attributable
to common stockholders
Preferred stock dividends and accretion
Gain on extinguishment of
Series A Preferred Stock
Net loss from continuing operations
Adjustments:
Depreciation and amortization
Interest expense, net
Income tax provision
EBITDA
Share-based compensation expense
Foreign currency loss (income), net
Loss on sale of assets and asset impairments
Restructuring charges, net
Reorganization items, net
Adjusted EBITDA
Free cash flow, which includes discontinued operations, for the years ended December 31 is reconciled as follows:
(in thousands)
Net cash provided by (used in) operating activities
Less capital expenditures
Free cash flow
Net cash (debt) as of December 31 is reconciled as follows:
(in thousands)
Cash and cash equivalents
Cash and cash equivalents of
discontinued operations
Total debt, net of debt issuance costs
and debt discount
Net cash (debt)
Key Operating Metrics (1)
The key operating metrics as of and for the year ended December 31 are as follows:
Sets
Estimated megawatts
Utilization
Dedicated manufacturing lines
Manufacturing lines installed
Wind blade ASP (in $ thousands)
See below for more information on each of our key operating metrics.
Sets represents the number of wind blade sets, consisting of three wind blades each, which we produced worldwide during the period. We monitor sets and believe that presenting sets to investors is helpful because we believe that it is the most direct measurement of our manufacturing output during the period. Sets primarily impact net sales.
Estimated megawatts are the energy capacity to be generated by wind blade sets produced during the period. Our estimate is based solely on name-plate capacity of the wind turbine on which the wind blades we manufacture are expected to be installed. We monitor estimated megawatts and believe that presenting estimated megawatts to investors is helpful because we believe that it is a commonly followed measurement of energy capacity across our industry and provides an indication of our share of the overall wind blade market.
Utilization represents the percentage of the number of wind blades produced during the period compared to the total potential wind blade capacity of the manufacturing lines installed during the period. We monitor utilization because we believe it helps investors to better understand how close we are to operating at maximum production capacity.
Dedicated manufacturing lines are the number of wind blade manufacturing lines that we have dedicated to our customers pursuant to our supply agreements at the end of the period. We monitor dedicated manufacturing lines and believe that presenting this metric to investors is helpful because we believe that the number of dedicated manufacturing lines is the best indicator of demand for the wind blades we manufacture for customers under our supply agreements in any given period. Lines become dedicated upon the execution of a supply agreement; this means that lines are typically dedicated before they are installed.
Manufacturing lines installed represents the number of wind blade manufacturing lines installed and either in operation, startup or transition during the period. We believe that total manufacturing lines installed provides an understanding of the number of manufacturing lines installed and either in operation, startup or transition. From time to time, we have manufacturing lines installed that are not dedicated to our customers pursuant to a supply agreement.
Wind blade ASP represents the average sales price (ASP) during the period for a single wind blade that we manufacture for our customers. We monitor wind blade ASP and believe that presenting it to investors is helpful as it is the most direct measurement of our pricing structure with our customers under our supply agreements and directly impacts net sales.
RESULTS OF OPERATIONS
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following table summarizes certain of our operating results as a percentage of net sales for the years ended December 31 that have been derived from our consolidated statements of operations:
Net sales
Cost of sales
Startup and transition costs
Total cost of goods sold
Gross loss
General and administrative expenses
Loss on sale of assets and asset impairments
Restructuring charges, net
Loss from continuing operations
Total other expense
Loss before income taxes
Reorganization items, net
Income tax provision
Net loss from continuing operations
Net loss from discontinued operations
Net loss attributable to common stockholders
Net sales
Consolidated discussion
The following table summarizes our net sales by product/service for the years ended December 31:
Change
(in thousands)
Wind blade, tooling
and other wind
related sales
Field service, inspection
and repair services
sales
Total net sales
The increase in wind blade, tooling, and other wind-related (collectively, Wind) sales for the year ended December 31, 2025, as compared to the same period in 2024,was primarily due to a 15% increase in the number of wind blades produced, partially offset by liquidated damages as a result of certain production challenges at our Mexico facilities and lower average sales prices of wind blades due to changes in the mix of wind blade models produced. The change in volume was primarily due to the restart and production ramp for two of our previously idled facilities, offset by a temporary production stoppage due to a safety stand-down in our Mexico manufacturing facilities in the second quarter of 2025 and temporary production stoppages subsequent to the Petition Date due to supply chain challenges as a result of the Chapter 11 Cases.
The increase in field service, inspection and repair services (collectively, Field Services) sales for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to an increase in technicians deployed to revenue generating projects due to a decrease in time spent on non-revenue generating warranty campaigns.
Segment discussion
The following table summarizes our net sales by our three geographic operating segments for the years ended December 31:
Change
(in thousands)
Mexico
India
Other
Total net sales
U.S. Segment
The following table summarizes our net sales by product/service for the U.S. segment for the years ended December 31:
Change
(in thousands)
Wind blade, tooling
and other wind
related sales
Field service, inspection
and repair services
sales
Total net sales
NM - not meaningful.
The increase in our U.S. segment's Wind sales for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to the restart of production at our Iowa manufacturing facility.
The increase in Field Services sales for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to an increase in technicians deployed to revenue generating projects due to a decrease in time spent on non-revenue generating warranty campaigns.
Mexico Segment
The following table summarizes our net sales by product/service for the Mexico segment for the years ended December 31:
Change
(in thousands)
Wind blade, tooling
and other wind
related sales
Field service, inspection
and repair services
sales
Total net sales
The increase in the Mexico segment’s Wind sales for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to a 18% net increase in the number of wind blades produced across our Mexico manufacturing facilities due primarily due to the restart and ramp of production of a previously idled facility in Juarez, Mexico, as well as higher utilization as certain of our manufacturing lines in Mexico were in serial production in the current periods, that were in transition during the prior comparative period. This increase in volume was partially offset by liquidated damages as a result of certain production challenges, temporary production stoppages subsequent to the Petition Date due to supply chain challenges as a result of the Chapter 11 Cases, lower average sales prices of wind blades due to changes in the mix of wind blades produced, a temporary production stoppage from a safety stand-down in the second quarter, and a decrease in the number of wind blades produced at the Nordex Matamoros facility that shut down at the conclusion of the contract on June 30, 2024.
The increase in our Mexico segment's Field Services sales for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to an increase in technicians deployed to revenue generating projects due to a decrease in time spent on non-revenue generating warranty campaigns.
India Segment
The following table summarizes our net sales by product/service for the India segment for the years ended December 31:
Change
(in thousands)
Wind blade, tooling
and other wind
related sales
Field service, inspection
and repair services
sales
Total net sales
The decrease in the India segment’s net sales of Wind for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to lower average sales prices of wind blades due to changes in the mix of wind blade models produced and a decrease of 8% in the number of wind blades produced.
Other
The following table summarizes our net sales by product/service for the all other operations for the years ended December 31:
Change
(in thousands)
Wind blade, tooling
and other wind
related sales
Field service, inspection
and repair services
sales
Total net sales
Total cost of goods sold
The following table summarizes our total cost of goods sold for the years ended December 31:
Change
(in thousands)
Cost of sales
Startup costs
Transition costs
Total cost of goods sold
% of net sales
Total cost of goods sold as a percentage of net sales increased by approximately 3.6% for the year ended December 31, 2025, as compared to the same period in 2024, primarily due to liquidated damages and increased labor costs as a result of production challenges, a temporary production stoppage from a safety stand-down in the second quarter of 2025, and temporary production stoppages subsequent to the Petition Date due to supply chain challenges as a result of the Chapter 11 Cases. This increase was partially offset by lower startup and transition costs and the shutdown of our Nordex Matamoros facility at the end of the second quarter of 2024, which had significant cost challenges in the prior comparative period. The fluctuating U.S. dollar against the Mexican Peso and Indian Rupee had a combined unfavorable impact of 1.8% on consolidated cost of goods sold for the year ended December 31, 2025, as compared to the same period in 2024.
General and administrative expenses
The following table summarizes our general and administrative expenses for the years ended December 31:
Change
(in thousands)
General and
administrative expenses
% of net sales
General and administrative expenses decreased by approximately 2.1% as a percentage of net sales for the year ended December 31, 2025, as compared to the same period in 2024. General and administrative expenses for the years ended December 31, 2025 and 2024 include approximately $8.7 million and $18.7 million, respectively, of unallocated corporate overhead costs that were previously allocated to our discontinued operations in Türkiye but have been reclassified to continuing operations to conform to the current period’s presentation. The remaining improvement in general and administrative expenses for the year ended December 31, 2025 as compared to the same period in 2024 is primarily due to lower employee compensation costs and lower professional service and consulting fees unrelated to our capital restructuring activities, partially offset by increased network and telecommunication costs associated with the implementation of our advanced technology processes in the first half of 2025.
Loss on sale of assets and asset impairments
The following table summarizes our loss on sale of assets and asset impairments for the years ended December 31:
Change
(in thousands)
Loss on sale of receivables
Loss on sale of other assets
and asset impairments
Total loss on sale of assets
and asset impairments
% of net sales
Losses on sales of receivables for the year ended December 31, 2025 compared to the same period in 2024, increased by approximately $3.5 million primarily due to an increase in the volume of receivables sold through our accounts receivable financing arrangements with certain of our customers. Losses on sales of other assets and asset impairments for the year ended December 31, 2025, as compared to the same period in 2024, decreased primarily due to approximately $3.4 million of asset impairments associated with our tooling business Mexico in the prior comparative period. We completed the divestiture of our tooling business in August 2025.
Restructuring charges, net
The following table summarizes our restructuring charges, net, for the years ended December 31:
Change
(in thousands)
Severance
Other restructuring costs
Total restructuring charges, net
% of net sales
The increase in restructuring charges, net for the year ended December 31, 2025, as compared to the same period in 2024 was primarily due to $23.2 million of pre-petition professional fees related to our capital restructuring activities prior to the filing of the Chapter 11 Cases, as well as an increase in termination benefits associated with a reduction in workforce at our India facility at the conclusion of our supply agreement with one of our customers.
Income (loss) from continuing operations
Segment discussion
The following table summarizes our income (loss) from operations by our three geographic operating segments for the years ended December 31:
Change
(in thousands)
Mexico
India
Other
Total loss from
operations from
continuing operations
% of net sales
U.S. Segment
The increase in the loss from operations in the U.S. segment for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to increased pre-petition professional fees associated with our capital restructuring activities, start-up costs at our previously idled Iowa facility, offset by increased field services sales and lower general and administrative expenses due to lower employee compensation costs.
Mexico Segment
The increase in loss from operations in the Mexico segment for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to liquidated damages and increased labor costs as a result of certain production challenges, temporary production stoppages subsequent to the Petition Date due to supply chain challenges as a result of the Chapter 11 Cases, and the impacts of a temporary production stoppage from a safety stand-down in the second quarter of 2025. These negative impacts were partially offset by the shutdown of our Nordex Matamoros facility at the end of the second quarter of 2024, which had significant cost challenges in the prior comparative period, a decrease in startup and transition costs, an increase in the number of wind blades produced due to the restart and ramp of production at one of our previously idled facilities in Juarez, Mexico, and changes in foreign currency fluctuations. The fluctuating U.S. dollar relative to the Mexican Peso had an impact of 1.6% on the Mexico segment's cost of goods sold for the year ended December 31, 2025, as compared to the same period in 2024.
India Segment
The decrease in income from operations in the India segment for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to lower average sales prices of wind blades, decreases in the number of wind blades produced, and an increase in startup and transition costs in the first quarter of 2025.
Other income (expense)
The following table summarizes our total other income (expense) for the years ended December 31:
Change
(in thousands)
Interest expense, net
Foreign currency
income (loss), net
Miscellaneous income
Total other expense
The increase in total other expense for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to an increase in interest expense and non-cash amortization of debt discounts related to our Senior Secured Term Loan, as well as unfavorable foreign currency exchange rates.
Reorganization items, net
The following table summarizes our reorganization items, net for the years ended December 31:
Change
(in thousands)
Reorganization items, net
The increase in reorganization items, net for the year ended December 31, 2025, as compared to the same period in 2024, was due to costs associated with the Chapter 11 Cases, including $54.5 million of post-petition professional fees, $3.9 million of employee retention costs, $2.5 million of interest expense related to the write-off of debt issuance costs and $0.3 million of other bankruptcy-related costs, offset by $11.6 million of gains on adjustments to liabilities subject to compromise.
Income taxes
The following table summarizes our income taxes for the years ended December 31:
Change
(in thousands)
Income tax provision
Effective tax rate
Our income tax provision for the year ended December 31, 2025, as compared to the same period in 2024 decreased due to the mix of earnings of our operations in foreign jurisdictions and changes in our uncertain tax positions.
Net loss from continuing operations
The following table summarizes our net loss from continuing operations for the years ended December 31:
Change
(in thousands)
Net loss from
continuing operations
The increase in the net loss for the year ended December 31, 2025 as compared to the same period in 2024, was primarily due to pre-petition and post-petition professional fees associated with our capital restructuring activities, as well as liquidated damages and higher labor costs due to production challenges. These negative impacts were partially offset by the shutdown of our Nordex Matamoros facility at the end of the second quarter of 2024, which had significant cost challenges in the prior comparative period, and an overall increase in the number of wind blades produced compared to the prior period.
Net loss from discontinued operations
The following table summarizes our net loss from discontinued operations for the years ended December 31:
Change
(in thousands)
Net loss from
discontinued operations
The net loss from discontinued operations for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to the impacts of the divestiture of our Automotive business on June 30, 2024 in the prior comparative period and the divestiture of our Turkish operations.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
For a comparison of our results of operations for the years ended December 31, 2024 and 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025 and incorporated herein by reference.
LIQUIDITY AND CAPITAL RESOURCES
Our primary needs for liquidity have been, and in the future will continue to be, capital expenditures, purchases of raw materials, the impact of startups and transitions, working capital, debt service costs, warranty costs, and reorganization costs associated with our Chapter 11 Cases. Our capital expenditures have been primarily related to machinery and equipment for new facilities or facility expansions. Historically, we have funded our working capital needs through cash flows from operations, the proceeds received from our credit facilities and from proceeds received from the issuance of stock.
In connection with the filing of the Chapter 11 Cases, the Debtors entered into a DIP Credit Agreement, pursuant to which, the DIP Lenders agreed to provide the Company with a multiple draw term loan facility in an aggregate principal amount not to exceed $82.5 million (the “DIP Facility”). On August 14, 2025, the Company received $7.5 million in DIP Tranche 1 borrowings under the DIP Facility, which was used (i) to pay amounts, fees, costs and expenses related to the Chapter 11 Cases and (ii) for working capital and general corporate purposes. Concurrently with the funding of the DIP Tranche 1, the DIP Lenders rolled up their ratable share of Senior Secured Term Loan obligations in an amount equal to two times the amount of new money borrowed under such DIP Tranche 1, or $15.0 million (the “Initial Roll-Up Loan”). As of December 31, 2025, the Company had outstanding borrowings of $23.9 million under the DIP Facility, consisting of $7.5 million of DIP Tranche 1 borrowings, $15.0 million of Initial Roll-Up Loans, $0.2 million of commitment fees, and $1.2 million of paid in kind interest.
On March 1, 2026, the Company received a letter from the DIP Lenders regarding an Event of Default occurring under the DIP Credit Agreement. The letter notified and confirmed to the Company that, because, among other things, as of the date of the letter, the Bankruptcy Court has not entered a Disclosure Statement Order (nor any other order approving the adequacy of a disclosure statement in connection with a chapter 11 plan for the Debtors), an Event of Default under the DIP Credit Agreement has occurred and is continuing pursuant to Section 11.01(g) (Events of Default) of the DIP Credit Agreement (the “DIP Default”). On March 16, 2026, the DIP Lenders agreed to waive the DIP Default, extend the maturity date under the DIP Credit Agreement and consent to the Vestas Sale Transactions, ECP Sale Transaction and GEV Transaction as set forth in more detail in the Oaktree Consent Term Sheet filed with the Bankruptcy Court.
CBP is currently reviewing certain of the wind blade models that are manufactured at our facilities in Mexico pursuant to the Uyghur Forced Labor Prevention Act (“UFLPA”). As a result of these reviews, CBP has restricted the importation of these wind blades into the U.S. while the matter remains under investigation. Although we are confident that our wind blade supply chain does not source materials from the Xinjiang Uyghur Autonomous Region of China, the UFLPA establishes a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China, or by certain identified entities, are made with forced labor and are therefore prohibited from entry into the U.S. unless the importer can demonstrate otherwise to the satisfaction of CBP.
Because of the current CBP actions, a substantial portion of the wind blades manufactured at our Mexico facilities are unable to be imported into the U.S. market. The inability to import these wind blades has significantly disrupted, and may continue to disrupt, our supply chain, reduce available inventory for U.S. customers, delay deliveries, and result in lost sales. In addition, these CBP reviews have required and may continue to require significant management attention, internal resources, and legal and compliance costs as we work to respond to CBP’s inquiries and further demonstrate compliance with applicable laws.
The outcome and duration of the CBP reviews are uncertain. If we are unable to satisfactorily resolve the matter, CBP may continue to detain, exclude, or seize affected wind blades, which could further restrict our ability to serve customers in the U.S. and may require us to modify our sourcing, manufacturing, or supply chain practices. Any prolonged disruption in our ability to import wind blades into the U.S., or any adverse findings by CBP, will have a further, material adverse effect on our business, financial condition, and results of operations.
Our liquidity as of December 31, 2025 has been impacted by liquidated damages paid to our customers and lower than expected wind blade production volume at our Mexico manufacturing facilities due to a temporary production stoppage from a safety stand-down in the second quarter of 2025 and temporary production stoppages subsequent to the Petition Date due to supply chain challenges as a result of the Chapter 11 Cases. We have also
incurred significant professional fees and other costs in connection with our Chapter 11 Cases that have adversely impacted our liquidity.
Due to the liquidity challenges we have faced during the pendency of the Chapter 11 Cases, we have entered into various agreements with our customers, Vestas and GE Vernova, pursuant to which these customers have provided short-term liquidity needs through cash advances and accelerated payment terms, so that the Company could continue to operate while negotiating the terms of a potential plan of reorganization and pursue a parallel sale process. The cash advance payments have constituted an allowed administrative expense claim against the Debtors under section 503(b) of the Bankruptcy Code, and accordingly, we have recorded these advances as contract liabilities in our consolidated balance sheets. As of December 31, 2025, we had $25.0 million of contract liabilities outstanding related to cash received from our customers under these liquidity arrangements.
At December 31, 2025 and 2024, we had unrestricted cash and cash equivalents totaling $13.9 million and $143.3 million, respectively. The December 31, 2025 balance included $5.4 million of cash located outside of the U.S., $2.6 million in India, $1.2 million in Mexico and $1.6 million in other countries. The December 31, 2024 balance included $5.8 million of cash located outside of the U.S., $1.8 million in India, $2.3 million in Mexico and $1.7 million in other countries. In addition to these amounts, at December 31, 2025 and 2024, we had unrestricted cash and cash equivalents related to our discontinued operations of $0.5 million and $54.7 million, respectively, all located outside of the U.S.
We are not presently involved in any off-balance sheet arrangements, including transactions with unconsolidated special-purpose or other entities that would materially affect our financial position, results of operations, liquidity or capital resources, other than our accounts receivable assignment agreements described below. Furthermore, we do not have any relationships with special-purpose or other entities that provide off-balance sheet financing; liquidity, market risk or credit risk support; or engage in leasing or other services that may expose us to liability or risks of loss that are not reflected in the consolidated financial statements and related notes.
Our segments enter into accounts receivable assignment agreements with various financial institutions. Under these agreements, the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to our segment’s customers at an agreed-upon discount rate.
The following table summarizes certain key details of our accounts receivable assignment agreements in place as of December 31, 2025:
Year Of Initial Agreement
Segment(s) Related To
Current Annual Interest Rate
Mexico
SOFR plus 0.26%
India
SOFR plus 0.26%
SOFR plus 0.29%
Mexico
SOFR plus 0.29%
As the receivables are purchased by the financial institutions under the agreements noted above, the receivables are removed from our consolidated balance sheet. During the years ended December 31, 2025 and 2024, $746.8 million and $474.1 million, respectively, of receivables were sold under the accounts receivable assignment agreements described above.
Cash Flow Discussion
The following table summarizes our key cash flow activity on a consolidated basis, and includes cash flows from continuing and discontinued operations, for the years ended December 31:
$ Change
(in thousands)
Net cash provided by (used in) operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Impact of foreign exchange rates on cash, cash
equivalents and restricted cash
Net change in cash, cash equivalents
and restricted cash
Operating Cash Flows
Net cash used in operating activities increased by $138.9 million for the year ended December 31, 2025 as compared to the same period in 2024, primarily due to lower income from continuing operations due to the various production and liquidity challenges in Mexico mentioned above, and significant professional fees associated with our Chapter 11 Cases, including $23.2 million of pre-petition fees and $54.5 million of post-petition fees through December 31, 2025. Our operating cash flow was also impacted by the labor strike associated with our discontinued operations in Türkiye. This was partially offset by the shutdown of the Nordex Matamoros facility and divestiture of our Automotive business on June 30, 2024, which had significant losses from operations in the prior comparative period.
Investing Cash Flows
Net cash used in investing activities decreased by $10.4 million for the year ended December 31, 2025 as compared to the same period in 2024 primarily due to lower capital expenditures from fewer lines in startup and transition in the current year.
Financing Cash Flows
Net cash used in financing activities increased by $95.4 million for the year ended December 31, 2025 as compared to the same period in 2024, primarily due to our discontinued operations in Türkiye prior to the sale of such operations, including net repayments of $47.9 million of outstanding borrowings under our international credit facilities in the current period compared to net proceeds of $62.0 million under the same credit facilities in the prior period. Partially offsetting these net uses of cash from financing activities, the Company received $7.5 million in cash proceeds under its DIP Credit Agreement.
For a discussion and comparison of our cash flows for the years ended December 31, 2024 and 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025 incorporated herein by reference.
Our Indebtedness
For a discussion of our indebtedness, refer to Note 14 – Debt, of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Other Contingencies
For a discussion of our legal proceedings, refer to Note 18 – Commitments and Contingencies – Legal Proceedings, of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
The wind blades and other composite structures that we produce are subject to warranties against defects in workmanship and materials, generally for a period of two to five years. We are not responsible for the fitness for use of the wind blade or the overall wind turbine system. If a wind blade is found to be defective during the warranty period as a result of a defect in workmanship or materials, among other potential remedies, we may need to repair or replace the wind blade (which could include significant transportation and installation costs) at our sole expense. At December 31, 2025 and 2024, we had accrued warranty reserves totaling $45.8 million and $38.8 million, respectively. At December 31, 2025, approximately $31.4 million of the accrued warranty reserve is classified as liabilities subject to compromise in our consolidated balance sheets.
As of December 31, 2025, we had no material operating expenditures for environmental matters, including government imposed remedial or corrective actions, during the year ended December 31, 2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amount of our assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to revenue recognition and warranty expense. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.
We believe the following critical accounting policies affect our more significant judgments used in the preparation of our consolidated financial statements.
Revenue Recognition. The majority of our revenue is generated from supply agreements associated with manufacturing of wind blades and related services. We account for a supply agreement when it has the approval from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and the collectability of consideration is probable. Our manufacturing services are customer specific and involve production of items that cannot be sold to other customers due to the customers’ protected IP.
Revenue is primarily recognized over time as we have an enforceable right to payment upon termination and we may not use or sell the product to fulfill other customers’ supply agreements. Because control transfers over time, revenue is recognized based on the extent of progress towards the completion of the performance obligation under the cost-to-cost input measure of progress as this method provides the best representation of the production progress towards satisfaction of the performance obligation. Under the cost-to-cost method, progress and the related revenue recognition is determined by a ratio of direct costs incurred to date in fulfillment of the performance obligation to the total estimated direct costs required to complete the performance obligation.
Determining the revenue to be recognized for services performed under our supply agreements involves judgments and estimates relating to the total consideration to be received and the expected direct costs to complete the performance obligation. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information available to us at the time of the estimate and may materially change as additional information becomes known.
Under the cost-to-cost method, contract assets established primarily relate to our rights to consideration for work completed but not billed at the reporting date on our supply agreements. The contract assets are transferred to accounts receivable when the rights become unconditional, which generally occurs when customers are invoiced upon the determination that a product conforms to the contract specifications.
See Note 1 – Summary of Operations and Summary of Significant Accounting Policies – (f) Revenue Recognition of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form
10-K, for further discussion of our accounting policies related to revenue recognition, including accounting policies surrounding our non-manufacturing related services.
Warranty Expense. The wind blades we manufacture are subject to warranties against defects in workmanship and materials, generally for a period of two to five years. We are not responsible for the fitness for use of the wind blade in the overall wind turbine system. If a wind blade is found to be defective during the warranty period as a result of a defect in workmanship or materials, among other potential remedies, we may need to repair or replace the wind blade at our sole expense. We provide warranties for all of our products with terms and conditions that vary depending on the product sold. We may offer extended warranties to our customers in limited situations. We record warranty expense based upon our estimate of future repairs using a probability-based methodology that considers previous warranty claims, identified quality issues and industry practices. Once the warranty period has expired, any remaining unused warranty accrual for the specific products is reversed against the current year warranty expense amount, provided that the warranty accrual for other products whose warranty period has not yet expired is sufficient to cover the estimated cost of future repairs for those other products.
Our estimate of warranty expense requires us to make assumptions about matters that are highly uncertain, including future rates of product failure, repair costs, availability of materials, shipping and handling, and de-installation and re-installation costs at customers’ sites, among others. When a potential or actual warranty claim arises, we may accrue additional warranty reserves for the estimated cost of remediation or proposed settlement. During the years ended December 31, 2025, 2024 and 2023, we accrued additional warranty expenses of approximately $19.7 million, $22.9 million and $42.7 million, respectively, beyond the normal warranty expense described above related to the remediation of specific wind blade models. Changes in warranty reserves could have a material effect on our consolidated financial statements. For example, as of December 31, 2025, a hypothetical change of 10% in the accrual rate of our warranty reserve would have resulted in a change to our warranty reserve of approximately $5.6 million.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 1 – Summary of Operations and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk
Not applicable.
Item 8. Financial Statemen ts and Supplementary Data
The financial statements required to be filed pursuant to this Item 8 are appended to this Report. An index of those financial statements is found in Part IV, Item 15 of this Annual Report on Form 10-K.
