06
美國
證券交易委員會
華盛頓特區20549
表格
截至2024年6月30日季度結束
或
委員會檔案編號
（依憑章程所載的完整登記名稱）
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(依據所在地或其他管轄區) 的註冊地或組織地點) |
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(國稅局雇主識別號碼) 識別號碼) |
(
(地址，包括郵遞區號和電話號碼，
包括註冊管理者的主要執行辦公室區號
根據法案第12(b)條規定註冊的證券：
每一類的名稱 |
交易標誌 |
在其上註冊的交易所的名稱 |
勾選表示登記者(1)是否已在過去12個月內(或登記者被要求提交此類報告的較短期間)按照1934年證券交易法第13或15(d)條的要求提交所有報告，並(2)在過去90天內一直受到此類提交要求的約束。
請打勾號表明註冊人是否根據《S-t條例405條規定（本章節232.405號）的規定，在過去12個月內（或註冊人需要提交此類文件的更短期限內），已提交每個交互數據文件。
請勾選該申報者是否為大型快速申報者、快速申報者、非快速申報者、小型報告公司或新興成長公司。請參閱交易所法案第1202條中“大型快速申報者”、“快速申報者”、“小型報告公司”和“新興成長公司”的定義。
大型加速報告人 |
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非加速文件提交人 |
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較小的報告公司 |
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新興成長公司 |
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如果一個新興成長型企業，請通過勾選標記表明該註冊者是否已選擇不使用按照證券交易法第13(a)條規定提供的任何新的或修改後的財務會計準則的延長過渡期來符合標準。 ☐
請在以下方框內打勾，以指示註冊人是否爲殼公司（如交易所法規第12b-2條規定）。 是 ☐ 否
截至2024年10月31日，有
tpi composites, inc.及其子公司
指數
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頁面 |
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項目 1. |
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未經審計的簡明合併財務報表註釋 |
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12 |
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項目 2. |
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25 |
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項目 3. |
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項目 4. |
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項目1。 |
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項目1A. |
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項目2。 |
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項目3。 |
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ITEm 4. |
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第5項 |
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項目6。 |
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1
有關前瞻性陳述的特別說明
本季度報告表格10-Q包含了根據1933年證券法第27A節和1934年證券交易法第21E節（即交易所法）定義的前瞻性聲明。 本季度報告表格10-Q中包含的所有陳述，除了歷史事實的陳述外，包括關於我們未來運營和財務狀況、業務策略以及管理層未來運營計劃和目標的聲明，都是前瞻性聲明。 在許多情況下，您可以通過諸如「可能」、「應該」、「期望」、「計劃」、「預期」、「能夠」、「打算」、「目標」、「項目」、「考慮」、「相信」、「估計」、「預測」、「潛在」或「繼續」以及這些術語的否定形式或其他類似詞語來識別前瞻性聲明。 本季度報告表格10-Q中包含的前瞻性聲明包括但不限於以下內容：
2
這些前瞻性聲明僅爲預測。這些聲明涉及未來事件或我們未來的財務表現，並涉及已知和未知的風險、不確定性和可能導致我們實際結果、活動水平、表現或成就明顯偏離任何未來結果、活動水平、表現或成就的其他重要因素。我們在年報10-k表格的「風險因素」部分中描述了我們認爲可能導致實際結果與這些前瞻性聲明不符的主要風險和不確定性，截至2023年12月31日已向美國證券交易委員會（SEC）提交，並於2024年2月22日提交。由於前瞻性聲明固有地受到風險和不確定性的影響，其中一些風險和不確定性無法預測或量化，因此您不應將這些前瞻性聲明視爲對未來事件的保證。
本季度報告中的前瞻性聲明代表了我們截至本季度報告日期的看法。我們預計後續事件和發展將導致我們的看法發生變化。然而，儘管我們可能選擇在未來某個時刻更新這些前瞻性聲明，但我們沒有義務更新任何前瞻性聲明，以反映聲明發布後發生的事件或發展，或反映未預見事件的發生，除非法律要求。因此，您不應將這些前瞻性聲明視爲在本季度報告日期之後代表我們的看法。我們的前瞻性聲明並未反映我們可能進行的任何未來收購、合併、處置、合資或投資的潛在影響。
3
第一部分. 財務財務信息
項目 l. 精簡合併 F財務報表（未經審計）
tpi composites, inc.及其子公司
壓縮的綜合資產負債表TED資產負債表
(未經審計)
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九月三十日， |
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2024年12月31日， |
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2024 |
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2023 |
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（以千爲單位，除額面值數據外） |
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資產 |
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流動資產： |
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現金及現金等價物 |
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$ |
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受限現金 |
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應收賬款 |
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合同資產 |
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預付費用 |
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其他流動資產 |
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存貨 |
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待售資產 |
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已停止運營部門的流動資產 |
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總流動資產 |
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物業、廠房和設備，淨值 |
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資產：租賃資產 |
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其他非流動資產 |
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總資產 |
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$ |
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流動負債: |
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應付賬款及應計費用 |
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$ |
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$ |
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應計保脩金 |
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長期債務的流動部分 |
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當前經營租賃負債 |
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合同負債 |
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待售負債 |
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已停止運營的流動負債 |
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總流動負債 |
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長期負債淨額 |
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非流動工程租賃負債 |
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其他非流動負債 |
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總負債 |
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股東赤字： |
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普通股，每股 |
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實收資本 |
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累計其他綜合損失 |
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累積赤字 |
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截至2024年3月31日和2023年12月31日，公司的庫藏股票分別有2,279,784股和2,693,653股。 |
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股東赤字總額 |
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負債總額和股東權益虧損總額 |
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$ |
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$ |
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請參見我們未經審計的簡明合併基本報表的附註。
4
tpi composites, inc.及其子公司
簡明合併財務報表損益表
(未經審計)
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三個月已結束 |
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九個月已結束 |
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九月三十日 |
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九月三十日 |
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2024 |
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2023 |
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2024 |
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2023 |
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（以千計，每股數據除外） |
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淨銷售額 |
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$ |
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$ |
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$ |
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銷售成本 |
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啓動和過渡成本 |
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銷售商品的總成本 |
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毛利（虧損） |
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一般和管理費用 |
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出售資產虧損和資產減值 |
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重組費用，淨額 |
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持續經營造成的損失 |
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其他收入（支出）： |
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利息支出，淨額 |
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外幣損失 |
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雜項收入 |
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其他支出總額 |
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所得稅前持續經營的虧損 |
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所得稅條款 |
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持續經營的淨虧損 |
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優先股股息和增持 |
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歸屬於普通股股東的持續經營淨虧損 |
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已終止業務的淨虧損 |
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歸屬於普通股股東的淨虧損 |
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$ |
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已發行普通股的加權平均股： |
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基本 |
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稀釋 |
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每股普通股持續經營淨虧損： |
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基本 |
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$ |
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稀釋 |
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$ |
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$ |
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$ |
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$ |
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每股普通股已終止業務的淨虧損： |
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基本 |
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$ |
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$ |
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$ |
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稀釋 |
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$ |
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$ |
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$ |
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每股普通股淨虧損： |
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基本 |
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$ |
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稀釋 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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請參見我們未經審計的簡明合併基本報表的附註。
5
tpi composites, inc.及其子公司
壓縮的合併財務報表 綜合損失
(未經審計)
|
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結束三個月 |
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結束九個月 |
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九月三十日， |
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九月30日, |
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2024 |
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2023 |
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2024 |
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2023 |
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（單位：千） |
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歸屬於普通股東的持續經營中的淨虧損 |
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$ |
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停用業務的淨虧損 |
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歸屬於普通股股東的淨損失 |
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其他全面收益（損失）： |
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外幣翻譯調整 |
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未確認的精算虧損 |
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未確認的精算虧損攤銷 |
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外幣翻譯重分類 |
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對沖衍生工具的未實現收益，稅後 |
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重新分類對沖衍生工具損失， |
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綜合虧損 |
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$ |
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$ |
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請參見我們未經審計的簡明合併基本報表的附註。
6
tpi composites, inc.及其子公司
簡明綜合損益表合併財務報表Mezzanine權益和股東虧空的變動
(未經審計)
|
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截至2024年9月30日的九個月 |
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累計 |
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
A系列優先股 |
|
|
|
常見 |
|
|
已付資本 |
|
|
其他綜合 |
|
|
累計 |
|
|
庫存股， |
|
|
總股東 |
|
|||||||||||||||
|
|
股票 |
|
|
金額 |
|
|
|
股份 |
|
|
金額 |
|
|
資本 |
|
|
損失 |
|
|
赤字 |
|
|
按成本覈算 |
|
|
赤字 |
|
|||||||||
|
|
|
|
|
|
|
|
|
（單位：千） |
|
|||||||||||||||||||||||||||
2023年12月31日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||||
淨虧損 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
其他綜合損失 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
基於分享的發行- |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
基於分享的 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
年月日的餘額 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||||
淨損失 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
其他綜合損失 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
根據股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股份基礎的 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
餘額爲 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||||
淨損失 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
其他綜合損失 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
與股票相關的發行 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
基於股票的 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
餘額爲 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||||
7
|
|
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 |
|
|
deficit |
|
|||||||||
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|||||||||||||||||||||||||||
Balance at December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Preferred stock dividends |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Common stock |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Issuances under share- |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Share-based |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accretion of Series A |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Capped call transactions |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Preferred stock dividends |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Common stock |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Issuances under share- |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Share-based |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accretion of Series A |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Preferred stock dividends |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Common stock |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuances under share- |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Share-based |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accretion of Series A |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
8
Balance at |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
See accompanying notes to our unaudited condensed consolidated financial statements.
9
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Loss on sale of discontinued operations |
|
|
|
|
|
|
||
Loss on sale of assets and asset impairments |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Paid-in-kind interest |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
|
|
Contract assets and liabilities |
|
|
( |
) |
|
|
|
|
Operating lease right of use assets and operating lease liabilities |
|
|
|
|
|
( |
) |
|
Inventories |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
( |
) |
|
|
|
|
Other current assets |
|
|
|
|
|
( |
) |
|
Other noncurrent assets |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
( |
) |
|
Accrued warranty |
|
|
( |
) |
|
|
|
|
Other noncurrent liabilities |
|
|
( |
) |
|
|
|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of business |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from issuance of convertible notes |
|
|
|
|
|
|
||
Purchase of capped calls |
|
|
|
|
|
( |
) |
|
Payments of debt issuance costs |
|
|
|
|
|
( |
) |
|
Proceeds from working capital loans |
|
|
|
|
|
|
||
Repayments of working capital loans |
|
|
( |
) |
|
|
( |
) |
Principal repayments of finance leases |
|
|
( |
) |
|
|
( |
) |
Net proceeds from other debt |
|
|
|
|
|
|
||
Repurchase of common stock including shares withheld in lieu of income taxes |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Impact of foreign exchange rates on cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Net change in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of year |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
|
$ |
|
||
See accompanying notes to our unaudited condensed consolidated financial statements.
10
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes, net of refunds |
|
|
|
|
|
|
||
Noncash investing and financing activities: |
|
|
|
|
|
|
||
Right of use assets obtained in exchange for new operating lease liabilities |
|
|
|
|
|
|
||
Property, plant, and equipment obtained in exchange for new finance lease liabilities |
|
|
|
|
|
|
||
Accrued capital expenditures in accounts payable |
|
|
|
|
|
|
||
Paid-in-kind preferred stock dividends and accretion |
|
|
|
|
|
|
||
Reconciliation of Cash, Cash Equivalents and Restricted Cash: |
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restricted cash |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents of discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash, cash equivalents and restricted cash shown in |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See accompanying notes to our unaudited condensed consolidated financial statements.
11
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by us without audit, pursuant to the rules and regulations of the SEC and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K. Although we believe the disclosures that are made are adequate to make the information presented herein not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted, as permitted by the SEC. The accompanying condensed consolidated financial statements reflect, in the opinion of our management, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2024, and the results of our operations, comprehensive income (loss) and cash flows for the periods presented. Interim results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation.
The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The accompanying condensed consolidated financial statements include the accounts of TPI Composites, Inc. and all of our majority owned subsidiaries. All significant intercompany transactions and balances have been eliminated.
We are exploring alternatives for the divestiture of our tooling business as part of our continued prioritization of capital for growth in the wind blade business, and as of September 30, 2024, we met the criteria to classify $
References to TPI Composites, Inc, the “Company,” “we,” “us” or “our” in these notes refer to TPI Composites, Inc. and its consolidated subsidiaries.
Recently Issued Accounting Pronouncements - Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments are intended to increase reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the standard for annual disclosure requirements on January 1, 2024, and plans to adopt the standard for interim periods beginning January 1, 2025, with early adoption permitted. The Company is evaluating the potential impact of its adoption on the Company’s audited Consolidated Financial Statements but does not anticipate that such adoption will have a material impact.
Recently Issued Accounting Pronouncements - Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU also includes certain other amendments intended to improve the effectiveness of income tax disclosures. This ASU is effective for the Company’s fiscal year beginning January 1, 2025 and allows the use of a prospective or retrospective approach. The Company plans to adopt the standard on January 1, 2025 and has not yet determined the potential impact of its adoption on the Company’s audited Consolidated Financial Statements.
12
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2. Discontinued Operations
On June 30, 2024, we completed the divestiture of our wholly-owned subsidiary, TPI, Inc. (the Automotive subsidiary). The Automotive subsidiary was engaged in the development, commercialization and implementation of the Company’s automotive industry related products. The Automotive subsidiary was previously classified as held for sale in the Company’s Consolidated Balance Sheets as of December 31, 2023 and March 31, 2024. As a result of the divestiture, the Company recorded a $
In December 2022, we committed to a restructuring plan to rebalance our organization and optimize our global manufacturing footprint. Changing economic and geopolitical factors, including increased logistics costs and tariffs imposed on components of wind turbines from China, including wind blades, had an adverse impact on demand and profitability for our wind blades manufactured in our Chinese facilities. In connection with our restructuring plan, we ceased production at our Yangzhou, China manufacturing facility as of December 31, 2022 and are in the process of shutting down our business operations in China. Our business operations in China comprised the entirety of our "Asia" reporting segment. The shut down had a meaningful effect on our global manufacturing footprint and consolidated financial results. Accordingly, the historical results of our Asia reporting segment have been presented as discontinued operations in our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.
The following tables present the carrying amounts of major classes of assets and liabilities that were included in discontinued operations:
|
|
September 30, 2024 |
|
|||||||||
|
|
(in thousands) |
|
|||||||||
|
|
Automotive |
|
|
Asia |
|
|
Total |
|
|||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other classes of assets |
|
|
|
|
|
|
|
|
|
|||
Total assets of discontinued operations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accrued restructuring |
|
|
|
|
|
|
|
|
|
|||
Total liabilities of discontinued operations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
December 31, 2023 |
|
|||||||||
|
|
(in thousands) |
|
|||||||||
|
|
Automotive |
|
|
Asia |
|
|
Total |
|
|||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|||
Other classes of assets that are not major |
|
|
|
|
|
|
|
|
|
|||
Total assets of discontinued operations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accrued restructuring |
|
|
|
|
|
|
|
|
|
|||
Total liabilities of discontinued operations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
13
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A summary of the results from discontinued operations included in the Condensed Consolidated Statements of Operations are as follows:
|
|
Three Months Ended September 30, 2024 |
|
|||||||||
|
|
Automotive |
|
|
Asia |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Gross loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss on sale of discontinued operations |
|
|
|
|
|
|
|
|
|
|||
Restructuring charges, net |
|
|
|
|
|
|
|
|
|
|||
Loss from discontinued operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other income (expense) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax provision |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net loss from discontinued operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Three Months Ended September 30, 2023 |
|
|||||||||
|
|
Automotive |
|
|
Asia |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Gross loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|||
(Gain) loss on sale of assets and asset impairments |
|
|
|
|
|
( |
) |
|
|
|
||
Restructuring charges, net |
|
|
|
|
|
( |
) |
|
|
|
||
Gain (loss) from discontinued operations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Total other expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax provision |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net loss from discontinued operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Nine Months Ended September 30, 2024 |
|
|||||||||
|
|
Automotive |
|
|
Asia |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Gross loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
General and administrative expenses |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
(Gain) loss on sale of assets and asset impairments |
|
|
|
|
|
( |
) |
|
|
|
||
Loss on sale of discontinued operations |
|
|
|
|
|
|
|
|
|
|||
Restructuring charges, net |
|
|
|
|
|
|
|
|
|
|||
Income (loss) from discontinued operations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Total other income (expense) |
|
|
|
|
|
( |
) |
|
|
|
||
Income (loss) before income taxes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax provision |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income (loss) from discontinued operations |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
14
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
Nine Months Ended September 30, 2023 |
|
|||||||||
|
|
Automotive |
|
|
Asia |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of sales |
|
|
|
|
|
|
|
|
|
|||
Gross loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|||
Loss on sale of assets and asset impairments |
|
|
|
|
|
|
|
|
|
|||
Restructuring charges, net |
|
|
|
|
|
|
|
|
|
|||
Loss from discontinued operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other income |
|
|
|
|
|
|
|
|
|
|||
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax provision |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Loss from discontinued operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The following table presents summarized cash flows from discontinued operations that are included in the Condensed Consolidated Statements of Cash Flows:
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Net cash provided by (used in) operating activities from discontinued operations |
|
$ |
|
|
$ |
( |
) |
|
Net cash used in investing activities from discontinued operations |
|
|
( |
) |
|
|
( |
) |
Additional non-cash items related to operating activities from discontinued operations: |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
( |
) |
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
||
Note 3. Revenue From Contracts with Customers
For a detailed discussion of our revenue recognition policy, refer to the discussion in Note 1, Summary of Operations and Summary of Significant Accounting Policies – (c) Revenue Recognition, to the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2023.
The following tables represent the disaggregation of our net sales by product for each of our reportable segments:
|
|
Three Months Ended September 30, 2024 |
|
|||||||||||||||||
|
|
U.S. |
|
|
Mexico |
|
|
EMEA |
|
|
India |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Wind blade, tooling and other wind |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Field service, inspection and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
Three Months Ended September 30, 2023 |
|
|||||||||||||||||
|
|
U.S. |
|
|
Mexico |
|
|
EMEA |
|
|
India |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Wind blade, tooling and other wind |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Field service, inspection and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
15
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
Nine Months Ended September 30, 2024 |
|
|||||||||||||||||
|
|
U.S. |
|
|
Mexico |
|
|
EMEA |
|
|
India |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Wind blade, tooling and other wind |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Field service, inspection and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
Nine Months Ended September 30, 2023 |
|
|||||||||||||||||
|
|
U.S. |
|
|
Mexico |
|
|
EMEA |
|
|
India |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Wind blade, tooling and other wind |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Field service, inspection and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
For a further discussion regarding our operating segments, see Note 15, Segment Reporting.
Contract Assets and Liabilities
Contract assets consist of the amount of revenue recognized over time for performance obligations in production where control has transferred to the customer, but the contract does not yet allow for the customer to be billed. Typically, customers are billed when the product finishes production and meets the technical specifications contained in the contract. The majority of the contract asset balance relates to materials procured based on customer specifications. The contract assets are recorded as current assets in the condensed consolidated balance sheets. Contract liabilities consist of advance payments in excess of revenue earned. The contract liabilities are recorded as current liabilities in the condensed consolidated balance sheets and are reduced as we record revenue over time.
These contract assets and liabilities are reported on the condensed consolidated balance sheets net on a contract-by-contract basis at the end of each reporting period.
Contract assets and contract liabilities consisted of the following:
|
|
September 30, |
|
|
December 31, |
|
|
|
|
|||
|
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Gross contract assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Less: reclassification from contract liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Contract assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
September 30, |
|
|
December 31, |
|
|
|
|
|||
|
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Gross contract liabilities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Less: reclassification to contract assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Contract liabilities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
16
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Gross contract assets increased by $
For the nine months ended September 30, 2024, we recognized $
Performance Obligations
Remaining performance obligations represent the transaction price for which work has not been performed and excludes any unexercised contract options. The transaction price includes estimated variable consideration as determined based on the estimated production output within the range of the contractual guaranteed minimum volume obligations and production capacity.
As of September 30, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations to be satisfied in future periods was approximately $
|
|
$ |
|
|
% of Total |
|
||
|
|
(in thousands) |
|
|||||
Year Ending December 31, |
|
|
|
|
|
|
||
|
$ |
|
|
|
% |
|||
|
|
|
|
|
|
|||
Total remaining performance obligations |
|
$ |
|
|
|
% |
||
Note 4. Significant Risks and Uncertainties
Our revenues and receivables are earned from a small number of customers. As such, our production levels are dependent on these customers’ orders. See Note 14, Concentration of Customers.
We maintain our U.S. cash in bank deposit and money market mutual fund accounts that, at times, exceed U.S. federally insured limits. U.S. bank accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) in an amount up to $
We also maintain cash in bank deposit accounts outside the U.S. that are not subject to FDIC limits. At September 30, 2024, this included $
17
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5. Accrued Warranty
The warranty accrual activity for the periods noted consisted of the following:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Warranty accrual at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Accrual during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of warranty services provided during the period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Changes in estimate for pre-existing warranties, |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warranty accrual at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 6. Debt
Long-term debt, net of current maturities, consisted of the following:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|||
Unsecured financing—EMEA |
|
|
|
|
|
|
||
Secured and unsecured working capital—India |
|
|
|
|
|
|
||
Equipment finance leases—Mexico |
|
|
|
|
|
|
||
Equipment finance leases—EMEA |
|
|
|
|
|
|
||
Other equipment finance leases |
|
|
|
|
|
|
||
Total debt—principal |
|
|
|
|
|
|
||
Less: Debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Less: Debt discount (3) |
|
|
( |
) |
|
|
( |
) |
Total debt, net of debt issuance costs and debt discount |
|
|
|
|
|
|
||
Less: Current maturities of long-term debt (4) |
|
|
( |
) |
|
|
( |
) |
Long-term debt, net of current maturities |
|
$ |
|
|
$ |
|
||
(1)
(2)
(3)
(4)
Note 7. Share-Based Compensation Plans
During the nine months ended September 30, 2024, we granted to certain employees an aggregate of
18
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
terms and conditions of our stock option and incentive plan and the applicable award agreement. Additionally, during the nine months ended September 30, 2024, we issued
The share-based compensation expense recognized in the condensed consolidated statements of operations was as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Cost of goods sold |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total share-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The share-based compensation expense recognized by award type was as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
RSUs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total share-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 8. Leases
We have operating and finance leases for our manufacturing facilities, warehouses, offices, automobiles and certain of our machinery and equipment. Our leases have remaining lease terms of between and
The components of lease cost were as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Total operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of assets under finance leases |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest on finance leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total finance lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
19
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Total lease assets and liabilities were as follows:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Operating Leases |
|
|
|
|
|
|
||
Operating lease right of use assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Current operating lease liabilities |
|
$ |
|
|
$ |
|
||
Noncurrent operating lease liabilities |
|
|
|
|
|
|
||
Total operating lease liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Finance Leases |
|
|
|
|
|
|
||
Property, plant and equipment, gross |
|
$ |
|
|
$ |
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|||
Total finance lease liabilities |
|
$ |
|
|
$ |
|
||
Supplemental cash flow information related to leases was as follows:
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from finance leases |
|
|
|
|
|
|
||
Financing cash flows from finance leases |
|
|
|
|
|
|
||
Note 9. Employee Benefit Plans
Defined Contribution Plans
We maintain a 401(k) plan for all of our U.S. employees. Under the 401(k) plan, eligible employees may contribute, subject to statutory limitations, a percentage of their salaries. We currently match
In Mexico, we maintain an annual savings fund, which matches the employee contribution each week, based on the Mexican statutory maximum of
Defined Benefit Plans
In Türkiye we provide benefits for virtually all employee terminations, including retirements and voluntary and involuntary terminations, for employees who have completed at least one year of service. The annual net periodic benefit cost and projected benefit obligations related to this plan are determined annually on December 31, unless a remeasurement event occurs in an interim period. This determination requires assumptions to be made concerning general economic conditions (particularly interest rates), increases to compensation levels, and service period trends. Changes in the assumptions to reflect actual experience can result in a change in the net periodic benefit cost and projected benefit obligations. If actual experience differs from these assumptions, the difference is recorded as an actuarial gain or loss and amortized into earnings over a period of time based on the average future service period, which may cause the expense related to providing these benefits to increase or decrease.
20
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 10. Income Taxes
For the three and nine months ended September 30, 2024, we reported an income tax provision of $
No changes in tax law occurred during the three and nine months ended September 30, 2024, which had a material impact on our income tax provision. We do not record a deferred tax liability related to unremitted earnings as we maintain our assertion to indefinitely reinvest our unremitted foreign earnings.
Note 11. Net Loss Per Common Share
The following table sets forth the computation of basic and diluted net loss per common share:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands, except per share data) |
|
|||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss from continuing operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Preferred stock dividends and accretion |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net loss from continuing operations attributable |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss from discontinued operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted-average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted-average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from continuing operations per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from discontinued operations per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive shares excluded from the calculation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive share-based compensation awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
We use the if-converted method for calculating any potential dilutive effect of the Convertible Notes on diluted net loss per common share. The Convertible Notes would have a diluted impact on net income per share when the average price of our Common Stock for a given period exceeds the respective conversion price of the Convertible Notes. During the nine months ended September 30, 2024 and 2023, we had
21
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12. Stockholders’ Deficit
Accumulated Other Comprehensive Loss
The following tables presents the changes in accumulated other comprehensive loss (AOCL) by component:
|
|
Nine Months Ended September 30, 2024 |
|
|||||||||||||
|
|
Foreign |
|
|
Accrued |
|
|
Foreign |
|
|
|
|
||||
|
|
currency |
|
|
post-retirement |
|
|
exchange |
|
|
|
|
||||
|
|
translation |
|
|
benefit |
|
|
forward |
|
|
Total |
|
||||
|
|
adjustments |
|
|
liability |
|
|
contracts |
|
|
AOCL |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Balance at December 31, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Other comprehensive income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current period other comprehensive income |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at March 31, 2024 |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Other comprehensive income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current period other comprehensive income |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at June 30, 2024 |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Other comprehensive income before reclassifications |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current period other comprehensive income |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at September 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
Nine Months Ended September 30, 2023 |
|
|||||||||||||
|
|
Foreign |
|
|
Accrued |
|
|
Foreign |
|
|
|
|
||||
|
|
currency |
|
|
post-retirement |
|
|
exchange |
|
|
|
|
||||
|
|
translation |
|
|
benefit |
|
|
forward |
|
|
Total |
|
||||
|
|
adjustments |
|
|
liability |
|
|
contracts |
|
|
AOCL |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Balance at December 31, 2022 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income before reclassifications |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current period other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at March 31, 2023 |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Other comprehensive income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Net tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current period other comprehensive income |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balance at June 30, 2023 |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Other comprehensive income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Amounts reclassified from AOCL |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net current period other comprehensive income |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balance at September 30, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Note 13. Commitments and Contingencies
Legal Proceedings
From time to time, we are party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which may not be covered by insurance. Upon resolution of any pending legal matters, we may incur charges in excess of
22
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
presently established reserves. Our management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.
In January 2021, we received a complaint that was filed by the administrator for the Senvion GmbH (Senvion) insolvency estate in the Hamburg District court. The complaint asserts voidance claims against us in the aggregate amount of $
Note 14. Concentration of Customers
Net sales from certain customers (in thousands) in excess of
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||||||||||||||||
Customer |
|
Net sales |
|
|
% of Total |
|
|
Net sales |
|
|
% of Total |
|
|
Net sales |
|
|
% of Total |
|
|
Net sales |
|
|
% of Total |
|
||||||||
GE |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
Nordex |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Vestas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Trade accounts receivable from certain customers in excess of
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Customer |
|
% of Total |
|
|
% of Total |
|
||
Nordex |
|
|
% |
|
|
% |
||
GE |
|
|
|
|
|
|
||
Enercon |
|
|
|
|
|
|
||
Vestas |
|
|
|
|
|
|
||
Note 15. Segment Reporting
Our operating segments are defined geographically into
Our U.S. and India segments operate in the U.S. dollar. Our Mexico segment operates in its local currency and includes a U.S. parent company that operates in the U.S. dollar. Our EMEA segment operates in the Euro.
23
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables set forth certain information regarding each of our segments:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
India |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales by geographic location: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Türkiye |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Spain |
|
|
|
|
|
|
|
|
|
|
|
|
||||
India |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Mexico |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
India |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total loss from continuing operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Property, plant and equipment, net: |
|
|
|
|
|
|
||
U.S. |
|
$ |
|
|
$ |
|
||
Mexico |
|
|
|
|
|
|
||
EMEA |
|
|
|
|
|
|
||
India |
|
|
|
|
|
|
||
Total property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
(1) The losses from operations in our U.S. segment includes corporate general and administrative costs of $
Note 16. Subsequent Event
In November 2024, we purchased a series of call option contracts to mitigate cash flow variability associated with forecasted expenses in Mexican Pesos against changes in the U.S. Dollar to Mexican Peso exchange rate. A premium of $
24
ITEM 2. 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 condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to plans and strategy for our business, 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 Quarterly Report on Form 10-Q or in our previously filed Annual Report on Form 10-K for the year ended December 31, 2023, particularly those under the heading “Risk Factors.”
OVERVIEW
Our Company
We are the only independent manufacturer of composite wind blades for the wind energy market with a global manufacturing footprint. We deliver high-quality, cost-effective composite solutions through long-term relationships with leading original equipment manufacturers (OEM) 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 factories in the U.S., Mexico, Türkiye, and India. We operate additional engineering development centers in Denmark and Germany and a services facility in Spain.
Our business operations are defined geographically into four geographic operating segments—(1) the United States (U.S.), (2) Mexico, (3) Europe, the Middle East and Africa (EMEA) and (4) India. See Note 15, Segment Reporting, to our condensed consolidated financial statements for more details about our operating segments.
Discontinued Operations
In June 2024, we completed the divestiture of our wholly-owned subsidiary, TPI, Inc. (the Automotive subsidiary) for cash proceeds of one US Dollar. The Automotive subsidiary was engaged in the development, commercialization and implementation of the Company’s automotive industry related products. The Automotive subsidiary was previously classified as held for sale in the Company’s Consolidated Balance Sheet beginning December 31, 2023 and March 31, 2024. As a result of the divestiture, the Company recorded a $19.7 million non-cash impairment charge related to property, plant and equipment, and a $6.3 million loss on sale of the discontinued operations for the nine months ended September 30, 2024. The divestiture constituted a strategic shift as the Company will focus entirely on executing on its core business in the wind industry going forward, and accordingly, the historical results of our Automotive subsidiary have been reclassified as discontinued operations for all periods presented in the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.
KEY TRENDS AND RECENT DEVELOPMENTS AFFECTING OUR BUSINESS
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, semiconductor chip manufacturers, the adoption of electric vehicles, and the electrification of buildings. Over the course of the past few years, we have seen numerous government policy initiatives aimed at expanding the use of renewable energy, including the passing of the Inflation Reduction Act of 2022 (the IRA) in the U.S. and several policy initiatives in the EU that are expected to simplify regulations, speed up permitting and promote cross-border projects to accelerate climate neutrality. We expect these recent trends in governmental policy will enable long-term revenue growth in the wind industry. As the majority of our wind blades are installed in the U.S. and Europe, these policy trends are expected to have a material impact on our business and the pace of long-term growth.
Despite these favorable long-term policy trends, we expect demand in the near term will not significantly improve while the wind industry goes through the process of implementing key provisions of the IRA and awaits more robust policies in the EU. In addition, permitting, transmission, transmission queues, the ability of the broader wind industry supply chain to ramp volume, elevated interest rates and inflation, and the cost and availability of capital are further factors limiting the timing of the wind market recovery.
As the onshore wind market recovers, we expect sales of our wind blades to increase moderately in 2025 as our lines that are in startup and transition in 2024 will achieve serial production to meet projected customer demand for wind blades in the U.S. market, partially offset by lower forecasted demand for wind blades in the European market. 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. The hyperinflationary environment we
25
have experienced in Türkiye for the last number of years is not expected to subside any time soon. In addition, 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 blade manufacturers for years, their recent aggressive push to expand their presence in Europe and other regions outside of North America, supported by their government's backing, 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, we believe it is unlikely that European governments will take similar steps to meaningfully help suppliers like TPI that supply passive components to our OEM customers.
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 20% effective January 1, 2024. The government of Türkiye increased minimum wages 49% effective January 1, 2024. 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 these countries continue to experience wage inflation at these levels, and the increased costs in local currency are not offset by favorable foreign currency fluctuations or productivity improvements, such elevated wages will have a material impact on our results of operations.
Effective June 30, 2024, we shut down the Matamoros, Mexico manufacturing facility for Nordex that we took over from them in July 2021. Our results of operations for the nine months ended September 30, 2024 were adversely impacted by the performance of this facility in the first half of the year due to higher than anticipated losses driven by cancelled orders and production inefficiencies resulting from Nordex’s request for us to shut down the plant at the conclusion of the contract on June 30, 2024, including releasing all associates working in the factory. While Nordex funded all of our severance costs for the headcount reduction, our results of operations for the nine months ended September 30, 2024 were negatively impacted by significantly less demand from Nordex than expected and production inefficiencies relating to the closure of the facility. We experienced a loss from operations of $33.6 million at this facility for the nine months ended September 30, 2024, and a loss from operations of $25.6 million at this facility for the nine months ended September 30, 2023, respectively. The increase in this loss from operations compared to the prior year was primarily due to a 50% decrease for the nine-month period in the volume of wind blades produced, due to environmental conditions at this facility affecting production in early 2024, cancelled orders and inefficiencies resulting from the closure of the facility in the second quarter of 2024. The loss from operations for the nine months ended September 30, 2024, was reduced by the impact of $5.0 million in additional fees received from Nordex related to the cancelled orders and production inefficiencies during the closure of the facility.
We are exploring alternatives for the divestiture of our tooling business as part of our continued prioritization of capital for growth in the wind blade business, and as of September 30, 2024, we met the criteria to classify $5.0 million of assets and $1.1 million of liabilities as held for sale in our condensed consolidated balance sheets. The assets held for sale primarily relate to net property, plant and equipment, inventory, and accounts receivable. The liabilities held for sale primarily relate to accounts payable and other accrued expenses. Upon classifying the assets as held for sale, we recognized $3.9 million of impairment charges during the three months ended September 30, 2024.
KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE
In addition to measures of financial performance presented in our condensed 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. For a detailed discussion of our key financial measures and our key operating metrics, refer to the discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Metrics Used By Management To Measure Performance” included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.
26
KEY FINANCIAL MEASURES
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Net sales |
|
$ |
380,762 |
|
|
$ |
370,242 |
|
|
$ |
984,625 |
|
|
$ |
1,138,068 |
|
Net loss from continuing operations |
|
|
(38,596 |
) |
|
|
(26,948 |
) |
|
|
(160,971 |
) |
|
|
(95,578 |
) |
EBITDA (1) |
|
|
(5,590 |
) |
|
|
(8,638 |
) |
|
|
(63,128 |
) |
|
|
(50,191 |
) |
Adjusted EBITDA (1) |
|
|
8,014 |
|
|
|
215 |
|
|
|
(39,940 |
) |
|
|
(20,431 |
) |
Capital expenditures (2) |
|
|
|
|
|
|
|
|
22,079 |
|
|
|
15,846 |
|
||
Free cash flow (1)(2) |
|
|
|
|
|
|
|
|
(96,922 |
) |
|
|
(101,754 |
) |
||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Total debt, net of debt issuance costs and debt discount |
|
$ |
605,834 |
|
|
$ |
485,193 |
|
Net debt (1) |
|
|
(479,228 |
) |
|
|
(323,218 |
) |
The following tables reconcile our non-GAAP key financial measures to the most directly comparable GAAP measures:
EBITDA and adjusted EBITDA are reconciled as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Net loss attributable to common stockholders |
|
$ |
(40,068 |
) |
|
$ |
(72,846 |
) |
|
$ |
(192,625 |
) |
|
$ |
(190,981 |
) |
Net loss from discontinued operations |
|
|
1,472 |
|
|
|
29,867 |
|
|
|
31,654 |
|
|
|
48,601 |
|
Net loss from continuing operations attributable |
|
|
(38,596 |
) |
|
|
(42,979 |
) |
|
|
(160,971 |
) |
|
|
(142,380 |
) |
Preferred stock dividends and accretion |
|
|
— |
|
|
|
16,031 |
|
|
|
— |
|
|
|
46,802 |
|
Net loss from continuing operations |
|
|
(38,596 |
) |
|
|
(26,948 |
) |
|
|
(160,971 |
) |
|
|
(95,578 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
7,571 |
|
|
|
8,678 |
|
|
|
22,943 |
|
|
|
27,238 |
|
Interest expense, net |
|
|
24,194 |
|
|
|
1,625 |
|
|
|
68,005 |
|
|
|
6,026 |
|
Income tax provision |
|
|
1,241 |
|
|
|
8,007 |
|
|
|
6,895 |
|
|
|
12,123 |
|
EBITDA |
|
|
(5,590 |
) |
|
|
(8,638 |
) |
|
|
(63,128 |
) |
|
|
(50,191 |
) |
Share-based compensation expense |
|
|
1,634 |
|
|
|
2,468 |
|
|
|
5,321 |
|
|
|
8,993 |
|
Foreign currency loss |
|
|
2,346 |
|
|
|
511 |
|
|
|
2,845 |
|
|
|
3,257 |
|
Loss on sale of assets and asset impairments |
|
|
9,196 |
|
|
|
5,164 |
|
|
|
14,114 |
|
|
|
14,576 |
|
Restructuring charges, net |
|
|
428 |
|
|
|
710 |
|
|
|
908 |
|
|
|
2,934 |
|
Adjusted EBITDA |
|
$ |
8,014 |
|
|
$ |
215 |
|
|
$ |
(39,940 |
) |
|
$ |
(20,431 |
) |
Free cash flow is reconciled as follows:
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Net cash used in operating activities |
|
$ |
(74,843 |
) |
|
$ |
(85,908 |
) |
Capital expenditures |
|
|
(22,079 |
) |
|
|
(15,846 |
) |
Free cash flow |
|
$ |
(96,922 |
) |
|
$ |
(101,754 |
) |
27
Net cash (debt) is reconciled as follows:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Cash and cash equivalents |
|
$ |
125,871 |
|
|
$ |
161,059 |
|
Cash and cash equivalents of discontinued operations |
|
|
735 |
|
|
|
916 |
|
Total debt, net of debt issuance costs and debt discount |
|
|
(605,834 |
) |
|
|
(485,193 |
) |
Net debt |
|
$ |
(479,228 |
) |
|
$ |
(323,218 |
) |
KEY OPERATING METRICS
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Sets |
|
|
601 |
|
|
|
666 |
|
|
|
1,562 |
|
|
|
1,982 |
|
Estimated megawatts |
|
|
2,526 |
|
|
|
2,892 |
|
|
|
6,600 |
|
|
|
8,750 |
|
Utilization |
|
|
89 |
% |
|
|
85 |
% |
|
|
73 |
% |
|
|
84 |
% |
Dedicated manufacturing lines |
|
|
34 |
|
|
|
37 |
|
|
|
34 |
|
|
|
37 |
|
Manufacturing lines installed |
|
|
34 |
|
|
|
37 |
|
|
|
34 |
|
|
|
37 |
|
Wind blade ASP (in $ thousands) |
|
$ |
199 |
|
|
$ |
176 |
|
|
$ |
198 |
|
|
$ |
183 |
|
RESULTS OF OPERATIONS
The following table summarizes our operating results as a percentage of net sales for the three and nine months ended September 30, 2024 and 2023 that have been derived from our condensed consolidated statements of operations:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales |
|
|
97.1 |
|
|
|
99.4 |
|
|
|
99.8 |
|
|
|
102.2 |
|
Startup and transition costs |
|
|
2.1 |
|
|
|
1.3 |
|
|
|
5.2 |
|
|
|
0.9 |
|
Total cost of goods sold |
|
|
99.3 |
|
|
|
100.7 |
|
|
|
105.0 |
|
|
|
103.1 |
|
Gross profit (loss) |
|
|
0.7 |
|
|
|
(0.7 |
) |
|
|
(5.0 |
) |
|
|
(3.1 |
) |
General and administrative expenses |
|
|
1.2 |
|
|
|
2.4 |
|
|
|
2.3 |
|
|
|
2.0 |
|
Loss on sale of assets and asset impairments |
|
|
2.4 |
|
|
|
1.4 |
|
|
|
1.4 |
|
|
|
1.3 |
|
Restructuring charges, net |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
Loss from continuing operations |
|
|
(3.0 |
) |
|
|
(4.6 |
) |
|
|
(8.8 |
) |
|
|
(6.6 |
) |
Total other expense |
|
|
(6.8 |
) |
|
|
(0.5 |
) |
|
|
(6.8 |
) |
|
|
(0.7 |
) |
Loss before income taxes |
|
|
(9.8 |
) |
|
|
(5.1 |
) |
|
|
(15.6 |
) |
|
|
(7.3 |
) |
Income tax provision |
|
|
(0.3 |
) |
|
|
(2.2 |
) |
|
|
(0.7 |
) |
|
|
(1.1 |
) |
Net loss from continuing operations |
|
|
(10.1 |
) |
|
|
(7.3 |
) |
|
|
(16.3 |
) |
|
|
(8.4 |
) |
Preferred stock dividends and accretion |
|
|
— |
|
|
|
(4.3 |
) |
|
|
— |
|
|
|
(4.1 |
) |
Net loss attributable to common stockholders from continuing operations |
|
|
(10.1 |
) |
|
|
(11.6 |
) |
|
|
(16.3 |
) |
|
|
(12.5 |
) |
Net loss from discontinued operations |
|
|
(0.4 |
) |
|
|
(8.1 |
) |
|
|
(3.3 |
) |
|
|
(4.3 |
) |
Net loss attributable to common stockholders |
|
|
(10.5 |
)% |
|
|
(19.7 |
)% |
|
|
(19.6 |
)% |
|
|
(16.8 |
)% |
28
Net sales
Consolidated discussion
The following table summarizes our net sales by product/service for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Wind blade, tooling |
|
$ |
369,082 |
|
|
$ |
362,231 |
|
|
$ |
6,851 |
|
|
|
1.9 |
% |
|
$ |
962,277 |
|
|
$ |
1,112,557 |
|
|
$ |
(150,280 |
) |
|
|
(13.5 |
)% |
Field service, |
|
|
11,680 |
|
|
|
8,011 |
|
|
|
3,669 |
|
|
|
45.8 |
|
|
|
22,348 |
|
|
|
25,511 |
|
|
|
(3,163 |
) |
|
|
(12.4 |
) |
Total net sales |
|
$ |
380,762 |
|
|
$ |
370,242 |
|
|
$ |
10,520 |
|
|
|
2.8 |
% |
|
$ |
984,625 |
|
|
$ |
1,138,068 |
|
|
$ |
(153,443 |
) |
|
|
(13.5 |
)% |
The increase in net sales of wind blades, tooling and other wind related sales (collectively, Wind) for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to higher average sales prices of wind blades due to changes in the mix of wind blade models produced, in particular the startup of production at one of our previously idled facilities in Juarez, Mexico, an increase in wind blade inventory included in contract assets driven by the startups and transitions, and favorable foreign currency fluctuations. The increase in wind blade inventory directly correlates to higher sales under the cost-to-cost revenue recognition method for our wind blade contracts. This increase was partially offset by a 10% decrease for the three-month period ended September 30, 2024 in the number of wind blades produced due primarily to the number and pace of startups and transitions and expected volume declines based on market activity levels. The decrease in Wind sales for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a 21% decrease for the nine-month period in the number of wind blades produced due primarily to the number and pace of startups and transitions, expected volume declines based on market activity levels, and unfavorable foreign currency fluctuations. This decrease was partially offset by higher average sales prices of wind blades due to changes in the mix of wind blade models produced, in particular the startup of production at one of our previously idled facilities in Juarez, Mexico. The increase in field service, inspection and repair services (collectively, Field Services) sales for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to an increase in technicians deployed to revenue generating projects as our technicians decreased their time spent on non-revenue generating inspection and repair activities. The decrease in Field Services sales for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a reduction in technicians deployed to revenue generating projects due to an increase in time spent on non-revenue generating inspection and repair activities in the first half of 2024. The fluctuating U.S. dollar relative to the Euro had a favorable impact of 0.3% and 0.1%, respectively, on consolidated net sales during the three and nine months ended September 30, 2024 as compared to the same period in 2023.
Segment discussion
The following table summarizes our net sales by our four geographic operating segments for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
U.S. |
|
$ |
7,417 |
|
|
$ |
4,566 |
|
|
$ |
2,851 |
|
|
|
62.4 |
% |
|
$ |
14,177 |
|
|
$ |
19,035 |
|
|
$ |
(4,858 |
) |
|
|
(25.5 |
)% |
Mexico |
|
|
206,342 |
|
|
|
156,861 |
|
|
|
49,481 |
|
|
|
31.5 |
|
|
|
518,111 |
|
|
|
478,479 |
|
|
|
39,632 |
|
|
|
8.3 |
|
EMEA |
|
|
123,950 |
|
|
|
149,254 |
|
|
|
(25,304 |
) |
|
|
(17.0 |
) |
|
|
325,455 |
|
|
|
451,347 |
|
|
|
(125,892 |
) |
|
|
(27.9 |
) |
India |
|
|
43,053 |
|
|
|
59,561 |
|
|
|
(16,508 |
) |
|
|
(27.7 |
) |
|
|
126,882 |
|
|
|
189,207 |
|
|
|
(62,325 |
) |
|
|
(32.9 |
) |
Total net sales |
|
$ |
380,762 |
|
|
$ |
370,242 |
|
|
$ |
10,520 |
|
|
|
2.8 |
% |
|
$ |
984,625 |
|
|
$ |
1,138,068 |
|
|
$ |
(153,443 |
) |
|
|
(13.5 |
)% |
29
U.S. Segment
The following table summarizes our net sales by product/service for the U.S. segment for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Field service, |
|
$ |
7,417 |
|
|
$ |
4,566 |
|
|
$ |
2,851 |
|
|
|
62.4 |
% |
|
$ |
14,177 |
|
|
$ |
19,035 |
|
|
$ |
(4,858 |
) |
|
|
(25.5 |
)% |
Total net sales |
|
$ |
7,417 |
|
|
$ |
4,566 |
|
|
$ |
2,851 |
|
|
|
62.4 |
% |
|
$ |
14,177 |
|
|
$ |
19,035 |
|
|
$ |
(4,858 |
) |
|
|
(25.5 |
)% |
The increase in Field Services sales for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to an increase in technicians deployed to revenue generating projects and less time spent on non-revenue generating projects as inspection and repair activities slow down. The decrease in Field Services sales for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a reduction in technicians deployed to revenue generating projects in the first half of 2024 due to an increase in time spent on non-revenue generating inspection and repair activities in the first half of 2024.
Mexico Segment
The following table summarizes our net sales by product/service for the Mexico segment for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Wind blade, tooling |
|
$ |
205,523 |
|
|
$ |
156,077 |
|
|
$ |
49,446 |
|
|
|
31.7 |
% |
|
$ |
516,728 |
|
|
$ |
477,306 |
|
|
$ |
39,422 |
|
|
|
8.3 |
% |
Field service, |
|
|
819 |
|
|
|
784 |
|
|
|
35 |
|
|
|
4.5 |
|
|
|
1,383 |
|
|
|
1,173 |
|
|
|
210 |
|
|
|
17.9 |
|
Total net sales |
|
$ |
206,342 |
|
|
$ |
156,861 |
|
|
$ |
49,481 |
|
|
|
31.5 |
% |
|
$ |
518,111 |
|
|
$ |
478,479 |
|
|
$ |
39,632 |
|
|
|
8.3 |
% |
The increase in the Mexico segment’s Wind sales for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to higher average sales prices of wind blades in Mexico due to changes in the mix of wind blade models produced, the impact of wage inflation on wind blade prices, an increase in wind blade inventory included in contract assets driven by startups and transitions, and a 1% net increase in the number of wind blades produced across our Mexico facilities. The increase in wind blade inventory in the Mexico segment directly correlates to higher sales under the cost-to-cost revenue recognition method for our wind blade contracts.
The increase in the Mexico segment’s Wind sales for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to higher average sales prices of wind blades due to changes in the mix of wind blade models produced, partially offset by a 12% net decrease in the number of wind blades produced across our Mexico facilities. The change in volume was primarily associated with decreased production at one of our Matamoros, Mexico manufacturing facilities due to the transition of several of the manufacturing lines at this facility to larger wind blade models that have not yet achieved serial production levels. The change in volume was also due to 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. These decreases were partially offset by a combined 6% increase in volume across our facilities in Juarez, Mexico, including the restart of production at one of our previously idled facilities.
30
EMEA Segment
The following table summarizes our net sales by product/service for the EMEA segment for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Wind blade, tooling |
|
$ |
120,506 |
|
|
$ |
146,593 |
|
|
$ |
(26,087 |
) |
|
|
(17.8 |
)% |
|
$ |
318,667 |
|
|
$ |
446,044 |
|
|
$ |
(127,377 |
) |
|
|
(28.6 |
)% |
Field service, |
|
|
3,444 |
|
|
|
2,661 |
|
|
|
783 |
|
|
|
29.4 |
|
|
|
6,788 |
|
|
|
5,303 |
|
|
|
1,485 |
|
|
|
28.0 |
|
Total net sales |
|
$ |
123,950 |
|
|
$ |
149,254 |
|
|
$ |
(25,304 |
) |
|
|
(17.0 |
)% |
|
$ |
325,455 |
|
|
$ |
451,347 |
|
|
$ |
(125,892 |
) |
|
|
(27.9 |
)% |
The decrease in the EMEA segment’s Wind sales for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to a 15% and 30% decrease, for the three and nine month periods, respectively, in the number of wind blades produced due to reduced demand from one of our customers and the transition of certain manufacturing lines to a different customers' wind blade model, as well as unfavorable foreign currency fluctuations. These decreases were partially offset by higher average sales prices of wind blades in Türkiye due to such changes in the mix of wind blade models produced. The fluctuating U.S. dollar relative to the Euro had a favorable impact of 0.9% and 0.4% on the EMEA segment's net sales, respectively, during the three and nine months ended September 30, 2024, as compared to the same periods in 2023.
India Segment
The following table summarizes our net sales by product/service for the India segment for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Wind blade, tooling |
|
$ |
43,053 |
|
|
$ |
59,561 |
|
|
$ |
(16,508 |
) |
|
|
(27.7 |
)% |
|
$ |
126,882 |
|
|
$ |
189,207 |
|
|
$ |
(62,325 |
) |
|
|
(32.9 |
)% |
Total net sales |
|
$ |
43,053 |
|
|
$ |
59,561 |
|
|
$ |
(16,508 |
) |
|
|
(27.7 |
)% |
|
$ |
126,882 |
|
|
$ |
189,207 |
|
|
$ |
(62,325 |
) |
|
|
(32.9 |
)% |
The decrease in the India segment’s net sales of Wind for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to a 24% decrease for both the three and nine month periods in the number of wind blades produced due to a decrease in market demand for one of our customers' wind blades models produced at this facility, and lower average sales prices due to the impact of raw material and logistic cost reductions on wind blade prices.
Total cost of goods sold
The following table summarizes our total cost of goods sold for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Cost of sales |
|
$ |
369,882 |
|
|
$ |
367,915 |
|
|
$ |
1,967 |
|
|
|
0.5 |
% |
|
$ |
982,939 |
|
|
$ |
1,163,429 |
|
|
$ |
(180,490 |
) |
|
|
(15.5 |
)% |
Startup costs |
|
|
4,596 |
|
|
|
— |
|
|
|
4,596 |
|
|
NM |
|
|
|
18,278 |
|
|
|
— |
|
|
|
18,278 |
|
|
NM |
|
||
Transition costs |
|
|
3,517 |
|
|
|
4,817 |
|
|
|
(1,300 |
) |
|
|
(27.0 |
) |
|
|
32,742 |
|
|
|
10,174 |
|
|
|
22,568 |
|
|
NM |
|
|
Total startup and |
|
|
8,113 |
|
|
|
4,817 |
|
|
|
3,296 |
|
|
|
68.4 |
|
|
|
51,020 |
|
|
|
10,174 |
|
|
|
40,846 |
|
|
NM |
|
|
Total cost of |
|
$ |
377,995 |
|
|
$ |
372,732 |
|
|
$ |
5,263 |
|
|
|
1.4 |
% |
|
$ |
1,033,959 |
|
|
$ |
1,173,603 |
|
|
$ |
(139,644 |
) |
|
|
(11.9 |
)% |
% of net sales |
|
|
99.3 |
% |
|
|
100.7 |
% |
|
|
|
|
|
(1.4 |
)% |
|
|
105.0 |
% |
|
|
103.1 |
% |
|
|
|
|
|
1.9 |
% |
||
NM – not meaningful
31
Total cost of goods sold as a percentage of net sales decreased by approximately 1.4% for the three months ended September 30, 2024, as compared to the same period in 2023, primarily driven 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 warranty costs, and a decrease in transition costs as we made progress on the transition of four manufacturing lines at our other Matamoros, Mexico facility. This decrease was partially offset by an increase in startup costs associated with four manufacturing lines in Juarez, Mexico at a previously idle manufacturing facility, and increased labor costs in Türkiye and Mexico as a result of wage increases. The fluctuating U.S. dollar against the Euro, Turkish Lira, Mexican Peso and Indian Rupee had a combined favorable impact of 3.0% on consolidated cost of goods sold for the three months ended September 30, 2024, as compared to the same period in 2023.
Total cost of goods sold as a percentage of net sales increased by approximately 1.9% for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily driven by an increase in startup and transition costs associated with four manufacturing lines in Juarez, Mexico at a previously idle manufacturing facility, two manufacturing lines in transition at one of our Türkiye facilities where two longer blade models are replacing three blade models due to space considerations, and four manufacturing lines in transition at one of our Matamoros, Mexico manufacturing facilities. The increase in cost of goods sold as a percentage of net sales was also due to increased labor costs in Türkiye and Mexico as a result of wage increases. These increases were partially offset by a decrease in warranty costs for the nine months ended September 30, 2024 compared to the same period in 2023, due to the $32.7 million warranty charge recorded in the second quarter of the prior year. The fluctuating U.S. dollar against the Euro, Turkish Lira, Mexican Peso and Indian Rupee had a combined favorable impact of 4.1% on consolidated cost of goods sold for the nine months ended September 30, 2024, as compared to the same period in 2023.
General and administrative expenses
The following table summarizes our general and administrative expenses for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
General and |
|
$ |
4,717 |
|
|
$ |
8,817 |
|
|
$ |
(4,100 |
) |
|
|
(46.5 |
)% |
|
$ |
22,331 |
|
|
$ |
22,618 |
|
|
$ |
(287 |
) |
|
|
(1.3 |
)% |
% of net sales |
|
|
1.2 |
% |
|
|
2.4 |
% |
|
|
|
|
|
(1.2 |
)% |
|
|
2.3 |
% |
|
|
2.0 |
% |
|
|
|
|
|
0.3 |
% |
||
General and administrative expenses as a percentage of net sales decreased by approximately 1.2% for the three months ended September 30, 2024, as compared to the same period in 2023, and was primarily driven by lower employee compensation costs and cost savings initiatives. General and administrative expenses as a percentage of net sales for the nine months ended September 30, 2024 as compared to the same period in 2023 was flat, primarily due to lower employee compensation costs and cost savings initiatives, offset by increases in professional service and consulting fees.
Loss on sale of assets and asset impairments
The following table summarizes our loss on sale of assets and asset impairments for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Loss on sale |
|
$ |
5,174 |
|
|
$ |
5,153 |
|
|
$ |
21 |
|
|
|
0.4 |
% |
|
$ |
9,101 |
|
|
$ |
14,543 |
|
|
$ |
(5,442 |
) |
|
|
(37.4 |
)% |
Loss on sale |
|
|
4,022 |
|
|
|
11 |
|
|
|
4,011 |
|
|
NM |
|
|
|
5,013 |
|
|
|
33 |
|
|
|
4,980 |
|
|
NM |
|
||
Total loss on sale of |
|
$ |
9,196 |
|
|
$ |
5,164 |
|
|
$ |
4,032 |
|
|
|
78.1 |
|
|
$ |
14,114 |
|
|
$ |
14,576 |
|
|
$ |
(462 |
) |
|
|
(3.2 |
) |
% of net sales |
|
|
2.4 |
% |
|
|
1.4 |
% |
|
|
|
|
|
1.0 |
% |
|
|
1.4 |
% |
|
|
1.3 |
% |
|
|
|
|
|
0.1 |
% |
||
32
The increase in loss on sale of assets and asset impairments for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to $3.9 million of asset impairments associated with our tooling business in Mexico. The decrease for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a decrease in the volume of receivables sold through our accounts receivable financing arrangements with certain of our customers in the first half of 2024.
Income (loss) from operations
Segment discussion
The following table summarizes our income (loss) from operations by our four geographic operating segments for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
U.S. |
|
$ |
(3,657 |
) |
|
$ |
(3,039 |
) |
|
$ |
(618 |
) |
|
|
(20.3 |
)% |
|
$ |
(19,318 |
) |
|
$ |
(10,459 |
) |
|
$ |
(8,859 |
) |
|
|
(84.7 |
)% |
Mexico |
|
|
(20,555 |
) |
|
|
(32,926 |
) |
|
|
12,371 |
|
|
|
37.6 |
|
|
|
(72,513 |
) |
|
|
(114,887 |
) |
|
|
42,374 |
|
|
|
36.9 |
|
EMEA |
|
|
10,952 |
|
|
|
11,570 |
|
|
|
(618 |
) |
|
|
(5.3 |
) |
|
|
823 |
|
|
|
32,504 |
|
|
|
(31,681 |
) |
|
|
(97.5 |
) |
India |
|
|
1,686 |
|
|
|
7,214 |
|
|
|
(5,528 |
) |
|
|
(76.6 |
) |
|
|
4,321 |
|
|
|
17,179 |
|
|
|
(12,858 |
) |
|
|
(74.8 |
) |
Total income (loss) |
|
$ |
(11,574 |
) |
|
$ |
(17,181 |
) |
|
$ |
5,607 |
|
|
|
32.6 |
% |
|
$ |
(86,687 |
) |
|
$ |
(75,663 |
) |
|
$ |
(11,024 |
) |
|
|
(14.6 |
)% |
% of net sales |
|
|
(3.0 |
)% |
|
|
(4.6 |
)% |
|
|
|
|
|
1.6 |
% |
|
|
(8.8 |
)% |
|
|
(6.6 |
)% |
|
|
|
|
|
(2.2 |
)% |
||
U.S. Segment
The increase in loss from operations in the U.S. segment for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to increases in professional services and consulting fees. This loss was partially offset by a decrease in employee compensation costs, reduced share-based compensation and depreciation expenses. The increase in the loss from operations in the U.S. segment for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a reduction in field services sales in the first half of 2024 as technicians spent more time on non-revenue generating inspection and repair activities.
Mexico Segment
The decrease in loss from operations in the Mexico segment for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to 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, as well as higher average sales prices in the current period due to a change in the mix of wind blades, and favorable foreign currency fluctuations. This was partially offset by a decrease in the volume of wind blades produced, increased startup and transition costs, increased labor costs, and continued cost challenges at our other facility in Matamoros, Mexico. The fluctuating U.S. dollar relative to the Mexican Peso had a favorable impact of 2.1% for the three months ended September 30, 2024, as compared to the same period in 2023.
EMEA Segment
The decrease in income from operations in the EMEA segment for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to a 15% and 30% decrease, for the three and nine month periods, respectively, in the volume of wind blades produced, increased startup and transition costs, inflation impacting operating costs that we were not able to pass on to our customers, and increased labor costs as a result of wage increases in Türkiye. These decreases were partially offset by an increase in wind blade prices, cost savings initiatives, and favorable foreign currency fluctuations. The fluctuating U.S. dollar relative to the Turkish Lira and Euro had a favorable impact of 5.9% and 13.8%, respectively, on the EMEA segment's cost of goods sold for the three and nine months ended September 30, 2024, as compared to the same periods in 2023.
India Segment
The decrease in income from operations in the India segment for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to a 24% decrease for both the three and nine month periods respectively, in the volume of wind blades produced and lower average sales prices.
33
Other income (expense)
The following table summarizes our total other income (expense) for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Interest expense, net |
|
$ |
(24,194 |
) |
|
$ |
(1,625 |
) |
|
$ |
(22,569 |
) |
|
NM |
|
|
$ |
(68,005 |
) |
|
$ |
(6,026 |
) |
|
$ |
(61,979 |
) |
|
NM |
|
||
Foreign currency loss |
|
|
(2,346 |
) |
|
|
(511 |
) |
|
|
(1,835 |
) |
|
NM |
|
|
|
(2,845 |
) |
|
|
(3,257 |
) |
|
|
412 |
|
|
|
12.6 |
|
|
Miscellaneous income |
|
|
759 |
|
|
|
376 |
|
|
|
383 |
|
|
|
101.9 |
|
|
|
3,461 |
|
|
|
1,491 |
|
|
|
1,970 |
|
|
|
132.1 |
|
Total other expense |
|
$ |
(25,781 |
) |
|
$ |
(1,760 |
) |
|
$ |
(24,021 |
) |
|
NM |
|
|
$ |
(67,389 |
) |
|
$ |
(7,792 |
) |
|
$ |
(59,597 |
) |
|
NM |
|
||
% of net sales |
|
|
(6.8 |
)% |
|
|
(0.5 |
)% |
|
|
|
|
|
(6.3 |
)% |
|
|
(6.8 |
)% |
|
|
(0.7 |
)% |
|
|
|
|
|
(6.1 |
)% |
||
Total other expense as a percentage of net sales increased by 6.3% and 6.1% for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, primarily due to an increase in interest expense and non-cash amortization of debt discount related to the refinancing and issuance of our 11% senior secured term loan in the fourth quarter of 2023.
Income taxes
The following table summarizes our income taxes for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Income tax provision |
|
$ |
(1,241 |
) |
|
$ |
(8,007 |
) |
|
$ |
6,766 |
|
|
|
84.5 |
% |
|
$ |
(6,895 |
) |
|
$ |
(12,123 |
) |
|
$ |
5,228 |
|
|
|
43.1 |
% |
Effective tax rate |
|
|
(0.3 |
)% |
|
|
(2.2 |
)% |
|
|
|
|
|
1.9 |
% |
|
|
(0.7 |
)% |
|
|
(1.1 |
)% |
|
|
|
|
|
0.4 |
% |
||
See Note 10, Income Taxes, to our condensed consolidated financial statements for more details about our income taxes for the three and nine months ended September 30, 2024 and 2023.
Net loss from continuing operations
The following table summarizes our net loss from continuing operations for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Net loss from |
|
$ |
(38,596 |
) |
|
$ |
(26,948 |
) |
|
$ |
(11,648 |
) |
|
|
(43.2 |
)% |
|
$ |
(160,971 |
) |
|
$ |
(95,578 |
) |
|
$ |
(65,393 |
) |
|
|
(68.4 |
)% |
The increase in the net loss from continuing operations for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to the reasons set forth above.
Net loss from discontinued operations
The following table summarizes our net income (loss) from discontinued operations for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
September 30, |
|
|
Change |
|
|
September 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
Net loss from |
|
$ |
(1,472 |
) |
|
$ |
(29,867 |
) |
|
$ |
28,395 |
|
|
|
95.1 |
% |
|
$ |
(31,654 |
) |
|
$ |
(48,601 |
) |
|
$ |
16,947 |
|
|
|
34.9 |
% |
34
The decrease in net loss from discontinued operations for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the impacts of credit losses and impairment charges at our Automotive subsidiary in the prior comparative period because of the Proterra bankruptcy in August 2023. The decrease in net loss from discontinued operations for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the same reasons set forth above, partially offset by the impacts of our divestiture of our Automotive subsidiary in June 2024, which resulted in approximately $19.7 million of asset impairment charges related to property, plant and equipment, and $6.3 million of loss on the sale of discontinued operations.
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, new facility startup costs, the impact of line startups and transitions, working capital, debt service costs, warranty costs and restructuring costs associated with the optimization of our global footprint. 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 term debt, and proceeds received from the issuance of stock.
We had net proceeds under all of our various financing arrangements of $62.5 million for the nine months ended September 30, 2024 as compared to net proceeds under our financing arrangements of $111.6 million in the comparable period of 2023, primarily due to the issuance of the Convertible Notes in the prior comparative period. As of September 30, 2024 and December 31, 2023, we had $605.8 million and $485.2 million in outstanding indebtedness, net of issuance costs and debt discount, respectively. As of September 30, 2024, $139.8 million of outstanding indebtedness, consisting primarily of our working capital facilities in Türkiye and India, matures within the next twelve months. As of September 30, 2024, we had an aggregate of $25.3 million of remaining capacity for cash and non-cash financing, including $19.1 million of remaining availability for cash borrowing under our various credit facilities. Based upon current and anticipated levels of operations, we believe that cash on hand, available credit facilities, and cash flow from operations will be adequate to fund our working capital and capital expenditure requirements and to make required payments of principal and interest on our indebtedness over the next twelve months.
We anticipate that any new facilities and future facility expansions will be funded through cash flows from operations, the incurrence of other indebtedness and other potential sources of liquidity. The 11% senior secured term loan contains certain covenants and rights including, but not limited to, amount of indebtedness, capital expenditure limitations, a U.S. cash on hand balance requirement of $40.0 million through September 30, 2024 and $50.0 million thereafter.
At September 30, 2024 and December 31, 2023, we had unrestricted cash, cash equivalents and short-term investments totaling $125.9 million and $161.1 million, respectively. The September 30, 2024 balance includes $51.5 million of cash located outside of the United States, including $45.0 million in Türkiye, $4.6 million in India, $1.3 million in Mexico and $0.6 million in other countries. The December 31, 2023 balance included $45.0 million of cash located outside of the U.S., including $40.6 million in Türkiye, $1.9 million in India, $1.2 million in Mexico and $1.3 million in other countries. In addition to these amounts, at September 30, 2024 and December 31, 2023 we had $0.7 million and $0.9 million, respectively, of unrestricted cash and cash equivalents related to our discontinued operations which is held outside of the U.S.
35
Financing Facilities
Our total principal amount of debt outstanding as of September 30, 2024 and December 31, 2023 was $702.9 million and $606.1 million, respectively, including our convertible senior notes, secured and unsecured financing, working capital and term loan agreements and equipment finance leases. See Note 6, Debt, to our condensed consolidated financial statements for more details on our debt balances.
Cash Flow Discussion
The following table summarizes our key cash flow activities for the nine months ended September 30, 2024 and 2023:
|
|
Nine Months Ended |
|
|
|
|
||||||
|
|
September 30, |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Net cash used in operating activities |
|
$ |
(74,843 |
) |
|
$ |
(85,908 |
) |
|
$ |
11,065 |
|
Net cash used in investing activities |
|
|
(22,079 |
) |
|
|
(3,010 |
) |
|
|
(19,069 |
) |
Net cash provided by financing activities |
|
|
60,776 |
|
|
|
109,029 |
|
|
|
(48,253 |
) |
Impact of foreign exchange rates on cash, cash equivalents |
|
|
(485 |
) |
|
|
700 |
|
|
|
(1,185 |
) |
Net change in cash, cash equivalents and restricted cash |
|
$ |
(36,631 |
) |
|
$ |
20,811 |
|
|
$ |
(57,442 |
) |
Operating Cash Flows
Net cash used in operating activities decreased by $11.1 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to changes in net working capital in the current period and higher payments in the first quarter of the prior comparative period related to restructuring activities associated with the shutdown of our China operations at the end of 2022, partially offset by an increase in cash paid for taxes and cash paid for interest.
Investing Cash Flows
Net cash used in investing activities increased by $19.1 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to an increase of $6.3 million in capital expenditures for the startup and transition of our manufacturing lines at our facilities in Mexico and Türkiye and $12.8 million associated with the sale of our Taicang, China facility in the prior year.
Financing Cash Flows
Net cash provided by financing activities decreased by $48.3 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to the proceeds from the Convertible Notes in the prior comparative period, partially offset by increased borrowings under our Türkiye and India working capital facilities in the current period.
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 condensed 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 segments' customers at an agreed-upon discount rate.
36
The following table summarizes certain key details of each of the accounts receivable assignment agreements in place as of September 30, 2024:
Year Of Initial Agreement |
|
Segment(s) Related To |
|
Current Annual Interest Rate |
2019 |
|
Asia and Mexico |
|
LIBOR plus 1.00% |
2020 |
|
EMEA |
|
EURIBOR plus 1.95% |
2020 |
|
India |
|
LIBOR plus 1.00% |
2020 |
|
U.S. |
|
SOFR plus 0.29% |
2021 |
|
Mexico |
|
SOFR plus 0.29% |
2022 |
|
EMEA |
|
EURIBOR plus 1.97% |
As the receivables are purchased by the financial institutions under the agreements noted above, the receivables are removed from our condensed consolidated balance sheet. During the three and nine months ended September 30, 2024, $240.5 million and $459.6 million, respectively, of receivables were sold under the accounts receivable assignment agreements described above as compared to $278.2 million and $785.9 million, respectively, in the comparative prior year period.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk in the ordinary course of our business. These market risks are principally limited to changes in foreign currency exchange rates and commodity prices.
Foreign Currency Exchange Rate Risk. We conduct international operations in Mexico, Türkiye, India and Europe. Our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the functional currency of the transacting entity. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant functional currency and then translated into U.S. dollars for inclusion in our condensed consolidated financial statements. In recent years, exchange rates between these foreign currencies and the U.S. dollar have fluctuated significantly and may do so in the future. A hypothetical change of 10% in the exchange rates for the countries above would have resulted in a change to income from operations of approximately $10.8 million for the nine months ended September 30, 2024.
Commodity Price Risk. We are subject to commodity price risk under agreements for the supply of our raw materials. We have not hedged our commodity price exposure. We generally lock in pricing for most of our key raw materials for 12 months which protects us from price increases within that period, which we believe helps to mitigate the impact of raw material price increases. As many of our raw material supply agreements have meet or release clauses, if raw materials prices decrease, we are able to benefit from the reductions in price.
Resin, resin systems, and carbon fiber are the primary commodities for which we do not have fixed pricing. Approximately 52% of the resin and resin systems, and approximately 71% of the carbon fiber, we use is purchased under contracts either controlled or borne by two of our customers and therefore they receive/bear 100% of any decrease or increase in resin and carbon fiber costs further limiting our exposure to price fluctuations.
Taking into account the contractual obligations of our customers to share with us the cost savings or increases resulting from a change in the current forecasted price of resin, resin systems, and carbon fiber, we believe that a 10% change in the current forecasted price of resin, resin systems and carbon fiber for the customers in which we are exposed to fluctuating prices would have an impact to income from operations of approximately $5.7 million for the nine months ended September 30, 2024. With respect to our other customer supply agreements, our customers typically receive approximately 70% of the cost savings or increases resulting from a change in the price of resin, resin systems and carbon fiber.
Interest Rate Risk. As of September 30, 2024, all remaining secured and unsecured financing and finance lease obligations are fixed rate instruments and are not subject to fluctuations in interest rates.
37
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and operating effectiveness as of September 30, 2024 of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Note 13, Commitments and Contingencies, under the heading “Legal Proceedings” to our condensed consolidated financial statements for a discussion of legal proceedings and other related matters.
Item 1A. RISK FACTORS
There have been no material changes to the Risk Factors (Part I, Item 1A) in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition, and/or future results.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
Not applicable.
Issuer Purchases of Equity Securities
Not applicable.
Use of Proceeds
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
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Item 6. EXHIBITS
Exhibit Number |
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Exhibit Description |
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31.1* |
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2* |
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1** |
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2** |
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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101.INS* |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document |
101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document |
104* |
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Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) |
* Filed herewith.
** The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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TPI COMPOSITES, INC. |
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Date: November 7, 2024 |
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By: |
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/s/ Ryan Miller |
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Ryan Miller |
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Chief Financial Officer |
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(Principal Financial Officer) |
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