UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to

Commission file number 001-34278

BROADWIND ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware	88-0409160
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3240 S. Central Avenue, Cicero, IL 60804

(Address of principal executive offices)

(708) 780-4800

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒ Emerging growth company ☐	Smaller reporting company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period to comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐  No  ☒

Number of shares of registrant’s common stock, par value $0.001, outstanding as of July 30,  2019: 16,163,172.

BROADWIND ENERGY, INC. AND SUBSIDIARIES

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
Signatures		28

PART I.       FINANCIAL INFORMATION

Item 1.Financial Statements

BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

	June 30,		December 31,
	2019		2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	74	$	1,177
Accounts receivable, net		20,273		17,455
Inventories, net		35,758		22,670
Prepaid expenses and other current assets		1,760		1,776
Total current assets		57,865		43,078
LONG-TERM ASSETS:
Property and equipment, net		48,197		49,087
Operating lease right-of-use assets		16,651		—
Other intangible assets, net		6,196		6,602
Other assets		349		398
TOTAL ASSETS	$	129,258	$	99,165
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and other notes payable	$	27,555	$	11,930
Current portion of finance lease obligations		825		967
Current portion of operating lease obligations		1,591		—
Accounts payable		15,484		11,618
Accrued liabilities		4,372		3,806
Customer deposits		18,561		23,507
Current liabilities held for sale		26		27
Total current liabilities		68,414		51,855
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		998		1,408
Long-term finance lease obligations, net of current portion		553		571
Long-term operating lease obligations, net of current portion		17,020		—
Other		69		1,969
Total long-term liabilities		18,640		3,948
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding		—		—
Common stock, $0.001 par value; 30,000,000 shares authorized; 16,437,109 and 15,982,622 shares issued as of June 30, 2019, and December 31, 2018, respectively		16		16
Treasury stock, at cost, 273,937 shares as of June 30, 2019 and December 31, 2018		(1,842)		(1,842)
Additional paid-in capital		382,343		381,441
Accumulated deficit		(338,313)		(336,253)
Total stockholders’ equity		42,204		43,362
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	129,258	$	99,165

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018		2019		2018
Revenues	$	41,169	$	36,781	$	82,829	$	66,748
Cost of sales		37,277		34,442		75,388		64,426
Restructuring		—		116		12		231
Gross profit		3,892		2,223		7,429		2,091
OPERATING EXPENSES:
Selling, general and administrative		3,895		2,495		7,723		6,393
Impairment charges		—		4,993		—		4,993
Intangible amortization		203		471		406		942
Restructuring		—		—		—		36
Total operating expenses		4,098		7,959		8,129		12,364
Operating loss		(206)		(5,736)		(700)		(10,273)
OTHER EXPENSE, net:
Interest expense, net		(773)		(352)		(1,309)		(650)
Other, net		(16)		(1)		(18)		(4)
Total other expense, net		(789)		(353)		(1,327)		(654)
Net loss before provision (benefit) for income taxes		(995)		(6,089)		(2,027)		(10,927)
Provision (benefit) for income taxes		23		(6)		34		(33)
LOSS FROM CONTINUING OPERATIONS		(1,018)		(6,083)		(2,061)		(10,894)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		—		(33)		1		(60)
NET LOSS	$	(1,018)	$	(6,116)	$	(2,060)	$	(10,954)
NET LOSS PER COMMON SHARE—BASIC:
Loss from continuing operations	$	(0.06)	$	(0.40)	$	(0.13)	$	(0.71)
Income (loss) from discontinued operations		0.00		0.00		0.00		0.00
Net loss	$	(0.06)	$	(0.40)	$	(0.13)	$	(0.71)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC		16,046		15,421		15,917		15,339
NET LOSS PER COMMON SHARE—DILUTED:
Loss from continuing operations	$	(0.06)	$	(0.40)	$	(0.13)	$	(0.71)
Income (loss) from discontinued operations		0.00		0.00		0.00		0.00
Net loss	$	(0.06)	$	(0.40)	$	(0.13)	$	(0.71)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED		16,046		15,421		15,917		15,339

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)

	Common Stock			Treasury Stock
	Shares	Issued			Issued		Additional		Accumulated
	Issued	Amount		Shares	Amount		Paid-in Capital		Deficit			Total
BALANCE, December 31, 2017	15,480,299	$	15	(273,937)	$	(1,842)	$	380,005	$	(312,107)		$	66,071
Stock issued for restricted stock	96,534		1	—		—		—		—			1
Stock issued under defined contribution 401(k) retirement savings plan	74,123		—	—		—		167		—			167
Share-based compensation	—		—	—		—		262		—			262
Net loss	—		—	—		—		—		(4,838)			(4,838)
BALANCE, March 31, 2018	15,650,956	$	16	(273,937)	$	(1,842)	$	380,434	$	(316,945)		$	61,663
Stock issued for restricted stock	18,869		—	—		—		—		—			—
Stock issued under defined contribution 401(k) retirement savings plan	74,820		—	—		—		171		—			171
Share-based compensation	—		—	—		—		227		—			227
Net loss	—		—	—		—		—		(6,116)			(6,116)
BALANCE, June 30, 2018	15,744,645	$	16	(273,937)	$	(1,842)	$	380,832	$	(323,061)	$		55,945
BALANCE, December 31, 2018	15,982,622	$	16	(273,937)	$	(1,842)	$	381,441	$	(336,253)		$	43,362
Stock issued for restricted stock	141,384		—	—		—		—		—			—
Stock issued under defined contribution 401(k) retirement savings plan	135,636		—	—		—		187		—			187
Share-based compensation	—		—	—		—		255		—			255
Net loss	—		—	—		—		—		(1,042)			(1,042)
BALANCE, March 31, 2019	16,259,642	$	16	(273,937)	$	(1,842)	$	381,883	$	(337,295)		$	42,762
Stock issued for restricted stock	53,740		—	—		—		—		—			—
Stock issued under defined contribution 401(k) retirement savings plan	123,727		—	—		—		205		—			205
Share-based compensation	—		—	—		—		255		—			255
Net loss	—		—	—		—		—		(1,018)			(1,018)
BALANCE, June 30, 2019	16,437,109	$	16	(273,937)	$	(1,842)	$	382,343	$	(338,313)		$	42,204

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Six Months Ended June 30,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,060)	$	(10,954)
Income (loss) from discontinued operations		1		(60)
Loss from continuing operations		(2,061)		(10,894)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense		3,390		4,706
Deferred income taxes		(5)		(42)
Impairment charges		—		4,993
Change in fair value of interest rate swap agreements		26		—
Stock-based compensation		510		489
Allowance for doubtful accounts		(12)		(25)
Common stock issued under defined contribution 401(k) plan		392		338
Gain on disposal of assets		(1)		—
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		(2,806)		(4,232)
Inventories		(13,088)		(1,003)
Prepaid expenses and other current assets		16		49
Accounts payable		3,306		4,823
Accrued liabilities		540		325
Customer deposits		(4,946)		(1,141)
Other non-current assets and liabilities		127		(1,179)
Net cash used in operating activities of continuing operations		(14,612)		(2,793)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(1,183)		(1,676)
Proceeds from disposals of property and equipment		1		—
Net cash used in investing activities of continuing operations		(1,182)		(1,676)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		91,007		66,985
Payments on line of credit		(75,370)		(63,200)
Proceeds from long-term debt		—		1,410
Payments on long-term debt		(462)		(313)
Principal payments on finance leases		(485)		(377)
Net cash provided by financing activities of continuing operations		14,690		4,505
DISCONTINUED OPERATIONS:
Operating cash flows		1		(38)
Net cash provided by (used in) discontinued operations		1		(38)
NET DECREASE  IN CASH AND CASH EQUIVALENTS		(1,103)		(2)
CASH AND CASH EQUIVALENTS beginning of the period		1,177		78
CASH AND CASH EQUIVALENTS end of the period	$	74	$	76
Supplemental cash flow information:
Interest paid	$	825	$	537
Income taxes paid	$	49	$	84
Non-cash activities:
Issuance of restricted stock grants	$	510	$	489
Non-cash purchases of property and equipment	$	325	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands, except share and per share data)

NOTE 1 — BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind Energy, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Towers, Inc. (“Broadwind Towers”), Brad Foote Gear Works, Inc. (“Brad Foote”), and Red Wolf Company, LLC (“Red Wolf”).  All intercompany transactions and balances have been eliminated. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2019. The December 31, 2018 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 

During the first quarter of 2019, the Company assessed its segment reporting by evaluating various qualitative and quantitative measures for each business and product line. Following the execution of the Company’s 2018 restructuring plan and the resulting exit of the leased Abilene facility at the end of 2018, the Company revised its segment presentation by moving its Abilene compressed natural gas and heavy fabrication business from the Process Systems segment to the Towers and Heavy Fabrications segment. The Company made this determination because, post-restructuring, the residual heavy fabrications business activities previously carried out in the now vacated space were transferred to the nearby tower plant under the supervision of Towers and Heavy Fabrications segment management. The Company has restated prior periods presented to reflect this change. See Note 14, “Segment Reporting” of these condensed consolidated financial statements for further discussion of reportable segments.

There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2019 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, other than the adoption of Accounting Standards Updates (“ASU”) 2016-02 described in Note 8 “Leases” of these condensed consolidated financial statements.

Company Description

Through its subsidiaries, the Company provides technologically advanced high-value products to energy, mining and infrastructure sector customers, primarily in the United States of America (the “U.S.”). The Company’s most significant presence is within the U.S. wind energy industry, which accounted for 65% of the Company’s revenue during the first six months of 2019. 

The Company has increasingly diversified its operations to provide precision gearing and gearboxes, heavy fabrications, kitting and assemblies of industrial systems to a broad range of industrial customers for oil and gas (“O&G”), mining, steel, and other industrial applications.

Please refer to Note 16, “Restructuring” of these condensed consolidated financial statements for the discussion of the restructuring plan which the Company initiated in the first quarter of 2018. The Company has incurred a total of approximately $12 and $267 of net costs during the six months ended June 30, 2019 and 2018, respectively, to implement this restructuring plan.

Liquidity

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances,  the Credit Facility (as defined below), equipment financing, and access to the public or private debt and equity markets and has the option to raise capital under the Company’s Form S-3 (as discussed below).

See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt.

5

Total debt and finance lease obligations at June 30, 2019 totaled $29,931, which includes current outstanding debt and finance leases totaling $28,380. The current outstanding debt includes $26,637 outstanding under the Company’s revolving line of credit.

On August 11, 2017, the Company filed a “shelf” registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 10, 2017 (the “Form S-3”). This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

On July 31, 2018, the Company entered into an At Market Issuance Sales Agreement (the "ATM Agreement") with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the ATM Agreement, the Company may sell from time to time through the Agent shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Agent of 3% of the gross proceeds of the sale of the shares sold under the ATM Agreement and reimburse the Agent for the expenses of their counsel. During the year ended December 31, 2018, the Company issued 15,112 shares of the Company’s common stock under the ATM Agreement and the net proceeds (before upfront costs) to the Company from the sale of the Company’s common stock were approximately $33 after deducting commissions paid of approximately $1. As of June 30, 2019, the Company’s common stock having a value of approximately $9,967 remained available for issuance with respect to the ATM Agreement.

The Company anticipates that current cash resources, amounts available under the Credit Facility, cash to be generated from operations, and any potential proceeds from the sale of further Company securities under the Form S-3 will be adequate to meet the Company’s liquidity needs for at least the next twelve months. If assumptions regarding the Company’s production, sales and subsequent collections from certain of the Company’s large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, the Company may in the future encounter cash flow and liquidity issues. If the Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit the Company’s operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and debt covenants, there can be no assurances that its operations will generate sufficient cash, or that credit facilities will be available in an amount sufficient to enable the Company to meet these financial obligations.

Management’s Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future tax rates, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, workers’ compensation reserves, and health insurance reserves. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates.

NOTE 2 — REVENUES

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company’s revenues disaggregated by revenue source for the three and six months ended June 30, 2019 and 2018:

		Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018
Towers and Heavy Fabrications	$	28,970	$	25,552	$	57,264	$	43,747
Gearing		9,266		8,632		19,293		17,438
Process Systems		2,933		2,620		6,272		5,586
Eliminations		-		(23)		-		(23)
Consolidated	$	41,169	$	36,781	$	82,829	$	66,748

6

Revenue within the Company’s Gearing and Process Systems segments, as well as heavy fabrication revenues within the Towers and Heavy Fabrications segment, is recognized at a point in time, typically when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

For many tower sales within the Company’s Towers and Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.

NOTE 3 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018, as follows: 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Basic earnings per share calculation:
Net loss	$	(1,018)	$	(6,116)	$	(2,060)	$	(10,954)
Weighted average number of common shares outstanding		16,045,790		15,420,704		15,916,590		15,339,420
Basic net loss per share	$	(0.06)	$	(0.40)	$	(0.13)	$	(0.71)
Diluted earnings per share calculation:
Net loss	$	(1,018)	$	(6,116)	$	(2,060)	$	(10,954)
Weighted average number of common shares outstanding		16,045,790		15,420,704		15,916,590		15,339,420
Common stock equivalents:
Stock options and non-vested stock awards (1)		—		—		—		—
Weighted average number of common shares outstanding		16,045,790		15,420,704		15,916,590		15,339,420
Diluted net loss per share	$	(0.06)	$	(0.40)	$	(0.13)	$	(0.71)

(1) Stock options and restricted stock units granted and outstanding of 1,489,660 and 942,378 are excluded from the computation of diluted earnings for the three and six months ended June 30, 2019 and 2018 due to the anti dilutive effect as a result of the Company’s net loss for those respective periods.

NOTE 4 — INVENTORIES

The components of inventories as of June 30, 2019 and December 31, 2018 are summarized as follows:

	June 30,		December 31,
	2019		2018
Raw materials	$	26,264	$	16,394
Work-in-process		7,342		5,426
Finished goods		3,728		2,958
		37,334		24,778
Less: Reserve for excess and obsolete inventory		(1,576)		(2,108)
Net inventories	$	35,758	$	22,670

7

NOTE 5 — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of the purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities. Goodwill is not amortized but is tested at least annually for impairment or more frequently whenever events or circumstances occur indicating that those assets might be impaired.  

Other intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf in 2017. Other intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 4 to 9 years. The Company tests other intangible assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable.

The Company added $4,993 of goodwill and $13,270 of other intangible assets, as a result of the Red Wolf acquisition, which was included in the Process Systems segment. See Note 14, “Segment Reporting,” of these condensed consolidated financial statements for further discussion of the Company’s segments.

During the second quarter of 2018, the Company determined that the carrying amount of the Red Wolf reporting unit exceeded the fair value and recorded a $4,993 goodwill impairment charge. In addition, during the fourth quarter of 2018, the Company determined that its customer relationship intangible asset was impaired, and recorded a corresponding $7,592 impairment charge.

During the second quarter of 2019, the Company also identified a further triggering event associated with Red Wolf’s recent operating losses. The Company relied upon an undiscounted cash flow analysis performed in the prior quarter and determined that no significant changes to the previously used inputs or assumptions were needed.  As a result, the Company concluded that no impairment to this asset group was indicated as of June 30, 2019.

As of June 30, 2019 and December 31, 2018, the cost basis, accumulated amortization and net book value of intangible assets were as follows: 

June 30, 2019					December 31, 2018
				Remaining					Remaining
				Weighted					Weighted
		Accumulated	Net	Average			Accumulated	Net	Average
Cost	Accumulated	Impairment	Book	Amortization		Accumulated	Impairment	Book	Amortization
Basis	Amortization	Charges	Value	Period