TPI COMPOSITES, INC [TPIC] Filings

10-Q 1 tpic-20230930.htm 10-Q 10-Q

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 September 30, 2023

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

Commission File Number 001-37839

TPI Composites, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-1590775

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

9200 E. Pima Center Parkway, Suite 250

Scottsdale, AZ 85258

(480) 305-8910

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	TPIC	NASDAQ Global Market

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 12 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 12 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, a smaller reporting company, or an emerging growth company. See the 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	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying 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 ☒

As of October 31, 2023, there were 42,571,228 shares of common stock outstanding.

TPI COMPOSITES, INC. AND SUBSIDIARIES

INDEX


		Page

PART I. FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	4

	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	5

	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022	6

	Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	7

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	10

	Notes to Condensed Consolidated Financial Statements (Unaudited)	12

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	41

ITEM 4.	Controls and Procedures	42

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	43

ITEM 1A.	Risk Factors	43

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

ITEM 3.	Defaults Upon Senior Securities	43

ITEM 4.	Mine Safety Disclosures	43

ITEM 5.	Other Information	43

ITEM 6.	Exhibits	44

SIGNATURES		45

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terms 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 contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

competition from other wind blade and wind blade turbine manufacturers;

•

the discovery of defects in our products and our ability to estimate the future cost of warranty campaigns;

•

the sufficiency of our cash and cash equivalents to meet our liquidity needs;

•

the increasing cost and availability of additional capital, should such capital be needed;

•

the current status of the wind energy market and our addressable market;

•

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;

•

our ability to absorb or mitigate the impact of wage inflation in the countries in which we operate;

•

our ability to procure adequate supplies of raw materials and components to fulfill our wind blade volume commitments to our customers;

•

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;

•

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;

•

changes in domestic or international government or regulatory policy, including without limitation, changes in trade policy and energy policy;

•

changes in global economic trends and uncertainty, geopolitical risks, and demand or supply disruptions from global events;

•

changes in macroeconomic and market conditions, including the potential impact of any pandemic, risk of recession, rising interest rates and inflation, supply chain constraints, commodity prices and exchange rates, and the impact of such changes on our business and results of operations;

•

our ability to attract and retain customers for our products, and to optimize product pricing;

•

our ability to effectively manage our growth strategy and future expenses, including our startup and transition costs;

•

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;

•

our ability to keep up with market changes and innovations;

•

our ability to successfully open new manufacturing facilities and expand existing facilities on time and on budget;

•

the impact of the pace of new product and wind blade model introductions on our business and our results of operations;

•

our ability to identify and execute a strategic alternative to enable the growth of our automotive business;

•

our ability to maintain, protect and enhance our intellectual property;

•

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;

•

the attraction and retention of qualified associates and key personnel;

•

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

•

the potential impact of one or more of our customers becoming bankrupt or insolvent, or experiencing other financial problems.

These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We have described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the United States Securities and Exchange Commission (SEC) on February 22, 2023 the principal risks and uncertainties that we believe could cause actual results to differ from these forward-looking statements. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as guarantees of future events.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to update any forward-looking statement to reflect events or developments after the date on which the statement is made or to reflect the occurrence of unanticipated events except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this Quarterly Report on Form 10-Q. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

PART I. FINANCIAL INFORMATION

ITEM l. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30,			December 31,
	2023			2022
	(in thousands, except par value data)
Assets
Current assets:
Cash and cash equivalents	$	160,649		$	133,546
Restricted cash		9,300			9,854
Accounts receivable		135,660			184,809
Contract assets		184,379			215,939
Prepaid expenses		27,321			29,119
Other current assets		34,484			26,052
Inventories		5,779			10,661
Current assets of discontinued operations		4,857			35,182
Total current assets		562,429			645,162
Property, plant and equipment, net		128,071			136,841
Operating lease right of use assets		134,732			152,312
Other noncurrent assets		30,219			27,861
Total assets	$	855,451		$	962,176

Liabilities, Mezzanine Equity and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	247,562		$	280,499
Accrued warranty		42,955			22,347
Current maturities of long-term debt		63,290			59,975
Current operating lease liabilities		21,912			22,220
Contract liabilities		1,792			17,100
Current liabilities of discontinued operations		7,954			54,440
Total current liabilities		385,465			456,581
Long-term debt, net of current maturities		128,834			1,198
Noncurrent operating lease liabilities		117,038			133,363
Other noncurrent liabilities		15,272			10,670
Total liabilities		646,609			601,812
Commitments and contingencies (Note 15)
Mezzanine equity:
Series A Preferred Stock, $0.01 par value, 400 shares authorized; 350 shares issued and outstanding at September 30, 2023 and December 31, 2022; liquidation preference of $488,625 at September 30, 2023 and $475,735 at December 31, 2022		356,679			309,877
Stockholders’ equity:
Common shares, $0.01 par value, 100,000 shares authorized, 43,091 shares issued and 42,571 shares outstanding at September 30, 2023 and 100,000 shares authorized, 42,369 shares issued and 42,044 shares outstanding at December 31, 2022		431			424
Paid-in capital		351,448			407,570
Accumulated other comprehensive loss		(10,834	)		(15,387	)
Accumulated deficit		(478,748	)		(334,569	)
Treasury stock, at cost, 520 shares at September 30, 2023 and 325 shares at December 31, 2022		(10,134	)		(7,551	)
Total stockholders’ equity		(147,837	)		50,487
Total liabilities, mezzanine equity and stockholders’ equity	$	855,451		$	962,176

See accompanying notes to our unaudited condensed consolidated financial statements.

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(in thousands, except per share data)
Net sales	$	372,860		$	384,438		$	1,158,197		$	1,120,465
Cost of sales		379,219			380,729			1,203,867			1,099,368
Startup and transition costs		4,817			4,821			10,174			22,417
Total cost of goods sold		384,036			385,550			1,214,041			1,121,785
Gross loss		(11,176	)		(1,112	)		(55,844	)		(1,320	)
General and administrative expenses		28,709			8,030			42,510			22,578
Loss on sale of assets and asset impairments		5,857			2,969			15,269			6,142
Restructuring charges, net		1,167			(189	)		3,490			(390	)
Loss from continuing operations		(46,909	)		(11,922	)		(117,113	)		(29,650	)
Other income (expense):
Interest expense, net		(1,628	)		(1,210	)		(6,034	)		(2,872	)
Foreign currency income (loss)		(579	)		8,207			(3,278	)		14,306
Miscellaneous income		393			991			1,546			997
Total other income (expense)		(1,814	)		7,988			(7,766	)		12,431
Loss from continuing operations before income taxes		(48,723	)		(3,934	)		(124,879	)		(17,219	)
Income tax provision		(8,040	)		(2,852	)		(12,205	)		(11,678	)
Net loss from continuing operations		(56,763	)		(6,786	)		(137,084	)		(28,897	)
Preferred stock dividends and accretion		(16,031	)		(14,976	)		(46,802	)		(43,658	)
Net loss from continuing operations attributable to common stockholders		(72,794	)		(21,762	)		(183,886	)		(72,555	)
Net income (loss) from discontinued operations		(52	)		5,319			(7,095	)		6,120
Net loss attributable to common stockholders	$	(72,846	)	$	(16,443	)	$	(190,981	)	$	(66,435	)

Weighted-average shares of common stock outstanding:
Basic		42,570			41,984			42,448			41,950
Diluted		42,570			41,984			42,448			41,950

Net loss from continuing operations per common share:
Basic	$	(1.71	)	$	(0.52	)	$	(4.33	)	$	(1.73	)
Diluted	$	(1.71	)	$	(0.52	)	$	(4.33	)	$	(1.73	)

Net income (loss) from discontinued operations per common share:
Basic	$	(0.00	)	$	0.13		$	(0.17	)	$	0.15
Diluted	$	(0.00	)	$	0.13		$	(0.17	)	$	0.15

Net loss per common share:
Basic	$	(1.71	)	$	(0.39	)	$	(4.50	)	$	(1.58	)
Diluted	$	(1.71	)	$	(0.39	)	$	(4.50	)	$	(1.58	)

See accompanying notes to our unaudited condensed consolidated financial statements.

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(in thousands)
Net loss from continuing operations attributable to common stockholders	$	(72,794	)	$	(21,762	)	$	(183,886	)	$	(72,555	)
Net income (loss) from discontinued operations		(52	)		5,319			(7,095	)		6,120
Net loss attributable to common stockholders		(72,846	)		(16,443	)		(190,981	)		(66,435	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(3,052	)		(7,903	)		(1,858	)		28,120
Reclassification of foreign currency translation adjustments from disposition and exit of business activities, net of tax of $0		901			—			901			—
Unrealized gain (loss) on hedging derivatives, net of taxes of $0 for each of the presented periods		318			(582	)		2,261			1,574
Reclassification of (gain) loss on hedging derivatives, net of taxes of $0 for each of the presented periods		3,307			(187	)		3,249			(1,325	)
Comprehensive loss	$	(71,372	)	$	(25,115	)	$	(186,428	)	$	(38,066	)

See accompanying notes to our unaudited condensed consolidated financial statements.

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(Unaudited)


	Nine Months Ended September 30, 2023
												Accumulated
	Series A Preferred Stock				Common				Paid-in			other comprehensive			Accumulated			Treasury stock,			Total stockholders'
	Shares		Amount		Shares		Amount		capital			loss			deficit			at cost			equity
					(in thousands)
Balance at December 31, 2022		350	$	309,877		42,369	$	424	$	407,570		$	(15,387	)	$	(334,569	)	$	(7,551	)	$	50,487
Net loss		—		—		—		—		—			—			(22,127	)		—			(22,127	)
Preferred stock dividends		—		10,706		—		—		(10,706	)		—			—			—			(10,706	)
Other comprehensive income		—		—		—		—		—			2,010			—			—			2,010
Common stock repurchased for treasury		—		—		—		—		—			—			—			(2,549	)		(2,549	)
Issuances under share- based compensation plan		—		—		627		6		—			—			—			—			6
Share-based compensation expense		—		—		—		—		2,720			—			—			—			2,720
Accretion of Series A Preferred Stock		—		4,467		—		—		(4,467	)		—			—			—			(4,467

TPI COMPOSITES, INC [TPIC] Filings
10-Q	[2023-11-02]
10-Q	[2023-08-03]
10-Q	[2023-05-03]
10-K	[2023-02-22]
10-Q	[2022-11-03]
10-Q	[2022-08-03]
10-Q	[2022-05-05]
10-K	[2022-02-25]
10-Q	[2021-11-09]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-03-02]
10-Q	[2019-11-06]
10-Q	[2019-08-07]
10-Q	[2019-05-08]
10-K	[2019-03-05]
10-Q	[2018-11-07]
10-Q	[2018-08-07]
10-Q	[2018-05-03]
10-K	[2018-03-08]
10-Q	[2017-11-08]
10-Q	[2017-08-08]
10-Q	[2017-05-08]
S-1	[2017-04-21]
10-K	[2017-03-17]
10-Q	[2016-11-09]
10-Q	[2016-08-30]
S-1	[2016-06-17]