• TPI Composites, Inc. Announces Second Quarter 2023 Earnings Results – Agrees with GE to Expand Capacity in Mexico and Renews Focus on Quality

    المصدر: Nasdaq GlobeNewswire / 03 أغسطس 2023 15:05:08   America/Chicago

    SCOTTSDALE, Ariz., Aug. 03, 2023 (GLOBE NEWSWIRE) -- TPI Composites, Inc. (Nasdaq: TPIC), today reported financial results for the second quarter ended June 30, 2023.

    “I’m pleased to report that TPI and GE have reached an agreement in principle to amend their existing supply agreement in Mexico to add four new lines of capacity to produce blades for GE’s “workhorse” turbine in Juarez, with an initial term through 2025. TPI and GE expect to finalize this agreement in the third quarter,” said Bill Siwek, President, and CEO of TPI Composites.

    “As reported in our preliminary estimated earnings results last week, our financial results for the quarter were impacted by a warranty issue primarily related to one blade type in one factory,” added Siwek. “In light of the warranty charge as well as the quality issues impacting the broader wind industry, we have taken this opportunity to revisit our quality system and implement improvement initiatives to ensure we have more robust processes in place. This includes the recent appointment of Neil Jones as Chief Quality Officer, to help us better address the unprecedented challenges in the wind market, bringing to TPI over 25 years’ quality and engineering experience, most recently as Vestas’ Senior Vice President – Quality, Health, Safety and Environment.”

    “We remain diligent managing cash and we generated positive free cash flow for the second quarter, ending the quarter with $170 million of cash.   While we recognize the near-term headwinds for both TPI and the broader wind industry, we continue to believe in the outlook for TPI and the key role we play in the broader wind energy ecosystem. We are confident that our current liquidity position will enable us to navigate the near-term headwinds and put us on a path to achieve our sales and adjusted EBITDA targets.”

    Second Quarter 2023 Continuing Operations Results

    • Net Sales totaled $381 million for the three months ended June 30, 2023, a decrease of 2.9% over the same period last year
    • Net loss from continuing operations attributable to common stockholders was $80.8 million for the three months ended June 30, 2023, compared to a loss of $25.3 million in the same period last year
    • Adjusted EBITDA was a loss of $38.9 million for the three months ended June 30, 2023, a decrease of $44.5 million over the same period last year
    KPIs from continuing operations2Q’232Q’22
    Sets¹661675
    Estimated megawatts²2,9102,976
    Utilization385%88%
    Dedicated manufacturing lines43736
    Manufacturing lines installed53736
    1. Number of wind blade sets (which consist of three wind blades) produced worldwide during the period.
    2. Estimated megawatts of energy capacity to be generated by wind blade sets produced during the period.
    3. Utilization represents the percentage of wind blades produced during the period compared to the total potential wind blade capacity of manufacturing lines installed during the period.
    4. Number of wind blade manufacturing lines that are dedicated to our customers under long-term supply agreements at the end of the period.
    5. Number of wind blade manufacturing lines installed and either in operation, startup or transition during the period.

    Second Quarter 2023 Financial Results from Continuing Operations

    Net sales for the three months ended June 30, 2023, decreased 2.9% to $381.3 million as compared to $392.5 million in the same period in 2022 due to following:

    • Net sales of wind blades, tooling and other wind related sales (collectively “Wind”) decreased by $4.9 million, or 1.3%, to $362.7 million for the three months ended June 30, 2023, as compared to $367.6 million in the same period in 2022. The decrease in net sales of Wind during the three months ended June 30, 2023, as compared to the same period in 2022 was primarily due to a 2% decrease in the number of wind blades produced due to lower customer demand and delivery delays from increased inspection and repair activities, a decrease in other wind related sales for mold decommissioning services, and lower average sales prices due to the impact of raw material and logistic cost reductions on our blade prices, partially offset by favorable foreign currency fluctuations and an increase in tooling sales.
    • Automotive sales decreased by $3.4 million, or 32.0%, to $7.3 million for the three months ended June 30, 2023, as compared to $10.7 million in the same period in 2022. Automotive sales decreased primarily due to a decrease in the number of composite bus bodies produced and a decrease in sales of other automotive products due to our customers’ supply chain constraints and delays in transitions of new product launches, partially offset by an increase in fees associated with minimum volume commitments.
    • Field service, inspection, and repair service (“Field Services") sales decreased by $2.9 million to $11.3 million for the three months ended June 30, 2023, as compared to $14.2 million in the same period in 2022. Field Services sales declined due to a reduction in technicians deployed to revenue generating projects due primarily to an increase in time spent on non-revenue generating inspection and repair activities.
    • Net loss from continuing operations attributable to common stockholders was $80.8 million for the three months ended June 30, 2023, compared to a loss of $25.3 million in the same period in 2022.

    The net loss per common share was $1.90 for the three months ended June 30, 2023, compared to a net loss per common share of $0.60 for the same period in 2022.

    Adjusted EBITDA for the three months ended June 30, 2023, was a loss of $38.9 million as compared to adjusted EBITDA of $5.6 million during the same period in 2022. The decrease in adjusted EBITDA during the three months ended June 30, 2023, as compared to the same period in 2022 was primarily due to increased warranty costs, higher production costs for additional quality control measures implemented at certain manufacturing facilities, and increased labor costs in Türkiye and Mexico, partially offset by favorable foreign currency fluctuations, cost savings initiatives, and lower startup and transition costs.

    On June 30, 2023, and December 31, 2022, we had unrestricted cash, cash equivalents and short-term investments totaling $170.1 million and $133.6 million, respectively. Net cash used in operating activities increased by $15.1 million for the six months ended June 30, 2023, as compared to the same period in 2022, primarily as a result of an increase in operating losses, payments for China restructuring activities including outstanding payables and severance, an increase in gross contract assets due to an increase in unbilled wind blade production and timing of advance payments, and working capital fluctuations, partially offset by an increase in accounts receivable in the prior comparative period.

    Net cash used in investing activities increased by $0.9 million for the three months ended June 30, 2023, as compared to the same period in 2022, as a result of higher capital expenditures. Capital expenditures were $3.4 million for the three months ended June 30, 2023, as compared to $2.5 million during the same period in 2022. Our capital expenditures primarily relate to machinery and equipment and improvements to our existing facilities.

    2023 Guidance

    Guidance for the full year ending December 31, 2023:

    GuidancePrevious Full
    Year 2023
    Updated Full
    Year 2023
    Net Sales from Continuing Operations (1)$1.6 to $1.7 billion$1.525 to $1.575 billion
    Adjusted EBITDA Margin % from Continuing Operations (2)Low single-digitLoss of < (1%)
    Utilization %85% to 90% (based on 37 lines installed)80% to 85% (based on 37 lines installed)
    Capital Expenditures$40 to $45 million$40 to $45 million


    (1)Sales are now expected to be down about $100 million at the midpoint of the ranges from our initial guidance. Approximately half of the reduction relates to lower customer demand for blades and delays from inspection and repair activity. About a quarter of the reduction relates to lower Field Services sales as technicians have been diverted to non-revenue generating work. The remainder of the reduction relates to lower ASPs from supply chain reductions and lower Automotive sales than expected.
    (2)Expect low single digit adjusted EBITDA margin in the second half of the year. Including the loss from the second quarter ended June 30, 2023, expect the full year to be a slight loss of less than 1% of sales.
      

    Conference Call and Webcast Information

    TPI Composites will host an investor conference call this afternoon, Thursday, August 3rd, at 5:00 pm ET. Interested parties are invited to listen to the conference call which can be accessed live over the phone by dialing 1-888-886-7786, or for international callers, 1-416-764-8658. A replay will be available two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the live call and the replay is 19822327. The replay will be available until August 10, 2023. Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investors section of the Company’s website at www.tpicomposites.com. The online replay will be available for a limited time beginning immediately following the call.

    About TPI Composites, Inc.

    TPI Composites, Inc. is a global company focused on innovative and sustainable solutions to decarbonize and electrify the world. TPI delivers high-quality, cost-effective composite solutions through long-term relationships with leading OEMs in the wind and automotive markets. TPI is headquartered in Scottsdale, Arizona and operates factories in the U.S., Mexico, Türkiye and India. TPI operates additional engineering development centers in Denmark and Germany and global service training centers in the U.S. and Spain.

    Forward-Looking Statements

    This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements contained in this release include, but are not limited to, statements about:  i. competition from other wind blade and wind blade turbine manufacturers; ii. the discovery of defects in our products and our ability to estimate the future cost of warranty campaigns; iii. the current status of the wind energy market and our addressable market; iv. our ability to absorb or mitigate the impact of price increases in resin, carbon reinforcements (or fiber), other raw materials and related logistics costs that we use to produce our products; v. our ability to absorb or mitigate the impact of wage inflation in the countries in which we operate; vi. our ability to procure adequate supplies of raw materials and components to fulfill our wind blade volume commitments to our customers; vii. the potential impact of the increasing prevalence of auction based tenders in the wind energy market and increased competition from solar energy on our gross margins and overall financial performance; viii. our future financial performance, including our net sales, cost of goods sold, gross profit or gross margin, operating expenses, ability to generate positive cash flow and ability to achieve or maintain profitability; ix. changes in domestic or international government or regulatory policy, including without limitation, changes in trade policy and energy policy; x. changes in global economic trends and uncertainty, geopolitical risks, and demand or supply disruptions from global events; xi. changes in macroeconomic and market conditions, including the potential impact of any pandemic, risk of recession, inflation, supply chain constraints, commodity prices and exchange rates, and the impact of such changes on our business and results of operations; xii. the sufficiency of our cash and cash equivalents to meet our liquidity needs; xiii. the increasing cost and availability of additional capital, should such capital be needed; xiv. our ability to attract and retain customers for our products, and to optimize product pricing; xv. our ability to effectively manage our growth strategy and future expenses, including our startup and transition costs; xvi. our ability to successfully expand in our existing wind energy markets and into new international wind energy markets, including our ability to expand our field service inspection and repair services business and manufacture wind blades for offshore wind energy projects; xvii. our ability to keep up with market changes and innovations; xviii. our ability to successfully open new manufacturing facilities and expand existing facilities on time and on budget; xix. the impact of the pace of new product and wind blade model introductions on our business and our results of operations; xx. our ability to successfully expand our automotive business and execute upon our strategy of entering new markets outside of wind energy; xxi. our ability to maintain, protect and enhance our intellectual property; xxii. our ability to comply with existing, modified or new laws and regulations applying to our business, including the imposition of new taxes, duties or similar assessments on our products; xxiii. the attraction and retention of qualified associates and key personnel; xxiv. our ability to maintain good working relationships with our associates, and avoid labor disruptions, strikes and other disputes with labor unions that represent certain of our associates; and xxv. the potential impact of one or more of our customers becoming bankrupt or insolvent, or experiencing other financial problems.

    These forward-looking statements are often characterized by the use of words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements are only predictions based on our current expectations and our projections about future events. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. These factors include, but are not limited to, the matters discussed in “Risk Factors,” in our Annual Report on Form 10-K and other reports that we will file with the SEC.

    Non-GAAP Definitions
    This press release includes unaudited non-GAAP financial measures, including EBITDA, adjusted EBITDA, net cash (debt) and free cash flow. We define EBITDA as net income (loss) from continuing operations plus interest expense (including losses on the extinguishment of debt and net of interest income), income taxes and depreciation and amortization. We define adjusted EBITDA as EBITDA plus any share-based compensation expense, any foreign currency income or losses, any gains or losses on the sale of assets and asset impairments and any restructuring charges. We define net cash (debt) as the total unrestricted cash and cash equivalents less the total principal amount of debt outstanding. We define free cash flow as net cash flow from operating activities less capital expenditures. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP.

    We provide forward-looking statements in the form of guidance in our quarterly earnings releases and during our quarterly earnings conference calls. This guidance is provided on a non-GAAP basis and cannot be reconciled to the closest GAAP measures without unreasonable effort because of the unpredictability of the amounts and timing of events affecting the items we exclude from non-GAAP measures. For example, stock-based compensation is unpredictable for our performance-based awards, which can fluctuate significantly based on current expectations of future achievement of performance-based targets. Amortization of intangible assets and restructuring costs are all impacted by the timing and size of potential future actions, which are difficult to predict. In addition, from time to time, we exclude certain items that occur infrequently, which are also inherently difficult to predict and estimate. It is also difficult to predict the tax effect of the items we exclude and to estimate certain discrete tax items, like the resolution of tax audits or changes to tax laws. As such, the costs that are being excluded from non-GAAP guidance are difficult to predict and a reconciliation or a range of results could lead to disclosure that would be imprecise or potentially misleading. Material changes to any one of the exclusions could have a significant effect on our guidance and future GAAP results.

    See Table Four for a reconciliation of certain non-GAAP financial measures to the comparable GAAP measures.

    Investor Relations
    480-315-8742
    Investors@TPIComposites.com

     
    TPI COMPOSITES, INC. AND SUBSIDIARIES
    TABLE ONE - CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (UNAUDITED)
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands, except per share data) 2023  2022   2023  2022 
    Net sales$381,271 $392,502  $785,337 $736,027 
    Cost of sales 425,267  386,218   824,648  718,639 
    Startup and transition costs 3,377  7,519   5,357  17,596 
    Total cost of goods sold 428,644  393,737   830,005  736,235 
    Gross loss (47,373) (1,235)  (44,668) (208)
    General and administrative expenses 6,767  6,688   13,801  14,548 
    Loss on sale of assets and asset impairments 5,819  2,265   9,412  3,173 
    Restructuring charges, net 2,248  (658)  2,323  (201)
    Loss from continuing operations (62,207) (9,530)  (70,204) (17,728)
    Other income (expense):     
    Interest expense, net (1,878) (955)  (4,406) (1,662)
    Foreign currency income (loss) (1,485) 5,696   (2,699) 6,099 
    Miscellaneous income (expense) 700  (48)  1,153  6 
    Total other income (expense) (2,663) 4,693   (5,952) 4,443 
    Loss from continuing operations before income taxes (64,870) (4,837)  (76,156) (13,285)
    Income tax provision (305) (5,882)  (4,165) (8,826)
    Net loss from continuing operations (65,175) (10,719)  (80,321) (22,111)
    Preferred stock dividends and accretion (15,598) (14,550)  (30,771) (28,682)
    Net loss from continuing operations attributable to common stockholders (80,773) (25,269)  (111,092) (50,793)
    Net income (loss) from discontinued operations (62) 5,209   (7,043) 801 
    Net loss attributable to common stockholders$(80,835)$(20,060) $(118,135)$(49,992)
          
    Weighted-average shares of common stock outstanding:     
    Basic 42,517  41,968   42,386  41,934 
    Diluted 42,517  41,968   42,386  41,934 
          
    Net loss from continuing operations per common share:     
    Basic$(1.90)$(0.60) $(2.62)$(1.21)
    Diluted$(1.90)$(0.60) $(2.62)$(1.21)
          
    Net income (loss) from discontinued operations per common share:     
    Basic$(0.00)$0.12  $(0.17)$0.02 
    Diluted$(0.00)$0.12  $(0.17)$0.02 
          
    Net loss per common share:     
    Basic$(1.90)$(0.48) $(2.79)$(1.19)
    Diluted$(1.90)$(0.48) $(2.79)$(1.19)
          
    Non-GAAP Measures (unaudited):     
    EBITDA$(52,498)$6,062  $(51,534)$8,088 
    Adjusted EBITDA$(38,884)$5,583  $(30,485)$11,654 
          


    TPI COMPOSITES, INC. AND SUBSIDIARIES
    TABLE TWO - CONDENSED CONSOLIDATED BALANCE SHEETS
    (UNAUDITED)
     June 30,December 31,
    (in thousands) 2023  2022 
    Assets  
    Current assets:  
    Cash and cash equivalents$170,096 $133,546 
    Restricted cash 9,239  9,854 
    Accounts receivable 158,411  184,809 
    Contract assets 220,119  215,939 
    Prepaid expenses 28,056  29,119 
    Other current assets 36,614  26,052 
    Inventories 7,167  10,661 
    Current assets of discontinued operations 13,111  35,182 
    Total current assets 642,813  645,162 
    Noncurrent assets:  
    Property, plant and equipment, net 129,959  136,841 
    Operating lease right of use assets 142,061  152,312 
    Other noncurrent assets 30,115  27,861 
    Total assets$944,948 $962,176 
       
    Liabilities and Stockholders' Equity  
    Current liabilities:  
    Accounts payable and accrued expenses$273,865 $280,499 
    Accrued warranty 49,288  22,347 
    Current maturities of long-term debt 62,232  59,975 
    Current operating lease liabilities 22,320  22,220 
    Contract liabilities -  17,100 
    Current liabilities of discontinued operations 9,723  54,440 
    Total current liabilities 417,428  456,581 
    Noncurrent liabilities:  
    Long-term debt, net of current maturities 128,735  1,198 
    Noncurrent operating lease liabilities 124,914  133,363 
    Other noncurrent liabilities 12,312  10,670 
    Total liabilities 683,389  601,812 
    Total mezzanine equity 340,648  309,877 
    Total stockholders’ equity (79,089) 50,487 
    Total liabilities, mezzanine equity and stockholders’ equity$944,948 $962,176 
       


    TPI COMPOSITES, INC. AND SUBSIDIARIES
    TABLE THREE - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED)
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023  2022   2023  2022 
          
    Net cash provided by (used in) operating activities$9,607 $21,893  $(74,254)$(59,161)
    Net cash used in investing activities (3,419) (2,494)  (6,694) (8,010)
    Net cash provided by (used in) financing activities 363  10,553   108,109  (12,726)
    Impact of foreign exchange rates on cash, cash equivalents and restricted cash 184  (7,042)  914  (8,649)
    Cash, cash equivalents and restricted cash, beginning of period 174,409  140,762   153,069  252,218 
    Cash, cash equivalents and restricted cash, end of period$181,144 $163,672  $181,144 $163,672 
          


    TPI COMPOSITES, INC. AND SUBSIDIARIES
    TABLE FOUR - RECONCILIATION OF NON-GAAP MEASURES
    (UNAUDITED)
    EBITDA and adjusted EBITDA are reconciled as follows:Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023  2022   2023  2022 
    Net loss attributable to common stockholders $(80,835)$(20,060) $(118,135)$(49,992)
    Net loss (income) from discontinued operations 62  (5,209)  7,043  (801)
    Net loss from continuing operations attributable to common stockholders (80,773) (25,269)  (111,092) (50,793)
    Preferred stock dividends and accretion 15,598  14,550   30,771  28,682 
    Net loss from continuing operations (65,175) (10,719)  (80,321) (22,111)
    Adjustments:     
    Depreciation and amortization 10,494  9,944   20,216  19,711 
    Interest expense, net 1,878  955   4,406  1,662 
    Income tax provision 305  5,882   4,165  8,826 
    EBITDA (52,498) 6,062   (51,534) 8,088 
    Share-based compensation expense 4,062  3,610   6,615  6,693 
    Foreign currency loss (income) 1,485  (5,696)  2,699  (6,099)
    Loss on sale of assets and asset impairments 5,819  2,265   9,412  3,173 
    Restructuring charges, net 2,248  (658)  2,323  (201)
    Adjusted EBITDA$(38,884)$5,583  $(30,485)$11,654 
          
    Net cash (debt) is reconciled as follows:June 30,December 31,   
    (in thousands) 2023  2022    
    Cash and cash equivalents$170,096 $133,546    
    Cash and cash equivalents of discontinued operations 1,809  9,669    
    Less total debt - principal (195,462) (61,173)   
    Net cash (debt)$(23,557)$82,042    
          
    Free cash flow is reconciled as follows:Three Months Ended June 30, Six Months Ended June 30,
    (in thousands) 2023  2022   2023  2022 
    Net cash provided by (used in) operating activities$9,607 $21,893  $(74,254)$(59,161)
    Less capital expenditures (3,419) (2,494)  (6,694) (8,010)
    Free cash flow$6,188 $19,399  $(80,948)$(67,171)
          

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