06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20212022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-37839
TPI Composites, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
| 20-1590775 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification Number) |
8501 N. Scottsdale Rd.
Gainey Center II, Suite 100
Scottsdale, AZ 85253
(480) 305-8910
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 | TPIC | NASDAQ Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
| ☒ |
| Accelerated filer |
| ☐ |
Non-accelerated filer |
| ☐ |
| Smaller reporting company |
| ☐ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of OctoberJuly 29, 2021,2022, there were 37,070,74437,287,031 shares of common stock outstanding.
TPI COMPOSITES, INC. AND SUBSIDIARIES
INDEX
Page | ||||
ITEM 1. |
| |||
|
| 4 | ||
Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 | 4 | |||
| 5 | |||
| 6 | |||
7 | ||||
| 9 | |||
Notes to Condensed Consolidated Financial Statements (Unaudited) |
| 11 | ||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
| |
ITEM 3. |
|
| ||
ITEM 4. |
|
| ||
ITEM 1. |
|
| ||
ITEM 1A. |
|
| ||
ITEM 2. |
|
| ||
ITEM 3. |
|
| ||
ITEM 4. |
|
| ||
ITEM 5. |
|
| ||
ITEM 6. |
|
| ||
|
1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities law.laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
2
These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or
2
implied by these forward-looking statements. We have described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the United States Securities and Exchange Commission (SEC) on February 25, 20212022 the principal risks and uncertainties that we believe could cause actual results to differ from these forward-looking statements. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as guarantees of future events.
The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to update any forward-looking statement to reflect events or developments after the date on which the statement is made or to reflect the occurrence of unanticipated events except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this Quarterly Report on Form 10-Q. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
3
PART I. FINANCIAL INFORMATION
ITEM l. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| September 30, |
| December 31, |
|
| June 30, |
| December 31, |
| ||||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
|
| (in thousands, except par value data) |
|
| (in thousands, except par value data) |
| ||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 119,005 |
|
| $ | 129,857 |
|
| $ | 155,020 |
|
| $ | 242,165 |
|
Restricted cash |
|
| 153 |
|
|
| 339 |
|
|
| 8,652 |
|
|
| 10,053 |
|
Accounts receivable |
|
| 178,104 |
|
|
| 132,768 |
|
|
| 194,913 |
|
|
| 157,804 |
|
Contract assets |
|
| 244,774 |
|
|
| 216,928 |
|
|
| 193,567 |
|
|
| 188,323 |
|
Prepaid expenses |
|
| 22,916 |
|
|
| 29,507 |
|
|
| 20,811 |
|
|
| 19,280 |
|
Other current assets |
|
| 22,613 |
|
|
| 27,921 |
|
|
| 25,087 |
|
|
| 22,584 |
|
Inventories |
|
| 11,251 |
|
|
| 10,839 |
|
|
| 13,725 |
|
|
| 11,533 |
|
Assets held for sale |
|
| 8,529 |
|
|
| 8,529 |
| ||||||||
Total current assets |
|
| 598,816 |
|
|
| 548,159 |
|
|
| 620,304 |
|
|
| 660,271 |
|
Property, plant and equipment, net |
|
| 192,326 |
|
|
| 209,001 |
|
|
| 167,098 |
|
|
| 169,578 |
|
Operating lease right of use assets |
|
| 146,794 |
|
|
| 158,827 |
|
|
| 154,629 |
|
|
| 137,192 |
|
Other noncurrent assets |
|
| 24,653 |
|
|
| 40,270 |
|
|
| 39,748 |
|
|
| 40,660 |
|
Total assets |
| $ | 962,589 |
|
| $ | 956,257 |
|
| $ | 981,779 |
|
| $ | 1,007,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts payable and accrued expenses |
| $ | 346,272 |
|
| $ | 295,992 |
|
| $ | 311,856 |
|
| $ | 336,697 |
|
Accrued warranty |
|
| 42,479 |
|
|
| 50,852 |
|
|
| 35,578 |
|
|
| 42,020 |
|
Current maturities of long-term debt |
|
| 251,563 |
|
|
| 32,551 |
|
|
| 60,618 |
|
|
| 66,438 |
|
Current operating lease liabilities |
|
| 22,939 |
|
|
| 26,099 |
|
|
| 22,066 |
|
|
| 22,681 |
|
Contract liabilities |
|
| 0 |
|
|
| 614 |
|
|
| 1,274 |
|
|
| 1,274 |
|
Total current liabilities |
|
| 663,253 |
|
|
| 406,108 |
|
|
| 431,392 |
|
|
| 469,110 |
|
Long-term debt, net of current maturities |
|
| 10,566 |
|
|
| 184,316 |
|
|
| 1,688 |
|
|
| 8,208 |
|
Noncurrent operating lease liabilities |
|
| 149,742 |
|
|
| 155,925 |
|
|
| 141,642 |
|
|
| 146,479 |
|
Other noncurrent liabilities |
|
| 7,964 |
|
|
| 8,873 |
|
|
| 11,781 |
|
|
| 10,978 |
|
Total liabilities |
|
| 831,525 |
|
|
| 755,222 |
|
|
| 586,503 |
|
|
| 634,775 |
|
Commitments and contingencies (Note 12) |
|
|
|
|
|
| ||||||||||
Commitments and contingencies (Note 14) |
|
|
|
|
|
| ||||||||||
Mezzanine equity: |
|
|
|
|
|
| ||||||||||
Series A Preferred Stock, $0.01 par value, 400 shares authorized; 350 and 350 shares |
|
| 279,656 |
|
|
| 250,974 |
| ||||||||
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Common shares, $0.01 par value, 100,000 shares authorized, 37,279 |
|
| 373 |
|
|
| 368 |
| ||||||||
Common shares, $0.01 par value, 100,000 shares authorized, 37,557 shares issued |
|
| 376 |
|
|
| 374 |
| ||||||||
Paid-in capital |
|
| 361,987 |
|
|
| 349,472 |
|
|
| 429,763 |
|
|
| 451,440 |
|
Accumulated other comprehensive loss |
|
| (43,176 | ) |
|
| (32,990 | ) |
|
| (16,965 | ) |
|
| (54,006 | ) |
Accumulated deficit |
|
| (181,987 | ) |
|
| (109,716 | ) |
|
| (290,574 | ) |
|
| (269,264 | ) |
Treasury stock, at cost, 208 shares at September 30, 2021 and 207 shares at |
|
| (6,133 | ) |
|
| (6,099 | ) | ||||||||
Treasury stock, at cost, 270 shares at June 30, 2022 and 238 shares at |
|
| (6,980 | ) |
|
| (6,592 | ) | ||||||||
Total stockholders’ equity |
|
| 131,064 |
|
|
| 201,035 |
|
|
| 115,620 |
|
|
| 121,952 |
|
Total liabilities and stockholders’ equity |
| $ | 962,589 |
|
| $ | 956,257 |
|
| $ | 981,779 |
|
| $ | 1,007,701 |
|
See accompanying notes to our unaudited condensed consolidated financial statements.
4
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||||
|
| September 30, |
| September 30, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||||||||
|
| (in thousands, except per share data) |
|
| (in thousands, except per share data) |
| ||||||||||||||||||||||||||
Net sales |
| $ | 479,599 |
|
| $ | 474,113 |
|
| $ | 1,343,120 |
|
| $ | 1,204,566 |
|
| $ | 452,368 |
|
| $ | 458,841 |
|
| $ | 837,238 |
|
| $ | 863,521 |
|
Cost of sales |
|
| 472,188 |
|
|
| 425,064 |
|
|
| 1,295,660 |
|
|
| 1,141,183 |
|
|
| 441,098 |
|
|
| 440,416 |
|
|
| 812,052 |
|
|
| 823,472 |
|
Startup and transition costs |
|
| 14,541 |
|
|
| 8,576 |
|
|
| 38,994 |
|
|
| 31,530 |
|
|
| 10,047 |
|
|
| 10,099 |
|
|
| 25,590 |
|
|
| 24,453 |
|
Total cost of goods sold |
|
| 486,729 |
|
|
| 433,640 |
|
|
| 1,334,654 |
|
|
| 1,172,713 |
|
|
| 451,145 |
|
|
| 450,515 |
|
|
| 837,642 |
|
|
| 847,925 |
|
Gross profit (loss) |
|
| (7,130 | ) |
|
| 40,473 |
|
|
| 8,466 |
|
|
| 31,853 |
|
|
| 1,223 |
|
|
| 8,326 |
|
|
| (404 | ) |
|
| 15,596 |
|
General and administrative expenses |
|
| 8,185 |
|
|
| 9,263 |
|
|
| 23,819 |
|
|
| 25,646 |
|
|
| 6,688 |
|
|
| 6,712 |
|
|
| 14,548 |
|
|
| 15,634 |
|
Loss on sale of assets and asset impairments |
|
| 7,250 |
|
|
| 2,160 |
|
|
| 9,998 |
|
|
| 5,518 |
|
|
| 2,563 |
|
|
| 1,451 |
|
|
| 3,522 |
|
|
| 2,748 |
|
Restructuring charges, net |
|
| 1,422 |
|
|
| 45 |
|
|
| 3,876 |
|
|
| 343 |
|
|
| 10 |
|
|
| 2,196 |
|
|
| 2,403 |
|
|
| 2,454 |
|
Income (loss) from operations |
|
| (23,987 | ) |
|
| 29,005 |
|
|
| (29,227 | ) |
|
| 346 |
| ||||||||||||||||
Loss from operations |
|
| (8,038 | ) |
|
| (2,033 | ) |
|
| (20,877 | ) |
|
| (5,240 | ) | ||||||||||||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest expense, net |
|
| (2,662 | ) |
|
| (3,093 | ) |
|
| (8,057 | ) |
|
| (7,409 | ) |
|
| (913 | ) |
|
| (2,691 | ) |
|
| (1,682 | ) |
|
| (5,395 | ) |
Foreign currency income (loss) |
|
| 3,958 |
|
|
| (17,127 | ) |
|
| (6,273 | ) |
|
| (18,095 | ) |
|
| 9,886 |
|
|
| (6,504 | ) |
|
| 10,096 |
|
|
| (10,231 | ) |
Miscellaneous income |
|
| 262 |
|
|
| 1,259 |
|
|
| 1,322 |
|
|
| 2,893 |
|
|
| 309 |
|
|
| 321 |
|
|
| 851 |
|
|
| 1,060 |
|
Total other income (expense) |
|
| 1,558 |
|
|
| (18,961 | ) |
|
| (13,008 | ) |
|
| (22,611 | ) |
|
| 9,282 |
|
|
| (8,874 | ) |
|
| 9,265 |
|
|
| (14,566 | ) |
Income (loss) before income taxes |
|
| (22,429 | ) |
|
| 10,044 |
|
|
| (42,235 | ) |
|
| (22,265 | ) |
|
| 1,244 |
|
|
| (10,907 | ) |
|
| (11,612 | ) |
|
| (19,806 | ) |
Income tax benefit (provision) |
|
| (8,248 | ) |
|
| 32,338 |
|
|
| (30,036 | ) |
|
| (1,946 | ) | ||||||||||||||||
Net income (loss) |
| $ | (30,677 | ) |
| $ | 42,382 |
|
| $ | (72,271 | ) |
| $ | (24,211 | ) | ||||||||||||||||
Income tax provision |
|
| (6,754 | ) |
|
| (28,890 | ) |
|
| (9,698 | ) |
|
| (21,788 | ) | ||||||||||||||||
Net loss |
|
| (5,510 | ) |
|
| (39,797 | ) |
|
| (21,310 | ) |
|
| (41,594 | ) | ||||||||||||||||
Preferred stock dividends and accretion |
|
| (14,550 | ) |
|
| 0 |
|
|
| (28,682 | ) |
|
| 0 |
| ||||||||||||||||
Net loss attributable to common stockholders |
| $ | (20,060 | ) |
| $ | (39,797 | ) |
| $ | (49,992 | ) |
| $ | (41,594 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic |
|
| 37,052 |
|
|
| 35,546 |
|
|
| 36,846 |
|
|
| 35,354 |
|
|
| 41,968 |
|
|
| 36,881 |
|
|
| 41,934 |
|
|
| 36,742 |
|
Diluted |
|
| 37,052 |
|
|
| 37,423 |
|
|
| 36,846 |
|
|
| 35,354 |
|
|
| 41,968 |
|
|
| 36,881 |
|
|
| 41,934 |
|
|
| 36,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Basic |
| $ | (0.83 | ) |
| $ | 1.19 |
|
| $ | (1.96 | ) |
| $ | (0.68 | ) |
| $ | (0.48 | ) |
| $ | (1.08 | ) |
| $ | (1.19 | ) |
| $ | (1.13 | ) |
Diluted |
| $ | (0.83 | ) |
| $ | 1.13 |
|
| $ | (1.96 | ) |
| $ | (0.68 | ) |
| $ | (0.48 | ) |
| $ | (1.08 | ) |
| $ | (1.19 | ) |
| $ | (1.13 | ) |
See accompanying notes to our unaudited condensed consolidated financial statements.
5
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| June 30, |
|
| June 30, |
| ||||||||||||||||||||
|
| 2021 |
| 2020 |
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
Net income (loss) |
| $ | (30,677 | ) |
| $ | 42,382 |
|
| $ | (72,271 | ) |
| $ | (24,211 | ) | ||||||||||||||||
Net loss |
| $ | (5,510 | ) |
| $ | (39,797 | ) |
| $ | (21,310 | ) |
| $ | (41,594 | ) | ||||||||||||||||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Foreign currency translation adjustments |
|
| (889 | ) |
|
| (1,662 | ) |
|
| (6,184 | ) |
|
| (13,175 | ) |
|
| (7,346 | ) |
|
| (4 | ) |
|
| 36,023 |
|
|
| (5,295 | ) |
Unrealized gain (loss) on hedging derivatives, net of taxes of |
|
| (728 | ) |
|
| 2,961 |
|
|
| (4,002 | ) |
|
| (1,159 | ) | ||||||||||||||||
Unrealized gain (loss) on hedging derivatives, net of taxes of |
|
| (1,687 | ) |
|
| (239 | ) |
|
| 1,018 |
|
|
| (3,274 | ) | ||||||||||||||||
Comprehensive income (loss) |
| $ | (32,294 | ) |
| $ | 43,681 |
|
| $ | (82,457 | ) |
| $ | (38,545 | ) |
|
| (14,543 | ) |
|
| (40,040 | ) |
|
| 15,731 |
|
|
| (50,163 | ) |
Preferred stock dividends and accretion |
|
| (14,550 | ) |
|
| 0 |
|
|
| (28,682 | ) |
|
| 0 |
| ||||||||||||||||
Comprehensive loss attributable to common stockholders |
| $ | (29,093 | ) |
| $ | (40,040 | ) |
| $ | (12,951 | ) |
| $ | (50,163 | ) |
See accompanying notes to our unaudited condensed consolidated financial statements.
6
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
(Unaudited)
|
| Nine Months Ended September 30, 2021 |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| |||||||
|
| Common |
|
| Paid-in |
|
| other comprehensive |
|
| Accumulated |
|
| Treasury stock, |
|
| Total stockholders' |
| ||||||||||
|
| Shares |
|
| Amount |
|
| capital |
|
| loss |
|
| deficit |
|
| at cost |
|
| equity |
| |||||||
|
| (in thousands) |
| |||||||||||||||||||||||||
Balance at December 31, 2020 |
|
| 36,771 |
|
| $ | 368 |
|
| $ | 349,472 |
|
| $ | (32,990 | ) |
| $ | (109,716 | ) |
| $ | (6,099 | ) |
| $ | 201,035 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,797 | ) |
|
| — |
|
|
| (1,797 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 2,494 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,494 |
|
Issuances under share- |
|
| 149 |
|
|
| 1 |
|
|
| 1,235 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,236 |
|
Common stock repurchased |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (34 | ) |
|
| (34 | ) |
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,326 | ) |
|
| — |
|
|
| — |
|
|
| (8,326 | ) |
Balance at March 31, 2021 |
|
| 36,920 |
|
|
| 369 |
|
|
| 353,201 |
|
|
| (41,316 | ) |
|
| (111,513 | ) |
|
| (6,133 | ) |
|
| 194,608 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (39,797 | ) |
|
| — |
|
|
| (39,797 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 2,836 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,836 |
|
Issuances under share- |
|
| 328 |
|
|
| 3 |
|
|
| 3,490 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,493 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (243 | ) |
|
| — |
|
|
| — |
|
|
| (243 | ) |
Balance at June 30, 2021 |
|
| 37,248 |
|
|
| 372 |
|
|
| 359,527 |
|
|
| (41,559 | ) |
|
| (151,310 | ) |
|
| (6,133 | ) |
|
| 160,897 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (30,677 | ) |
|
| — |
|
|
| (30,677 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 1,946 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,946 |
|
Issuances under share- |
|
| 31 |
|
|
| 1 |
|
|
| 514 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 515 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,617 | ) |
|
| — |
|
|
| — |
|
|
| (1,617 | ) |
Balance at September 30, 2021 |
|
| 37,279 |
|
| $ | 373 |
|
| $ | 361,987 |
|
| $ | (43,176 | ) |
| $ | (181,987 | ) |
| $ | (6,133 | ) |
| $ | 131,064 |
|
|
| Six Months Ended June 30, 2022 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Series A Preferred Stock |
|
|
| Common |
|
| Paid-in |
|
| other comprehensive |
|
| Accumulated |
|
| Treasury stock, |
|
| Total stockholders' |
| |||||||||||||||
|
| Shares |
|
| Amount |
|
|
| Shares |
|
| Amount |
|
| capital |
|
| loss |
|
| deficit |
|
| at cost |
|
| equity |
| |||||||||
|
|
|
|
|
|
|
|
| (in thousands) |
| |||||||||||||||||||||||||||
Balance at |
|
| 350 |
|
| $ | 250,974 |
|
|
|
| 37,418 |
|
| $ | 374 |
|
| $ | 451,440 |
|
| $ | (54,006 | ) |
| $ | (269,264 | ) |
| $ | (6,592 | ) |
| $ | 121,952 |
|
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (15,800 | ) |
|
| — |
|
|
| (15,800 | ) |
Preferred stock |
|
| — |
|
|
| 9,605 |
|
|
|
| — |
|
|
| — |
|
|
| (9,605 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,605 | ) |
Other comprehensive |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 46,074 |
|
|
| — |
|
|
| — |
|
|
| 46,074 |
|
Common stock |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (343 | ) |
|
| (343 | ) |
Issuances under |
|
| — |
|
|
| — |
|
|
|
| 106 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Share-based |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 3,279 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,279 |
|
Accretion of Series A |
|
| — |
|
|
| 4,527 |
|
|
|
| — |
|
|
| — |
|
|
| (4,527 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,527 | ) |
Balance at |
|
| 350 |
|
|
| 265,106 |
|
|
|
| 37,524 |
|
|
| 375 |
|
|
| 440,587 |
|
|
| (7,932 | ) |
|
| (285,064 | ) |
|
| (6,935 | ) |
|
| 141,031 |
|
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (5,510 | ) |
|
| — |
|
|
| (5,510 | ) |
Preferred stock |
|
| — |
|
|
| 9,975 |
|
|
|
| — |
|
|
| — |
|
|
| (9,975 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,975 | ) |
Other comprehensive |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,033 | ) |
|
| — |
|
|
| — |
|
|
| (9,033 | ) |
Common stock |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (45 | ) |
|
| (45 | ) |
Issuances under |
|
| — |
|
|
| — |
|
|
|
| 33 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Share-based |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 3,726 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,726 |
|
Accretion of Series A |
|
| — |
|
|
| 4,575 |
|
|
|
| — |
|
|
| — |
|
|
| (4,575 | ) |
|
| - |
|
|
| — |
|
|
| — |
|
|
| (4,575 | ) |
Balance at June 30, 2022 |
|
| 350 |
|
| $ | 279,656 |
|
|
|
| 37,557 |
|
| $ | 376 |
|
| $ | 429,763 |
|
| $ | (16,965 | ) |
| $ | (290,574 | ) |
| $ | (6,980 | ) |
| $ | 115,620 |
|
7
|
| Six Months Ended June 30, 2021 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Series A Preferred Stock |
|
|
| Common |
|
| Paid-in |
|
| other comprehensive |
|
| Accumulated |
|
| Treasury stock, |
|
| Total stockholders' |
| |||||||||||||||
|
| Shares |
|
| Amount |
|
|
| Shares |
|
| Amount |
|
| capital |
|
| loss |
|
| deficit |
|
| at cost |
|
| equity |
| |||||||||
|
|
|
|
|
|
|
|
| (in thousands) |
| |||||||||||||||||||||||||||
Balance at |
|
| — |
|
| $ | — |
|
|
|
| 36,771 |
|
| $ | 368 |
|
| $ | 349,472 |
|
| $ | (32,990 | ) |
| $ | (109,716 | ) |
| $ | (6,099 | ) |
| $ | 201,035 |
|
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,797 | ) |
|
| — |
|
|
| (1,797 | ) |
Other comprehensive |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,326 | ) |
|
| — |
|
|
| — |
|
|
| (8,326 | ) |
Common stock |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (34 | ) |
|
| (34 | ) |
Issuances under |
|
| — |
|
|
| — |
|
|
|
| 149 |
|
|
| 1 |
|
|
| 1,235 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,236 |
|
Share-based |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 2,494 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,494 |
|
Balance at |
|
| — |
|
|
| — |
|
|
|
| 36,920 |
|
|
| 369 |
|
|
| 353,201 |
|
|
| (41,316 | ) |
|
| (111,513 | ) |
|
| (6,133 | ) |
|
| 194,608 |
|
Net loss |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (39,797 | ) |
|
| — |
|
|
| (39,797 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 2,836 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,836 |
|
Issuances under share- |
|
| — |
|
|
| — |
|
|
|
| 328 |
|
|
| 3 |
|
|
| 3,490 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,493 |
|
Other comprehensive income |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (243 | ) |
|
| — |
|
|
| — |
|
|
| (243 | ) |
Balance at June 30, 2021 |
|
| — |
|
| $ | - |
|
|
|
| 37,248 |
|
| $ | 372 |
|
| $ | 359,527 |
|
| $ | (41,559 | ) |
| $ | (151,310 | ) |
| $ | (6,133 | ) |
| $ | 160,897 |
|
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - CONTINUED
(Unaudited)
|
| Nine Months Ended September 30, 2020 |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| |||||||
|
| Common |
|
| Paid-in |
|
| other comprehensive |
|
| Accumulated |
|
| Treasury stock, |
|
| Total stockholders' |
| ||||||||||
|
| Shares |
|
| Amount |
|
| capital |
|
| loss |
|
| deficit |
|
| at cost |
|
| equity |
| |||||||
|
| (in thousands) |
| |||||||||||||||||||||||||
Balance at December 31, 2019 |
|
| 35,326 |
|
| $ | 353 |
|
| $ | 322,906 |
|
| $ | (23,612 | ) |
| $ | (90,689 | ) |
| $ | (3,908 | ) |
| $ | 205,050 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (492 | ) |
|
| — |
|
|
| (492 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 2,970 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,970 |
|
Issuances under share- |
|
| 109 |
|
|
| 1 |
|
|
| 861 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 862 |
|
Common stock repurchased |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (459 | ) |
|
| (459 | ) |
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (16,893 | ) |
|
| — |
|
|
| — |
|
|
| (16,893 | ) |
Balance at March 31, 2020 |
|
| 35,435 |
|
|
| 354 |
|
|
| 326,737 |
|
|
| (40,505 | ) |
|
| (91,181 | ) |
|
| (4,367 | ) |
|
| 191,038 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (66,101 | ) |
|
| — |
|
|
| (66,101 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 2,186 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,186 |
|
Issuances under share- |
|
| 81 |
|
|
| 1 |
|
|
| 510 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 511 |
|
Common stock repurchased |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (49 | ) |
|
| (49 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,260 |
|
|
| — |
|
|
| — |
|
|
| 1,260 |
|
Balance at June 30, 2020 |
|
| 35,516 |
|
|
| 355 |
|
|
| 329,433 |
|
|
| (39,245 | ) |
|
| (157,282 | ) |
|
| (4,416 | ) |
|
| 128,845 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 42,382 |
|
|
| — |
|
|
| 42,382 |
|
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 2,434 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,434 |
|
Issuances under share- |
|
| 395 |
|
|
| 4 |
|
|
| 6,488 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,492 |
|
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,299 |
|
|
| — |
|
|
| — |
|
|
| 1,299 |
|
Balance at September 30, 2020 |
|
| 35,911 |
|
| $ | 359 |
|
| $ | 338,355 |
|
| $ | (37,946 | ) |
| $ | (114,900 | ) |
| $ | (4,416 | ) |
| $ | 181,452 |
|
See accompanying notes to our unaudited condensed consolidated financial statements.
8
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Nine Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| September 30, |
|
| June 30, |
| ||||||||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | (72,271 | ) |
| $ | (24,211 | ) |
| $ | (21,310 | ) |
| $ | (41,594 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) |
|
|
|
|
|
| ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
| ||||||||||
Depreciation and amortization |
|
| 37,399 |
|
|
| 36,675 |
|
|
| 23,449 |
|
|
| 24,110 |
|
Loss on sale of assets and asset impairments |
|
| 9,998 |
|
|
| 5,518 |
|
|
| 3,522 |
|
|
| 2,748 |
|
Share-based compensation expense |
|
| 7,267 |
|
|
| 7,947 |
|
|
| 7,057 |
|
|
| 5,324 |
|
Amortization of debt issuance costs |
|
| 342 |
|
|
| 237 |
|
|
| — |
|
|
| 228 |
|
Deferred income taxes |
|
| 17,201 |
|
|
| (9,375 | ) |
|
| 3,359 |
|
|
| 13,221 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts receivable |
|
| (51,617 | ) |
|
| 27,723 |
|
|
| (42,315 | ) |
|
| (19,465 | ) |
Contract assets and liabilities |
|
| (31,715 | ) |
|
| (48,185 | ) |
|
| (4,713 | ) |
|
| (16,007 | ) |
Operating lease right of use assets and operating lease liabilities |
|
| 2,690 |
|
|
| 14,370 |
|
|
| (891 | ) |
|
| 2,971 |
|
Inventories |
|
| (560 | ) |
|
| (7,986 | ) |
|
| (2,276 | ) |
|
| (2,488 | ) |
Prepaid expenses |
|
| 6,288 |
|
|
| (6,066 | ) |
|
| 866 |
|
|
| 8,232 |
|
Other current assets |
|
| 5,007 |
|
|
| 7,827 |
|
|
| (2,035 | ) |
|
| 7,151 |
|
Other noncurrent assets |
|
| (1,857 | ) |
|
| 338 |
|
|
| 6,019 |
|
|
| (1,767 | ) |
Accounts payable and accrued expenses |
|
| 52,869 |
|
|
| 19,510 |
|
|
| (23,787 | ) |
|
| 18,201 |
|
Accrued warranty |
|
| (8,373 | ) |
|
| 5,957 |
|
|
| (6,442 | ) |
|
| (3,390 | ) |
Other noncurrent liabilities |
|
| (909 | ) |
|
| 3,586 |
|
|
| 336 |
|
|
| (730 | ) |
Net cash provided by (used in) operating activities |
|
| (28,241 | ) |
|
| 33,865 |
| ||||||||
Net cash used in operating activities |
|
| (59,161 | ) |
|
| (3,255 | ) | ||||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Purchases of property, plant and equipment |
|
| (30,138 | ) |
|
| (53,428 | ) |
|
| (8,010 | ) |
|
| (27,059 | ) |
Net cash used in investing activities |
|
| (30,138 | ) |
|
| (53,428 | ) |
|
| (8,010 | ) |
|
| (27,059 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Proceeds from revolving and term loans |
|
| 18,109 |
|
|
| 80,000 |
| ||||||||
Repayments of revolving and term loans |
|
| 0 |
|
|
| (7,199 | ) | ||||||||
Net repayments of accounts receivable financing |
|
| 0 |
|
|
| (3,979 | ) | ||||||||
Proceeds from (repayments of) revolving and term loans |
|
| (1,757 | ) |
|
| 2,106 |
| ||||||||
Proceeds from working capital loans |
|
| 10,334 |
|
|
| 0 |
|
|
| 11,465 |
|
|
| 6,383 |
|
Repayments of working capital loans |
|
| (11,587 | ) |
|
| — |
| ||||||||
Principal repayments of finance leases |
|
| (4,249 | ) |
|
| (4,592 | ) |
|
| (2,772 | ) |
|
| (2,803 | ) |
Net proceeds from other debt |
|
| 18,909 |
|
|
| 32,311 |
| ||||||||
Debt issuance costs |
|
| 0 |
|
|
| (730 | ) | ||||||||
Net proceeds from (repayments of) other debt |
|
| (7,689 | ) |
|
| 13,362 |
| ||||||||
Proceeds from exercise of stock options |
|
| 5,211 |
|
|
| 7,124 |
|
|
| 2 |
|
|
| 4,688 |
|
Repurchase of common stock including shares withheld in lieu of income taxes |
|
| (34 | ) |
|
| (508 | ) |
|
| (388 | ) |
|
| (34 | ) |
Net cash provided by financing activities |
|
| 48,280 |
|
|
| 102,427 |
| ||||||||
Net cash provided by (used in) financing activities |
|
| (12,726 | ) |
|
| 23,702 |
| ||||||||
Impact of foreign exchange rates on cash, cash equivalents and restricted cash |
|
| (939 | ) |
|
| (3,204 | ) |
|
| (8,649 | ) |
|
| (323 | ) |
Net change in cash, cash equivalents and restricted cash |
|
| (11,038 | ) |
|
| 79,660 |
|
|
| (88,546 | ) |
|
| (6,935 | ) |
Cash, cash equivalents and restricted cash, beginning of year |
|
| 130,196 |
|
|
| 71,749 |
|
|
| 252,218 |
|
|
| 130,196 |
|
Cash, cash equivalents and restricted cash, end of period |
| $ | 119,158 |
|
| $ | 151,409 |
|
| $ | 163,672 |
|
| $ | 123,261 |
|
See accompanying notes to our unaudited condensed consolidated financial statements.
9
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
|
| Nine Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| September 30, |
|
| June 30, |
| ||||||||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash paid for interest |
| $ | 7,818 |
|
| $ | 6,871 |
|
| $ | 1,667 |
|
| $ | 5,255 |
|
Cash paid for income taxes, net of refunds |
|
| 19,487 |
|
|
| 11,642 |
|
|
| 14,677 |
|
|
| 14,866 |
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Right of use assets obtained in exchange for new operating lease liabilities |
|
| 9,190 |
|
|
| 67,705 |
|
|
| 10,670 |
|
|
| 5,384 |
|
Property, plant, and equipment obtained in exchange for new finance lease liabilities |
|
| 1,817 |
|
|
| 131 |
|
|
| — |
|
|
| 136 |
|
Accrued capital expenditures in accounts payable |
|
| 4,966 |
|
|
| 7,769 |
|
|
| 1,450 |
|
|
| 3,682 |
|
Paid-in-kind preferred stock dividends and accretion |
|
| 28,682 |
|
|
| — |
|
Reconciliation of Cash, Cash Equivalents and Restricted Cash: |
| September 30, |
|
| December 31, |
| September 30, |
|
| December 31, |
|
| June 30, |
|
| December 31, |
| June 30, |
|
| December 31, |
| ||||||||||
|
| 2021 |
| 2020 |
| 2020 |
| 2019 |
|
| 2022 |
|
| 2021 |
|
| 2021 |
|
| 2020 |
| |||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
Cash and cash equivalents |
| $ | 119,005 |
|
| $ | 129,857 |
|
| $ | 149,422 |
|
| $ | 70,282 |
|
| $ | 155,020 |
|
| $ | 242,165 |
|
| $ | 123,107 |
|
| $ | 129,857 |
|
Restricted cash |
|
| 153 |
|
|
| 339 |
|
|
| 1,987 |
|
|
| 992 |
|
|
| 8,652 |
|
|
| 10,053 |
|
|
| 154 |
|
|
| 339 |
|
Restricted cash included within other noncurrent assets |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 475 |
| ||||||||||||||||
Total cash, cash equivalents and restricted cash shown in |
| $ | 119,158 |
|
| $ | 130,196 |
|
| $ | 151,409 |
|
| $ | 71,749 |
|
| $ | 163,672 |
|
| $ | 252,218 |
|
| $ | 123,261 |
|
| $ | 130,196 |
|
See accompanying notes to our unaudited condensed consolidated financial statements.
10
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Significant Accounting Policies
Functional Currency Change from Turkish Lira to Euro for the Company’s Turkish operations.
Effective January 1, 2022, the functional currency for our operations in Turkey changed from the Turkish Lira to the Euro. Nonmonetary assets and liabilities were remeasured into Euros at the rate in effect on the date of the asset's or liability’s inception and then translated into reporting currency based on the current exchange rate. The monetary assets and liabilities were remeasured into Euros at the rate in effect on the date of change and then translated into reporting currency based on the current exchange rate. The difference between historical basis of nonmonetary assets and liabilities and the new basis of $44.9 million (increase in net assets) was recorded in the currency translation adjustment account. The amount recorded in the currency translation adjustment account for prior periods was not reversed upon the change in functional currency. The majority of the initial impact of the functional currency change was to property, plant and equipment and operating lease right of use assets with offset to the currency translation adjustment account.
While the change of the functional currency was based on a factual assessment, the determination of the date of the change required management’s judgement given the evolution in the primary economic and business environment in which we operate. When we established our Turkish operations in 2012 and 2013, the Turkish government had a goal of significantly increasing renewable energy generation and utilization within Turkey by year 2023. During 2014-2017, wind energy generated and utilized in Turkey increased and management observed that progress was being made towards the Turkish government's goal. In 2018 and 2019, the Turkish government introduced tenders to spur domestic renewable energy generation and utilization in Turkey. However, as of year-end 2020, Turkish domestic renewable energy generated and utilized was significantly less than originally forecasted by the Turkish government. As of 2021, there were no significant wind turbine installations under the tenders awarded by the Turkish government in 2018 and 2019. Based on recent and anticipated annual domestic renewable energy demand it is unlikely for the local energy generation to reach the Turkish government's goals for 2023. Additionally, in recent years sales to the eurozone have increased and the Company is focused on meeting the export demands of the region. Based on the analysis of the domestic renewable energy demand through 2021 and anticipated future demand, management concluded that Turkish domestic sales will not grow as previously envisioned and most of the future growth will continue to be predominately export sales to the eurozone, which are primarily denominated in Euros.
Management re-evaluated all indicators established in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 830, "Foreign Currency Matters", to determine the functional currency of our Turkish operations. Such indicators include i) cash flow, ii) sales price, iii) sales market, iv) expense, v) financing and vi) intercompany transactions and arrangements. At the time of the assessment adopted on January 1, 2022, (i) approximately 80% of our sales in Turkey were denominated in Euros and the rest were in USD, (ii) a majority of expenses were denominated in Euros, (iii) all debt and lease obligations were denominated in Euro, (iv) a majority of the cash balances were denominated in Euros and (v) a majority of the intercompany balances were denominated in Euros. When considering all relevant facts together along with managements’ long-term plan for our Turkey operations, management concluded that the Euro best reflects the currency of the primary economic environment in which we currently operate. As a result, the Company adopted the Euro as the functional currency of our Turkish operations effective January 1, 2022 on a prospective basis.
Note 1.2. 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, 20202021 included in our Annual Report on Form 10-K. CertainAlthough 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, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.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 SeptemberJune 30, 2021,2022, and the results of our operations, comprehensive income (loss) and cash flows for the periods presented. Interim results for the three and ninesix months ended SeptemberJune 30, 2021 and 20202022 are not necessarily indicative of the results to be expected for the full years.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.
11
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.
References to TPI Composites, Inc, the “Company,” “we,” “us” or “our” in these notes refer to TPI Composites, Inc. and its consolidated subsidiaries.
Accounting Pronouncements
Recently Adopted Accounting Pronouncements
Convertible Instruments
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU is intended to simplify the accounting for certain convertible instruments with characteristics of both liability and equity. This ASU removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. As a result, after the adoption of this guidance, an entity’s convertible debt instrument will be wholly accounted for as debt. This ASU also expands disclosure requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share calculations by requiring the use of the if-converted method.
This ASU is effective for all public business entities (other than smaller reporting companies) for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis. An entity should adopt the guidance at the beginning of its annual fiscal year. We adopted this standard on January 1, 2021 on a modified retrospective basis and it did not have a material effect on our condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
Reference Rate Reform
In March 2020, the FASB issued ASUAccounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This ASU only applies to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. This ASU is effective for all entities beginning on March 12, 2020 and entities may elect to apply the ASU prospectively through December 31, 2022. The FASB later issued ASU 2021-01, Reference Rate
11
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Reform (Topic 848): Scope, to clarify the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. We are currently evaluating the impact this guidance may have on our condensed consolidated financial statements and related disclosures.
Note 2.3. 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.10-K for the year ended December 31, 2021.
The following tables represents the disaggregation of our net sales revenue by product for each of our reportable segments:
|
| Three Months Ended September 30, 2021 |
|
| Three Months Ended June 30, 2022 |
| ||||||||||||||||||||||||||||||||||||||||||
|
| U.S. |
| Asia |
| Mexico |
| EMEA |
| India |
| Total |
|
| U.S. |
|
| Asia |
|
| Mexico |
|
| EMEA |
|
| India |
|
| Total |
| |||||||||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||||||||||||||||||
Wind blade sales |
| $ | 35,154 |
|
| $ | 47,187 |
|
| $ | 191,499 |
|
| $ | 126,705 |
|
| $ | 50,180 |
|
| $ | 450,725 |
|
| $ | 0 |
|
| $ | 56,232 |
|
| $ | 181,273 |
|
| $ | 126,438 |
|
| $ | 50,093 |
|
| $ | 414,036 |
|
Precision molding and |
|
| 0 |
|
|
| 3,869 |
|
|
| 4,514 |
|
|
| 0 |
|
|
| 0 |
|
|
| 8,383 |
|
|
| 0 |
|
|
| 2,607 |
|
|
| 227 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,834 |
|
Transportation sales |
|
| 3,621 |
|
|
| 0 |
|
|
| 3,194 |
|
|
| 0 |
|
|
| 0 |
|
|
| 6,815 |
|
|
| 10,660 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 10,660 |
|
Field service, inspection and |
|
| 9,930 |
|
|
| 812 |
|
|
| 3,015 |
|
|
| 1,277 |
|
|
| 2 |
|
|
| 15,036 |
| ||||||||||||||||||||||||
Other sales |
|
| 8,927 |
|
|
| 813 |
|
|
| 1,125 |
|
|
| 2,739 |
|
|
| 72 |
|
|
| 13,676 |
|
|
| 67 |
|
|
| 214 |
|
|
| 7,470 |
|
|
| 1,895 |
|
|
| 156 |
|
|
| 9,802 |
|
Total net sales |
| $ | 47,702 |
|
| $ | 51,869 |
|
| $ | 200,332 |
|
| $ | 129,444 |
|
| $ | 50,252 |
|
| $ | 479,599 |
|
| $ | 20,657 |
|
| $ | 59,865 |
|
| $ | 191,985 |
|
| $ | 129,610 |
|
| $ | 50,251 |
|
| $ | 452,368 |
|
|
| Three Months Ended June 30, 2021 |
| |||||||||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
| EMEA |
|
| India |
|
| Total |
| ||||||
|
| (in thousands) |
| |||||||||||||||||||||
Wind blade sales |
| $ | 39,427 |
|
| $ | 82,491 |
|
| $ | 131,188 |
|
| $ | 103,201 |
|
| $ | 62,397 |
|
| $ | 418,704 |
|
Precision molding and |
|
| 0 |
|
|
| 7,634 |
|
|
| 5,969 |
|
|
| 0 |
|
|
| 0 |
|
|
| 13,603 |
|
Transportation sales |
|
| 14,915 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 14,915 |
|
Field service, inspection and |
|
| 5,071 |
|
|
| 981 |
|
|
| 962 |
|
|
| 1,272 |
|
|
| 0 |
|
|
| 8,286 |
|
Other sales |
|
| 36 |
|
|
| 0 |
|
|
| 2,363 |
|
|
| 877 |
|
|
| 57 |
|
|
| 3,333 |
|
Total net sales |
| $ | 59,449 |
|
| $ | 91,106 |
|
| $ | 140,482 |
|
| $ | 105,350 |
|
| $ | 62,454 |
|
| $ | 458,841 |
|
|
| Three Months Ended September 30, 2020 |
| |||||||||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
| EMEA |
|
| India |
|
| Total |
| ||||||
|
| (in thousands) |
| |||||||||||||||||||||
Wind blade sales |
| $ | 37,272 |
|
| $ | 158,120 |
|
| $ | 153,575 |
|
| $ | 82,550 |
|
| $ | 18,618 |
|
| $ | 450,135 |
|
Precision molding and |
|
| 0 |
|
|
| 4,451 |
|
|
| 6,090 |
|
|
| 0 |
|
|
| 0 |
|
|
| 10,541 |
|
Transportation sales |
|
| 6,206 |
|
|
| 0 |
|
|
| 801 |
|
|
| 0 |
|
|
| 0 |
|
|
| 7,007 |
|
Other sales |
|
| 3,321 |
|
|
| 887 |
|
|
| 1,097 |
|
|
| 1,090 |
|
|
| 35 |
|
|
| 6,430 |
|
Total net sales |
| $ | 46,799 |
|
| $ | 163,458 |
|
| $ | 161,563 |
|
| $ | 83,640 |
|
| $ | 18,653 |
|
| $ | 474,113 |
|
|
| Nine Months Ended September 30, 2021 |
| |||||||||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
| EMEA |
|
| India |
|
| Total |
| ||||||
|
| (in thousands) |
| |||||||||||||||||||||
Wind blade sales |
| $ | 114,208 |
|
| $ | 202,181 |
|
| $ | 431,129 |
|
| $ | 340,933 |
|
| $ | 160,157 |
|
| $ | 1,248,608 |
|
Precision molding and |
|
| 0 |
|
|
| 15,467 |
|
|
| 15,446 |
|
|
| 0 |
|
|
| 0 |
|
|
| 30,913 |
|
Transportation sales |
|
| 22,272 |
|
|
| 0 |
|
|
| 7,589 |
|
|
| 0 |
|
|
| 0 |
|
|
| 29,861 |
|
Other sales |
|
| 17,269 |
|
|
| 2,255 |
|
|
| 7,797 |
|
|
| 6,227 |
|
|
| 190 |
|
|
| 33,738 |
|
Total net sales |
| $ | 153,749 |
|
| $ | 219,903 |
|
| $ | 461,961 |
|
| $ | 347,160 |
|
| $ | 160,347 |
|
| $ | 1,343,120 |
|
|
| Nine Months Ended September 30, 2020 |
| |||||||||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
| EMEA |
|
| India |
|
| Total |
| ||||||
|
| (in thousands) |
| |||||||||||||||||||||
Wind blade sales |
| $ | 99,514 |
|
| $ | 385,536 |
|
| $ | 346,954 |
|
| $ | 258,193 |
|
| $ | 44,338 |
|
| $ | 1,134,535 |
|
Precision molding and |
|
| 0 |
|
|
| 13,088 |
|
|
| 11,110 |
|
|
| 0 |
|
|
| 0 |
|
|
| 24,198 |
|
Transportation sales |
|
| 27,424 |
|
|
| 0 |
|
|
| 1,374 |
|
|
| 0 |
|
|
| 0 |
|
|
| 28,798 |
|
Other sales |
|
| 9,371 |
|
|
| 1,889 |
|
|
| 3,795 |
|
|
| 1,945 |
|
|
| 35 |
|
|
| 17,035 |
|
Total net sales |
| $ | 136,309 |
|
| $ | 400,513 |
|
| $ | 363,233 |
|
| $ | 260,138 |
|
| $ | 44,373 |
|
| $ | 1,204,566 |
|
For a further discussion regarding our operating segments, see Note 14, Segment Reporting. The geographic regions of Europe, the Middle East and Africa comprises the EMEA segment.
12
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
| Six Months Ended June 30, 2022 |
| |||||||||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
| EMEA |
|
| India |
|
| Total |
| ||||||
|
| (in thousands) |
| |||||||||||||||||||||
Wind blade sales |
| $ | 0 |
|
| $ | 92,631 |
|
| $ | 310,879 |
|
| $ | 273,287 |
|
| $ | 91,820 |
|
| $ | 768,617 |
|
Precision molding and |
|
| 0 |
|
|
| 6,466 |
|
|
| 374 |
|
|
| 0 |
|
|
| 0 |
|
|
| 6,840 |
|
Transportation sales |
|
| 23,517 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 23,517 |
|
Field service, inspection and |
|
| 18,531 |
|
|
| 1,780 |
|
|
| 3,015 |
|
|
| 1,558 |
|
|
| 2 |
|
|
| 24,886 |
|
Other sales |
|
| 166 |
|
|
| 334 |
|
|
| 8,113 |
|
|
| 4,450 |
|
|
| 315 |
|
|
| 13,378 |
|
Total net sales |
| $ | 42,214 |
|
| $ | 101,211 |
|
| $ | 322,381 |
|
| $ | 279,295 |
|
| $ | 92,137 |
|
| $ | 837,238 |
|
|
| Six Months Ended June 30, 2021 |
| |||||||||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
| EMEA |
|
| India |
|
| Total |
| ||||||
|
| (in thousands) |
| |||||||||||||||||||||
Wind blade sales |
| $ | 79,054 |
|
| $ | 154,994 |
|
| $ | 239,630 |
|
| $ | 214,228 |
|
| $ | 109,977 |
|
| $ | 797,883 |
|
Precision molding and |
|
| 0 |
|
|
| 11,598 |
|
|
| 10,932 |
|
|
|
|
|
|
|
|
| 22,530 |
| ||
Transportation sales |
|
| 23,046 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 23,046 |
|
Field service, inspection and |
|
| 8,065 |
|
|
| 1,289 |
|
|
| 962 |
|
|
| 2,285 |
|
|
| 0 |
|
|
| 12,601 |
|
Other sales |
|
| 277 |
|
|
| 153 |
|
|
| 5,710 |
|
|
| 1,203 |
|
|
| 118 |
|
|
| 7,461 |
|
Total net sales |
| $ | 110,442 |
|
| $ | 168,034 |
|
| $ | 257,234 |
|
| $ | 217,716 |
|
| $ | 110,095 |
|
| $ | 863,521 |
|
For a further discussion regarding our operating segments, see Note 16, Segment Reporting. The geographic regions of Europe, the Middle East and Africa comprises the EMEA segment. The geographic region of China comprises the Asia segment.
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. These amounts primarily represent progress payments received as precision molding and assembly systems are being manufactured. 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:
|
| June 30, |
|
| December 31, |
|
|
|
| |||
|
| 2022 |
|
| 2021 |
|
| $ Change |
| |||
|
| (in thousands) |
| |||||||||
Gross contract assets |
| $ | 194,319 |
|
| $ | 196,659 |
|
| $ | (2,340 | ) |
Less: reclassification from contract liabilities |
|
| (752 | ) |
|
| (8,336 | ) |
|
| 7,584 |
|
Contract assets |
| $ | 193,567 |
|
| $ | 188,323 |
|
| $ | 5,244 |
|
|
| June 30, |
|
| December 31, |
|
|
|
| |||
|
| 2022 |
|
| 2021 |
|
| $ Change |
| |||
|
| (in thousands) |
| |||||||||
Gross contract liabilities |
| $ | 2,026 |
|
| $ | 9,610 |
|
| $ | (7,584 | ) |
Less: reclassification to contract assets |
|
| (752 | ) |
|
| (8,336 | ) |
|
| 7,584 |
|
Contract liabilities |
| $ | 1,274 |
|
| $ | 1,274 |
|
| $ | 0 |
|
13
|
| September 30, |
|
| December 31, |
|
|
|
| |||
|
| 2021 |
|
| 2020 |
|
| $ Change |
| |||
|
| (in thousands) |
| |||||||||
Gross contract assets |
| $ | 253,878 |
|
| $ | 223,428 |
|
| $ | 30,450 |
|
Less: reclassification from contract liabilities |
|
| (9,104 | ) |
|
| (6,500 | ) |
|
| (2,604 | ) |
Contract assets |
| $ | 244,774 |
|
| $ | 216,928 |
|
| $ | 27,846 |
|
TPI COMPOSITES, INC. AND SUBSIDIARIES
|
| September 30, |
|
| December 31, |
|
|
|
| |||
|
| 2021 |
|
| 2020 |
|
| $ Change |
| |||
|
| (in thousands) |
| |||||||||
Gross contract liabilities |
| $ | 9,104 |
|
| $ | 7,114 |
|
| $ | 1,990 |
|
Less: reclassification to contract assets |
|
| (9,104 | ) |
|
| (6,500 | ) |
|
| (2,604 | ) |
Contract liabilities |
| $ | 0 |
|
| $ | 614 |
|
| $ | (614 | ) |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Contract assets increased by $27.85.2 million from December 31, 20202021 to SeptemberJune 30, 20212022 due to an increase in customer specific material purchases and incremental unbilled production during the ninesix months ended SeptemberJune 30, 2021. Contracts2022. Contract liabilities, decreased by $0.6 millionnet of the amounts reclassed to contract assets, remained consistent from December 31, 20202021 to SeptemberJune 30, 2021 primarily due to the revenue earned related to precision molding and assembly systems and wind blades being produced exceeding the amounts billed to customers during the nine months ended September 30, 2021.2022.
For the three and ninesix months ended SeptemberJune 30, 2021,2022, we recognized $0.51.3 million and $0.6 million, respectively, of revenue related to precision molding and assembly systems and wind blades, which was included in the corresponding contract liability balance at the beginning of the period.
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.
13
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of SeptemberJune 30, 2021,2022, the aggregate amount of the transaction price allocated to the remaining performance obligations to be satisfied in future periods was approximately $3.12.2 billion. We estimate that we will recognize the remaining performance obligations as revenue as follows:
|
| $ |
|
| % of Total |
|
| ||
|
| (in thousands) |
|
|
|
|
| ||
Year Ending December 31, |
|
|
|
|
|
|
| ||
Remainder of 2021 |
| $ | 418,708 |
|
|
| 13.4 |
| % |
2022 |
|
| 1,632,634 |
|
|
| 52.1 |
|
|
2023 |
|
| 898,126 |
|
|
| 28.6 |
|
|
2024 |
|
| 186,034 |
|
|
| 5.9 |
|
|
Total remaining performance obligations |
| $ | 3,135,502 |
|
|
| 100.0 |
| % |
|
| $ |
|
| % of Total |
| ||
|
| (in thousands) |
| |||||
Year Ending December 31, |
|
|
|
|
|
| ||
Remainder of 2022 |
| $ | 813,599 |
|
|
| 36.3 | % |
2023 |
|
| 1,213,634 |
|
|
| 54.2 |
|
2024 |
|
| 212,830 |
|
|
| 9.5 |
|
Total remaining performance obligations |
| $ | 2,240,063 |
|
|
| 100 | % |
For the three and ninesix months ended SeptemberJune 30, 2021,2022, net revenue recognized from our performance obligations satisfied in previous periods decreased by $7.34.0 million and $19.810.6 million, respectively, as compared to increasesdecreases of $14.84.0 million and $15.412.5 million, respectively, in the same periods in 2020.comparative prior year periods. The current year decreases primarily relatesrelate to changes in certain of our estimated total contract values and related direct costs to complete the performance obligations.
Note 3.4. 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 13,15, Concentration of Customers.
We may be required to reinstate temporary production suspensions or volume reductions at our manufacturing facilities to the extent there are new resurgences of COVID-19 cases in the regions where we operate or there is an outbreak of positive COVID-19 cases in any of our manufacturing facilities. For example, during the three months ended September 30, 2021 our manufacturing facility in Yangzhou, China was shut down for approximately three weeks due to a small outbreak
The after-effects of positive COVID-19 cases in Yangzhou City. In addition, our global supply chain has been adversely affected by the COVID-19 pandemic, during 2021the current geopolitical situation, and mayeconomic environment, including with respect to inflation, continue to be adversely affected if the COVID-19 pandemic persists.
During 2021, there have beenevolve and affect supply chain performance and underlying assumptions in various ways – specifically with volatility in commodity, energy, and logistics costs. There were both significant price increases and supply constraints during the three and six months ended June 30, 2022, as compared to the prior year comparative periods with respect to resin, fiberglass, and carbon fiber, which are key raw materials that we use to manufacture our products, as well as increases in logistics costs to obtain raw materials. We expect that the pricefiberglass, carbon fiber and related product supply will remain constrained. Production of resinfiberglass and carbon fiber will remain at elevated levels for the remainderproducts is very energy intensive and although we are able to pass on a majority of 2021. Approximately 55% of the resin and resin systems we use are purchased under contracts either controlled or borne by 2 ofcost increases to our customers, and therefore these customers receive/bear 100%rising energy costs could continue to adversely impact cost of any decrease or increase in resin prices. With respect to our other customer supply agreements, our customers typically receive/bear 70% of any raw material price decreases or increases.materials. If the supply of petroleum-based resin feedstocks and carbon fiber continue to be constrained and the prices for these raw materials remain elevated for an extended period of time, such shortagesconstraints and elevated price levels could impact our ability to meet our customers’ forecasted demand for our products for the remainder of 2021 and have a further material adverse impact on our results of operations foroperations.
Although we believe that the remainderonshore wind market will continue to grow over the long term, the expiration of 2021.the United States Production Tax Credit (PTC) at the end of 2021 and the lack of new policy or legislation has created uncertainty in the near term. We are monitoring legislative and regulatory policy proposals to extend or expand tax credits and other programs in the United States to promote wind energy.
14
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We maintain our U.S.United States (U.S.) cash in bank deposit and money market 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 $250,000 during 20212022 and 2020.2021. U.S. money market accounts are not guaranteed by the FDIC. At SeptemberJune 30, 20212022 and December 31, 2020,2021, we had $70.595.2 million and $68.9165.4 million, respectively, of cash in bank deposit and money market accounts in U.S. banks, which waswere in excess of FDIC limits. We have not experienced losses in any such accounts.
We also maintain cash in bank deposit accounts outside the U.S. with no insurance. At SeptemberJune 30, 2021,2022, this included $20.712.5 million in China, $17.939.3 million in Turkey, $7.34.9 million in India, $1.92.4 million in Mexico and $0.7 million in other countries. As of December 31, 2020,2021, this included $47.425.9 million in China, $6.042.6 million in Turkey, $5.05.7 million in India, $2.1 million in Mexico and $0.5 million in other countries. We have not experienced losses in these accounts. In addition, at SeptemberJune 30, 20212022 and December 31, 2020,2021, we had short-term deposits in interest bearing accounts in Chinathe U.S. of $0.28.7 million and $0.310.1 million, respectively, which are reported as restricted cash in our condensed consolidated balance sheets.
14
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Certain of our debt agreements are either tied to LIBOR or the Euro Interbank Offered Rate (EURIBOR) and certain of them have associated interest rate hedges. Due to the relatively low LIBOR and EURIBOR rates in effect as of September 30, 2021, a 10% change in the LIBOR or EURIBOR rate would not have had a material impact on our future earnings, fair values or cash flows.
Note 4.5. Accrued Warranty
The warranty accrual activity for the periods noted consisted of the following:
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||
|
| September 30, |
| September 30, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
| 2021 |
| ||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||
Warranty accrual at beginning of period |
| $ | 47,462 |
|
| $ | 56,772 |
|
| $ | 50,852 |
| $ | 47,639 |
|
| $ | 38,943 |
|
| $ | 45,956 |
|
| $ | 42,020 |
| $ | 50,852 |
|
Accrual during the period |
|
| 5,285 |
|
|
| 5,963 |
|
|
| 15,532 |
| 14,337 |
|
|
| 3,626 |
|
|
| 5,400 |
|
|
| 6,692 |
| 10,247 |
| ||
Cost of warranty services provided during the period |
|
| (9,826 | ) |
|
| (10,895 | ) |
|
| (21,178 | ) |
| (19,377 | ) |
|
| (4,085 | ) |
|
| (3,781 | ) |
|
| (12,399 | ) |
| (11,352 | ) |
Changes in estimate for pre-existing warranties, |
|
| (442 | ) |
|
| 1,756 |
|
|
| (2,727 | ) |
| 10,997 |
| |||||||||||||||
Changes in estimate for pre-existing warranties, |
|
| (2,906 | ) |
|
| (113 | ) |
|
| (735 | ) |
| (2,285 | ) | |||||||||||||||
Warranty accrual at end of period |
| $ | 42,479 |
|
| $ | 53,596 |
|
| $ | 42,479 |
| $ | 53,596 |
|
| $ | 35,578 |
|
| $ | 47,462 |
|
| $ | 35,578 |
| $ | 47,462 |
|
Note 5.6. Long-Term Debt, Net of Current Maturities
Long-term debt, net of current maturities, consisted of the following:
|
| September 30, |
| December 31, |
|
| June 30, |
| December 31, |
| ||||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Senior revolving loan—U.S. |
| $ | 181,154 |
|
| $ | 171,154 |
| ||||||||
Unsecured financing—EMEA |
|
| 52,683 |
|
|
| 30,040 |
|
| $ | 41,286 |
|
| $ | 48,444 |
|
Equipment financing—EMEA |
|
| 1,027 |
|
|
| 4,335 |
| ||||||||
Secured and unsecured working capital—India |
|
| 10,334 |
|
|
| 0 |
| ||||||||
Secured and unsecured working capital loans—India |
|
| 10,285 |
|
|
| 10,269 |
| ||||||||
Unsecured term loan—India |
|
| 8,109 |
|
|
| 0 |
|
|
| 6,214 |
|
|
| 8,109 |
|
Equipment finance lease—Mexico |
|
| 6,927 |
|
|
| 8,038 |
|
|
| 3,557 |
|
|
| 5,821 |
|
Equipment finance lease—EMEA |
|
| 2,459 |
|
|
| 4,119 |
|
|
| 909 |
|
|
| 1,884 |
|
Other equipment finance leases |
|
| 145 |
|
|
| 232 |
|
|
| 55 |
|
|
| 119 |
|
Total debt—principal |
|
| 262,838 |
|
|
| 217,918 |
|
|
| 62,306 |
|
|
| 74,646 |
|
Less: Debt issuance costs |
|
| (709 | ) |
|
| (1,051 | ) | ||||||||
Total debt, net of debt issuance costs |
|
| 262,129 |
|
|
| 216,867 |
| ||||||||
Less: Current maturities of long-term debt |
|
| (251,563 | ) |
|
| (32,551 | ) |
|
| (60,618 | ) |
|
| (66,438 | ) |
Long-term debt, net of debt issuance costs and |
| $ | 10,566 |
|
| $ | 184,316 |
| ||||||||
Long-term debt, net of current maturities |
| $ | 1,688 |
|
| $ | 8,208 |
|
As of September 30, 2021, we were not in compliance with our Total Net Leverage Ratio financial covenant (as defined in our Credit Agreement) and as a result the lender would have the right to request immediate payment of the senior revolving loan. Our liquidity and capital resources were adversely affected by certain events that occurred during the three months ended September 30, 2021. We experienced significant production delays that occurred at the Matamoros, Mexico manufacturing facility that we took over from Nordex in July 2021, as well as significant production delays in one of our Juarez, Mexico manufacturing facilities in connection with the ongoing transition to an innovative new blade for one of our customers. Although we expect that production will be stabilized in both of these manufacturing facilities by the end of the year, we expect that these transitions will continue to have an adverse impact on our liquidity for the remainder of the year. We also expect decreased demand for our wind blades from our customers during the remainder of 2021 and 2022. We believe this decrease in demand is due to the continued global renewable energy regulatory and policy uncertainty and raw material cost increases and constraints. We believe this decreased demand will also adversely impact our profitability and liquidity for the remainder of 2021 and 2022. Absent any other action or failure to close on item (i) discussed below, we will require additional liquidity to continue operations over the next 12 months.
In response to these conditions, we entered into (i) a $350 million Series A Preferred Stock Purchase Agreement and (ii) executed a limited 30-day credit agreement waiver through December 8, 2021. Per the terms of the Series A Preferred Stock Purchase
15
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Agreement, a portion of the funds raised through the Series A Preferred Stock Purchase Agreement will be used to repay in full amounts outstanding under the Credit Agreement. We also may elect at our option to require the purchaser to purchase an additional $50.0 million of Series A Preferred Stock upon the same terms and conditions as the initial issuance of the Series A Preferred Stock during the two-year period following the closing date. Accordingly, we have reclassified the balance outstanding under our senior revolving loan as a current liability as of September 30, 2021. We believe our plans are probable of occurring and sufficient to support ongoing operations for the foreseeable future. See Note 15, Subsequent Events, for a further discussion of the Series A Preferred Stock Purchase Agreement and the limited waiver.
Note 6.7. Share-Based Compensation Plans
During the ninesix months ended SeptemberJune 30, 2021,2022, we issued to certain employees and non-employee directors an aggregate of 168,993867,131 timed-based restricted stock units (RSUs), 58,39637,065 performance-based restricted stock units (PSUs) that vest upon achievement of a cumulative, three-year Adjusted EBITDA targetannual, adjusted Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) targets measured from January 1, 20212022 through December 31, 2023, and2024, 79,784111,193 PSUs that vest upon achievement of certain stock price hurdles for the period of the grant date through December 31, 2023. All2024, and 49,781 PSUs that vest upon achievement of certain strategic targets measured from January 12, 2022 through January 12, 2032. 167,507 of the time-based RSUs vest on the third anniversary date of the grant date.date, 413,467 of the time-based RSUs vest 50% on the first and second anniversary of the grant date, respectively, 210,053 of the time-based RSUs vest 25% on the first, second, third and fourth anniversary of the grant date, respectively, and 76,104 of the time-based RSUs vest 100% on the first
15
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
anniversary of the grant. Each of the time-based and performance-based RSU awards are subject to the recipient’s continued service with us, the terms and conditions of our stock option and incentive plan and the applicable award agreement.
In addition, during the six months ended June 30, 2022, we issued 45,510 stock options to certain employees.
The share-based compensation expense recognized in the condensed consolidated statements of operations was as follows:
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| June 30, |
|
| June 30, |
| ||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
Cost of goods sold |
| $ | 678 |
|
| $ | 479 |
|
| $ | 2,010 |
|
| $ | 1,115 |
|
| $ | 965 |
|
| $ | 1,129 |
|
| $ | 1,854 |
|
| $ | 1,332 |
|
General and administrative expenses |
|
| 1,265 |
|
|
| 2,152 |
|
|
| 5,257 |
|
|
| 6,832 |
|
|
| 2,783 |
|
|
| 1,796 |
|
|
| 5,203 |
|
|
| 3,992 |
|
Total share-based compensation expense |
| $ | 1,943 |
|
| $ | 2,631 |
|
| $ | 7,267 |
|
| $ | 7,947 |
|
| $ | 3,748 |
|
| $ | 2,925 |
|
| $ | 7,057 |
|
| $ | 5,324 |
|
The share-based compensation expense recognized by award type was as follows:
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| June 30, |
|
| June 30, |
| ||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
RSUs |
| $ | 1,506 |
|
| $ | 1,262 |
|
| $ | 4,533 |
|
| $ | 3,399 |
|
| $ | 2,911 |
|
| $ | 1,772 |
|
| $ | 5,730 |
|
| $ | 3,027 |
|
Stock options |
|
| 466 |
|
|
| 700 |
|
|
| 1,657 |
|
|
| 2,952 |
|
|
| 165 |
|
|
| 573 |
|
|
| 329 |
|
|
| 1,191 |
|
PSUs |
|
| (29 | ) |
|
| 669 |
|
|
| 1,077 |
|
|
| 1,596 |
|
|
| 672 |
|
|
| 580 |
|
|
| 998 |
|
|
| 1,106 |
|
Total share-based compensation expense |
| $ | 1,943 |
|
| $ | 2,631 |
|
| $ | 7,267 |
|
| $ | 7,947 |
|
| $ | 3,748 |
|
| $ | 2,925 |
|
| $ | 7,057 |
|
| $ | 5,324 |
|
During the three months ended September 30, 2021, we derived a $0.7 million benefit related to the reduction of the probability to zero of certain PSUs that vest upon achievement of a cumulative, three-year Adjusted EBITDA target.
Note 7.8. 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 one and 15 years, some of which may include options to extend the leases up to five years.
The components of lease cost were as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (in thousands) |
| |||||||||||||
Total operating lease cost |
| $ | 10,596 |
|
| $ | 9,645 |
|
| $ | 21,812 |
|
| $ | 19,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Finance lease cost |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization of assets under finance leases |
| $ | 869 |
|
| $ | 906 |
|
| $ | 1,906 |
|
| $ | 1,806 |
|
Interest on finance leases |
|
| 82 |
|
|
| 169 |
|
|
| 192 |
|
|
| 358 |
|
Total finance lease cost |
| $ | 951 |
|
| $ | 1,075 |
|
| $ | 2,098 |
|
| $ | 2,164 |
|
16
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The components of lease cost were as follows:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
| (in thousands) |
| |||||||||||||
Total operating lease cost |
| $ | 9,768 |
|
| $ | 9,546 |
|
| $ | 29,129 |
|
| $ | 27,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Finance lease cost |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization of assets under finance leases |
| $ | 870 |
|
| $ | 1,529 |
|
| $ | 2,676 |
|
| $ | 4,489 |
|
Interest on finance leases |
|
| 144 |
|
|
| 240 |
|
|
| 502 |
|
|
| 775 |
|
Total finance lease cost |
| $ | 1,014 |
|
| $ | 1,769 |
|
| $ | 3,178 |
|
| $ | 5,264 |
|
Total lease assets and liabilities were as follows:
|
| September 30, |
|
| December 31, |
|
| June 30, |
|
| December 31, |
| ||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Operating Leases |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating lease right of use assets |
| $ | 146,794 |
|
| $ | 158,827 |
|
| $ | 154,629 |
|
| $ | 137,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current operating lease liabilities |
| $ | 22,939 |
|
| $ | 26,099 |
|
| $ | 22,066 |
|
| $ | 22,681 |
|
Noncurrent operating lease liabilities |
|
| 149,742 |
|
|
| 155,925 |
|
|
| 141,642 |
|
|
| 146,479 |
|
Total operating lease liabilities |
| $ | 172,681 |
|
| $ | 182,024 |
|
| $ | 163,708 |
|
| $ | 169,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Finance Leases |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Property, plant and equipment, gross |
| $ | 26,958 |
|
| $ | 28,462 |
|
| $ | 36,106 |
|
| $ | 26,405 |
|
Less: accumulated depreciation |
|
| (14,065 | ) |
|
| (12,461 | ) |
|
| (21,537 | ) |
|
| (13,782 | ) |
Total property, plant and equipment, net |
| $ | 12,893 |
|
| $ | 16,001 |
|
| $ | 14,569 |
|
| $ | 12,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current maturities of long-term debt |
| $ | 6,296 |
|
| $ | 6,018 |
|
| $ | 2,833 |
|
| $ | 5,435 |
|
Long-term debt, net of debt issuance costs and current maturities |
|
| 3,235 |
|
|
| 6,371 |
|
|
| 1,688 |
|
|
| 2,389 |
|
Total finance lease liabilities |
| $ | 9,531 |
|
| $ | 12,389 |
|
| $ | 4,521 |
|
| $ | 7,824 |
|
Future minimum lease payments under noncancelable leases as of SeptemberJune 30, 20212022 were as follows:
|
| Operating |
|
| Finance |
|
| Operating |
|
| Finance |
| ||||
|
| Leases |
| Leases |
|
| Leases |
|
| Leases |
| |||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Year Ending December 31, |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Remainder of 2021 |
| $ | 9,576 |
|
| $ | 1,407 |
| ||||||||
2022 |
|
| 34,392 |
|
|
| 6,241 |
| ||||||||
Remainder of 2022 |
| $ | 17,237 |
|
| $ | 2,358 |
| ||||||||
2023 |
|
| 31,995 |
|
|
| 1,353 |
|
|
| 32,392 |
|
|
| 1,325 |
|
2024 |
|
| 27,789 |
|
|
| 710 |
|
|
| 29,594 |
|
|
| 711 |
|
2025 |
|
| 27,199 |
|
|
| 379 |
|
|
| 29,140 |
|
|
| 379 |
|
2026 |
|
| 28,176 |
|
|
| 7 |
| ||||||||
Thereafter |
|
| 101,634 |
|
|
| 6 |
|
|
| 80,835 |
|
|
| 0 |
|
Total future minimum lease payments |
|
| 232,585 |
|
|
| 10,096 |
|
|
| 217,374 |
|
|
| 4,780 |
|
Less: interest |
|
| (59,904 | ) |
|
| (565 | ) |
|
| (53,666 | ) |
|
| (259 | ) |
Total lease liabilities |
| $ | 172,681 |
|
| $ | 9,531 |
|
| $ | 163,708 |
|
| $ | 4,521 |
|
Supplemental cash flow information related to leases was as follows:
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
| (in thousands) |
| |||||
Cash paid for amounts included in the measurement of lease |
|
|
|
|
|
| ||
Operating cash flows from operating leases |
| $ | 20,169 |
|
| $ | 18,297 |
|
Operating cash flows from finance leases |
|
| 192 |
|
|
| 358 |
|
Financing cash flows from finance leases |
|
| 2,772 |
|
|
| 2,803 |
|
17
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Supplemental cash flow information related to leases was as follows:
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
| (in thousands) |
| |||||
Cash paid for amounts included in the measurement of lease |
|
|
|
|
|
| ||
Operating cash flows from operating leases |
| $ | 27,116 |
|
| $ | 22,308 |
|
Operating cash flows from finance leases |
|
| 502 |
|
|
| 775 |
|
Financing cash flows from finance leases |
|
| 4,249 |
|
|
| 4,592 |
|
Other information related to leases was as follows:
|
| September 30, |
|
| December 31, |
|
| June 30, |
|
| December 31, |
| ||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Weighted-Average Remaining Lease Term (In Years): |
|
|
|
|
|
|
|
|
|
| ||||||
Operating leases |
|
| 7.1 |
|
|
| 7.7 |
|
|
| 6.8 |
|
|
| 7.0 |
|
Finance leases |
|
| 2.0 |
|
|
| 2.2 |
|
|
| 1.8 |
|
|
| 1.9 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Weighted-Average Discount Rate: |
|
|
|
|
|
|
|
|
|
| ||||||
Operating leases |
|
| 8.0 | % |
|
| 7.9 | % |
|
| 8.1 | % |
|
| 8.0 | % |
Finance leases |
|
| 5.9 | % |
|
| 6.4 | % |
|
| 5.5 | % |
|
| 5.8 | % |
As of SeptemberJune 30, 2021,2022, there were 0 material additional leases related to our manufacturing facilities, warehouses, offices, automobiles or our machinery and equipment which have not yet commenced.
Note 8.9. Financial Instruments
Interest Rate Swap
We use interest rate swap contracts to mitigate our exposure to interest rate fluctuations associated with our U.S. senior revolving credit agreement (the Credit Agreement). We do not use such swap contracts for speculative or trading purposes.
As of September 30, 2021, 0 interest rate swaps originally designated for hedge accounting were de-designated or terminated. No ineffectiveness on our interest rate swaps was recognized as of September 30, 2021, and none is anticipated over the remaining term of the agreement.
Foreign Exchange Forward Contracts
We use foreign exchange forward contracts to mitigate our exposure to fluctuations in exchange rates between the functional currencies of our subsidiaries and the other currencies in which they transact. We do not use such forward contracts for speculative or trading purposes.
Mexican Peso
All of our remaining outstanding foreign exchange forward contracts (excluding those with call options) expired during the three months ended March 31, 2021. As of December 31, 2020, the notional values associated with our foreign exchange forward contracts qualifying as cash flow hedges were approximately 0.3 billion Mexican Pesos (approximately $14.0 million).
With regards to our foreign exchange call option contracts, for the three and ninesix months ended SeptemberJune 30, 2021,2022, $0.80.3 million and $2.20.9 million, respectively, of premium amortization was recorded through cost of sales within our condensed consolidated statements of operations.operations, as compared to $0.7 million and $1.4 million, respectively, in the comparative prior year periods. The net income (loss) recognized in accumulated other comprehensive loss in our condensed consolidated statements of changes in stockholders’ equity for our foreign exchange call option contracts is expected to be recognized in cost of sales in our condensed consolidated statements of operations during the next sixnine months.
18
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of SeptemberJune 30, 20212022 and December 31, 2020,2021, the notional values associated with our foreign exchange call option contracts qualifying as cash flow hedges were approximately 1.00.7 billion Mexican Pesos (approximately $48.531.9 million) and approximately 0.4 billion Mexican Pesos (approximately $17.320.2 million), respectively.
Chinese Renminbi
With regards toAll of our remaining outstanding foreign exchange forward contracts, for which hedge accounting does not apply, forexpired during 2022. For the three and ninesix months ended SeptemberJune 30, 2021,2022, $0.60.0 million and $1.20.1 million, respectively, in gains were recorded through foreign currency income (loss) within our condensed consolidated statements of operations.operations, as compared to $0.5 million and $0.6 million, respectively, in the comparative prior year periods.
India Rupee
With regards to our foreign exchange forward contracts and our foreign exchange call option contracts, for which hedge accounting does not apply, for the three and ninesix months ended SeptemberJune 30, 2021,2022, $1.30.1 million and $2.50.2 million, respectively, in gains were recorded through foreign currency income (loss) within our condensed consolidated statements of operations.operations, as compared to $0.5 million and $1.2 million, respectively, in the comparative prior year periods. Additionally, with regards to our foreign exchange call option contracts, for the three and ninesix months ended SeptemberJune 30, 2021,2022, $0.4 million and $0.71.0 million, respectively, of premium amortization was recorded as losses through foreign currency income (loss) within our condensed consolidated statements of operations.operations, as compared to $0.3 million and $0.3 million, respectively, in the comparative prior year periods.
The fair values and location of our financial instruments in our condensed consolidated balance sheets were as follows:
18
|
| Condensed Consolidated |
| September 30, |
|
| December 31, |
| ||
Financial Instrument |
| Balance Sheet Line Item |
| 2021 |
|
| 2020 |
| ||
|
|
|
| (in thousands) |
| |||||
Foreign exchange forward contracts |
| Other current assets |
| $ | 2,028 |
|
| $ | 5,832 |
|
Foreign exchange forward contracts |
| Accounts payable and accrued |
|
| 1,184 |
|
|
| 2,096 |
|
Interest rate swap |
| Other noncurrent liabilities |
|
| 2,928 |
|
|
| 4,414 |
|
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
| Condensed Consolidated |
| June 30, |
|
| December 31, |
| ||
Financial Instrument |
| Balance Sheet Line Item |
| 2022 |
|
| 2021 |
| ||
|
|
|
| (in thousands) |
| |||||
Foreign exchange forward contracts |
| Other current assets |
| $ | 2,004 |
|
| $ | 1,580 |
|
Foreign exchange forward contracts |
| Accounts payable and accrued |
|
| 0 |
|
|
| 1,052 |
|
The following table presents the pretax amounts reclassified from accumulated other comprehensive loss into our condensed consolidated statements of operations:
Accumulated |
| Condensed Consolidated |
| Three Months Ended |
|
| Nine Months Ended |
|
| Condensed Consolidated |
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||
Other Comprehensive |
| Statement of Operations |
| September 30, |
| September 30, |
|
| Statement of Operations |
| June 30, |
|
| June 30, |
| |||||||||||||||||||||
Loss Component |
| Line Item |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| Line Item |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||||||
Foreign exchange forward |
| Cost of sales |
| $ | 0 |
|
| $ | 1,546 |
|
| $ | (3,037 | ) |
| $ | 4,062 |
|
| Cost of sales |
| $ | (498 | ) |
| $ | (1,035 | ) |
| $ | (1,138 | ) |
| $ | (3,037 | ) |
Note 9.10. Restructuring Charges, Net
The following is a summary of our restructuring charges, net for the periods presented:
|
| Three Months Ended June 30, 2022 |
| ||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
|
| Total |
| ||||
|
| (in thousands) |
| ||||||||||||||
Severance |
| $ | 56 |
|
| $ | 484 |
|
| $ | (811 | ) |
|
| $ | (271 | ) |
Other restructuring costs |
|
| 97 |
|
|
| 184 |
|
|
| 0 |
|
|
|
| 281 |
|
Total restructuring charges, net |
| $ | 153 |
|
| $ | 668 |
|
| $ | (811 | ) |
|
| $ | 10 |
|
|
| Six Months Ended June 30, 2022 |
| ||||||||||||||
|
| U.S. |
|
| Asia |
|
| Mexico |
|
|
| Total |
| ||||
|
| (in thousands) |
| ||||||||||||||
Severance |
| $ | 100 |
|
| $ | 2,037 |
|
| $ | (545 | ) |
|
| $ | 1,592 |
|
Other restructuring costs |
|
| 244 |
|
|
| 567 |
|
|
| 0 |
|
|
|
| 811 |
|
Total restructuring charges, net |
| $ | 344 |
|
| $ | 2,604 |
|
| $ | (545 | ) |
|
| $ | 2,403 |
|
For the three and six months ended June 30, 2021, we incurred $2.2 million and $2.5 million, respectively, in restructuring charges related to our Asia segment.
The following is a summary of our restructuring liability activity for the periods presented:
|
| U.S. |
|
| Asia |
|
| Mexico |
|
|
| Total |
| ||||
|
| (in thousands) |
| ||||||||||||||
Balance at December 31, 2021 |
| $ | 2,638 |
|
| $ | 8,145 |
|
| $ | 2,161 |
|
|
| $ | 12,944 |
|
Restructuring charges, net |
|
| 191 |
|
|
| 1,936 |
|
|
| 266 |
|
|
|
| 2,393 |
|
Payments |
|
| (1,920 | ) |
|
| (4,675 | ) |
|
| (415 | ) |
|
|
| (7,010 | ) |
Balance at March 31, 2022 |
|
| 909 |
|
|
| 5,406 |
|
|
| 2,012 |
|
|
|
| 8,327 |
|
Restructuring charges, net |
|
| 153 |
|
|
| 668 |
|
|
| (811 | ) |
|
|
| 10 |
|
Payments |
|
| (675 | ) |
|
| (3,282 | ) |
|
| (295 | ) |
|
|
| (4,252 | ) |
Balance at June 30, 2022 |
| $ | 387 |
|
| $ | 2,792 |
|
| $ | 906 |
|
|
| $ | 4,085 |
|
Note 11. Income Taxes
For the three and six months ended SeptemberJune 30, 2021, our2022, we reported an income tax provision increased toof $8.26.8 million and $9.7 million, respectively, as compared to a benefitan income tax provision of $32.328.9 million and $21.8 million, respectively, in the comparative prior year period, and for the nine months ended September 30, 2021, our income tax provision increased to $periods. This30.0
million as compared to a provision of $19
1.9TPI COMPOSITES, INC. AND SUBSIDIARIES
million in the comparative prior year period. These income tax increases wereNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
decrease resulted primarily due tofrom the change in the mix of earnings of foreign jurisdictions and U.S. tax on foreign earnings in the current year periods. In addition, thean increase in the nine months ended September 30, 2021 asU.S. valuation allowance and uncertain tax positions compared to the same period in 2020 was due to the recording of a full U.S. valuation allowance and an increase in our uncertain tax positions in the current year period.2021.
No changes in tax law occurred during the ninesix months ended SeptemberJune 30, 2021,2022, which had a material impact on our income tax provision. We do not record a deferred tax liability related to unremitted foreign earnings as we maintain our assertion to indefinitely reinvest our unremitted foreign earnings.
19
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 10.12. Net Income (Loss) Per Common Share
The following table sets forth the computation of basic and diluted net income (loss) per common share:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
| (in thousands, except per share data) |
| |||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
| $ | (30,677 | ) |
| $ | 42,382 |
|
| $ | (72,271 | ) |
| $ | (24,211 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic weighted-average shares outstanding |
|
| 37,052 |
|
|
| 35,546 |
|
|
| 36,846 |
|
|
| 35,354 |
|
Effect of dilutive awards |
|
| 0 |
|
|
| 1,877 |
|
|
| 0 |
|
|
| 0 |
|
Diluted weighted-average shares outstanding |
|
| 37,052 |
|
|
| 37,423 |
|
|
| 36,846 |
|
|
| 35,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic net income (loss) per common share |
| $ | (0.83 | ) |
| $ | 1.19 |
|
| $ | (1.96 | ) |
| $ | (0.68 | ) |
Diluted net income (loss) per common share |
| $ | (0.83 | ) |
| $ | 1.13 |
|
| $ | (1.96 | ) |
| $ | (0.68 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Potentially dilutive shares excluded from the calculation |
|
| 1,312 |
|
|
| 0 |
|
|
| 1,693 |
|
|
| 1,399 |
|
Anti dilutive share-based compensation awards excluded |
|
| 13 |
|
|
| 1 |
|
|
| 0 |
|
|
| 33 |
|
Performance-based restricted stock units excluded from |
|
| 265 |
|
|
| 192 |
|
|
| 265 |
|
|
| 192 |
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (in thousands, except per share data) |
| |||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | (5,510 | ) |
| $ | (39,797 | ) |
| $ | (21,310 | ) |
| $ | (41,594 | ) |
Preferred stock dividends and accretion |
|
| (14,550 | ) |
|
| 0 |
|
|
| (28,682 | ) |
|
| 0 |
|
Net loss attributable to common stockholders |
| $ | (20,060 | ) |
| $ | (39,797 | ) |
| $ | (49,992 | ) |
| $ | (41,594 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic weighted-average shares outstanding |
|
| 41,968 |
|
|
| 36,881 |
|
|
| 41,934 |
|
|
| 36,742 |
|
Effect of dilutive awards |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Diluted weighted-average shares outstanding |
|
| 41,968 |
|
|
| 36,881 |
|
|
| 41,934 |
|
|
| 36,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic net income (loss) per common share |
| $ | (0.48 | ) |
| $ | (1.08 | ) |
| $ | (1.19 | ) |
| $ | (1.13 | ) |
Diluted net income (loss) per common share |
| $ | (0.48 | ) |
| $ | (1.08 | ) |
| $ | (1.19 | ) |
| $ | (1.13 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Potentially dilutive shares excluded from the calculation |
|
| 490 |
|
|
| 1,607 |
|
|
| 477 |
|
|
| 1,864 |
|
Anti-dilutive share-based compensation awards |
|
| 250 |
|
|
| 0 |
|
|
| 339 |
|
|
| 0 |
|
For the six months ended June 30, 2022, the weighted average number of common shares outstanding during the period includes 4,666,667 of outstanding, fully vested warrants that are exercisable for $0.01 per warrant.
20
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 11.13. Stockholders’ Equity
Accumulated Other Comprehensive Loss
The following tables presents the changes in accumulated other comprehensive loss (AOCL) by component:
|
| Nine Months Ended September 30, 2021 |
|
| Six Months Ended June 30, 2022 |
| ||||||||||||||||||||||||||
|
| Foreign |
|
|
|
| Foreign |
|
|
|
|
| Foreign |
|
|
|
| Foreign |
|
|
|
| ||||||||||
|
| currency |
|
|
|
| exchange |
|
|
|
|
| currency |
|
|
|
| exchange |
|
|
|
| ||||||||||
|
| translation |
|
| Interest rate |
| forward |
|
| Total |
|
| translation |
|
| Interest rate |
| forward |
|
| Total |
| ||||||||||
|
| adjustments |
| swap |
| contracts |
| AOCL |
|
| adjustments |
|
| swap |
|
| contracts |
|
| AOCL |
| |||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
Balance at December 31, 2020 |
| $ | (30,111 | ) |
| $ | (3,443 | ) |
| $ | 564 |
|
| $ | (32,990 | ) | ||||||||||||||||
Balance at December 31, 2021 |
| $ | (48,530 | ) |
| $ | 0 |
|
| $ | (5,476 | ) |
| $ | (54,006 | ) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| (5,291 | ) |
|
| 597 |
|
|
| (2,281 | ) |
|
| (6,975 | ) |
|
| 43,369 |
|
|
| 0 |
|
|
| 3,345 |
|
|
| 46,714 |
|
Amounts reclassified from AOCL |
|
| 0 |
|
|
| 0 |
|
|
| (2,002 | ) |
|
| (2,002 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (640 | ) |
|
| (640 | ) |
Net tax effect |
|
| 0 |
|
|
| (139 | ) |
|
| 790 |
|
|
| 651 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Net current period other comprehensive income (loss) |
|
| (5,291 | ) |
|
| 458 |
|
|
| (3,493 | ) |
|
| (8,326 | ) |
|
| 43,369 |
|
|
| 0 |
|
|
| 2,705 |
|
|
| 46,074 |
|
Balance at March 31, 2021 |
|
| (35,402 | ) |
|
| (2,985 | ) |
|
| (2,929 | ) |
|
| (41,316 | ) | ||||||||||||||||
Balance at March 31, 2022 |
|
| (5,161 | ) |
|
| 0 |
|
|
| (2,771 | ) |
|
| (7,932 | ) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| (4 | ) |
|
| 452 |
|
|
| 259 |
|
|
| 707 |
|
|
| (7,346 | ) |
|
| 0 |
|
|
| (1,189 | ) |
|
| (8,535 | ) |
Amounts reclassified from AOCL |
|
| 0 |
|
|
| 0 |
|
|
| (1,035 | ) |
|
| (1,035 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (498 | ) |
|
| (498 | ) |
Net tax effect |
|
| 0 |
|
|
| (105 | ) |
|
| 190 |
|
|
| 85 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Net current period other comprehensive income (loss) |
|
| (4 | ) |
|
| 347 |
|
|
| (586 | ) |
|
| (243 | ) |
|
| (7,346 | ) |
|
| 0 |
|
|
| (1,687 | ) |
|
| (9,033 | ) |
Balance at June 30, 2021 |
|
| (35,406 | ) |
|
| (2,638 | ) |
|
| (3,515 | ) |
|
| (41,559 | ) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| (889 | ) |
|
| 437 |
|
|
| (771 | ) |
|
| (1,223 | ) | ||||||||||||||||
Amounts reclassified from AOCL |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||
Net tax effect |
|
| 0 |
|
|
| 244 |
|
|
| (638 | ) |
|
| (394 | ) | ||||||||||||||||
Net current period other comprehensive income (loss) |
|
| (889 | ) |
|
| 681 |
|
|
| (1,409 | ) |
|
| (1,617 | ) | ||||||||||||||||
Balance at September 30, 2021 |
| $ | (36,295 | ) |
| $ | (1,957 | ) |
| $ | (4,924 | ) |
| $ | (43,176 | ) | ||||||||||||||||
Balance at June 30, 2022 |
| $ | (12,507 | ) |
| $ | 0 |
|
| $ | (4,458 | ) |
| $ | (16,965 | ) |
20
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
| Nine Months Ended September 30, 2020 |
|
| Six Months Ended June 30, 2021 |
| ||||||||||||||||||||||||||
|
| Foreign |
|
|
|
| Foreign |
|
|
|
|
| Foreign |
|
|
|
| Foreign |
|
|
|
| ||||||||||
|
| currency |
|
|
|
| exchange |
|
|
|
|
| currency |
|
|
|
| exchange |
|
|
|
| ||||||||||
|
| translation |
|
| Interest rate |
| forward |
|
| Total |
|
| translation |
|
| Interest rate |
| forward |
|
| Total |
| ||||||||||
|
| adjustments |
| swap |
| contracts |
| AOCL |
|
| adjustments |
|
| swap |
|
| contracts |
|
| AOCL |
| |||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
Balance at December 31, 2019 |
| $ | (22,012 | ) |
| $ | (2,145 | ) |
| $ | 545 |
|
| $ | (23,612 | ) | ||||||||||||||||
Balance at December 31, 2020 |
| $ | (30,111 | ) |
| $ | (3,443 | ) |
| $ | 564 |
|
| $ | (32,990 | ) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| (9,223 | ) |
|
| (2,550 | ) |
|
| (6,936 | ) |
|
| (18,709 | ) |
|
| (5,291 | ) |
|
| 597 |
|
|
| (2,281 | ) |
|
| (6,975 | ) |
Amounts reclassified from AOCL |
|
| 0 |
|
|
| 0 |
|
|
| (222 | ) |
|
| (222 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (2,002 | ) |
|
| (2,002 | ) |
Net tax effect |
|
| 0 |
|
|
| 535 |
|
|
| 1,503 |
|
|
| 2,038 |
|
|
| 0 |
|
|
| (139 | ) |
|
| 790 |
|
|
| 651 |
|
Net current period other comprehensive income (loss) |
|
| (9,223 | ) |
|
| (2,015 | ) |
|
| (5,655 | ) |
|
| (16,893 | ) |
|
| (5,291 | ) |
|
| 458 |
|
|
| (3,493 | ) |
|
| (8,326 | ) |
Balance at March 31, 2020 |
|
| (31,235 | ) |
|
| (4,160 | ) |
|
| (5,110 | ) |
|
| (40,505 | ) | ||||||||||||||||
Balance at March 31, 2021 |
|
| (35,402 | ) |
|
| (2,985 | ) |
|
| (2,929 | ) |
|
| (41,316 | ) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| (2,290 | ) |
|
| 0 |
|
|
| 1,750 |
|
|
| (540 | ) |
|
| (4 | ) |
|
| 452 |
|
|
| 259 |
|
|
| 707 |
|
Amounts reclassified from AOCL |
|
| 0 |
|
|
| 0 |
|
|
| 2,738 |
|
|
| 2,738 |
|
|
| 0 |
|
|
| 0 |
|
|
| (1,035 | ) |
|
| (1,035 | ) |
Net tax effect |
|
| 0 |
|
|
| 0 |
|
|
| (938 | ) |
|
| (938 | ) |
|
| 0 |
|
|
| (105 | ) |
|
| 190 |
|
|
| 85 |
|
Net current period other comprehensive income (loss) |
|
| (2,290 | ) |
|
| 0 |
|
|
| 3,550 |
|
|
| 1,260 |
|
|
| (4 | ) |
|
| 347 |
|
|
| (586 | ) |
|
| (243 | ) |
Balance at June 30, 2020 |
|
| (33,525 | ) |
|
| (4,160 | ) |
|
| (1,560 | ) |
|
| (39,245 | ) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| (1,662 | ) |
|
| 391 |
|
|
| 2,124 |
|
|
| 853 |
| ||||||||||||||||
Amounts reclassified from AOCL |
|
| 0 |
|
|
| 0 |
|
|
| 1,546 |
|
|
| 1,546 |
| ||||||||||||||||
Net tax effect |
|
| 0 |
|
|
| (535 | ) |
|
| (565 | ) |
|
| (1,100 | ) | ||||||||||||||||
Net current period other comprehensive income (loss) |
|
| (1,662 | ) |
|
| (144 | ) |
|
| 3,105 |
|
|
| 1,299 |
| ||||||||||||||||
Balance at September 30, 2020 |
| $ | (35,187 | ) |
| $ | (4,304 | ) |
| $ | 1,545 |
|
| $ | (37,946 | ) | ||||||||||||||||
Balance at June 30, 2021 |
| $ | (35,406 | ) |
| $ | (2,638 | ) |
| $ | (3,515 | ) |
| $ | (41,559 | ) |
Note 12.14. 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 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 German insolvency court. The complaint asserts voidance against us in the aggregate amount of $13.3 million. The alleged voidance claims relate to payments that Senvion made to us for wind blades that we produced prior to Senvion filing for insolvency protection. We filed a response to these alleged voidance claims in August 2021 and wefiled a supplemental response in April 2022. We believe we have meritorious defenses to the alleged voidance claims. Due to the early stagecurrent procedural posture of this claim, we have determined that the ultimate outcome cannot be estimated at this time.
21
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 13.15. Concentration of Customers
Net sales from certain customers (in thousands) in excess of 10 percent of our total consolidated net sales are as follows:
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| September 30, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||||||||||||||||||||||||||||||||||||||||
Customer |
| Net sales |
| % of Total |
| Net sales |
| % of Total |
| Net sales |
| % of Total |
| Net sales |
| % of Total |
|
| Net sales |
|
| % of Total |
|
| Net sales |
|
| % of Total |
|
| Net sales |
|
| % of Total |
|
| Net sales |
|
| % of Total |
| |||||||||||||||||||||||
Vestas |
| $ | 176,107 |
|
|
| 36.7 | % |
| $ | 240,710 |
|
|
| 50.8 | % |
| $ | 554,112 |
|
|
| 41.3 | % |
| $ | 591,548 |
|
|
| 49.1 | % |
| $ | 206,967 |
|
|
| 45.8 | % |
| $ | 208,787 |
|
|
| 45.5 | % |
| $ | 371,933 |
|
|
| 44.4 | % |
| $ | 378,005 |
|
|
| 43.8 | % |
Nordex |
|
| 121,159 |
|
|
| 26.8 | % |
|
| 81,505 |
|
|
| 17.8 | % |
|
| 238,452 |
|
|
| 28.5 |
|
|
| 158,048 |
|
|
| 18.3 |
| ||||||||||||||||||||||||||||||||
GE |
|
| 122,347 |
|
|
| 25.5 | % |
|
| 124,523 |
|
|
| 26.3 | % |
|
| 333,136 |
|
|
| 24.8 | % |
|
| 295,831 |
|
|
| 24.6 | % |
|
| 82,084 |
|
|
| 18.1 | % |
|
| 105,937 |
|
|
| 23.1 | % |
|
| 139,704 |
|
|
| 16.7 |
|
|
| 210,789 |
|
|
| 24.4 |
|
Nordex |
|
| 123,373 |
|
|
| 25.7 | % |
|
| 53,182 |
|
|
| 11.2 | % |
|
| 281,421 |
|
|
| 21.0 | % |
|
| 168,697 |
|
|
| 14.0 | % |
21
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Trade accounts receivable from certain customers in excess of 10 percent of our total consolidated trade accounts receivable are as follows:
|
| September 30, |
| December 31, |
|
| June 30, |
| December 31, |
| ||||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
Customer |
| % of Total |
| % of Total |
|
| % of Total |
|
| % of Total |
| |||||
Nordex |
|
| 43.5 | % |
|
| 40.8 | % |
|
| 53.4 | % |
|
| 61.5 | % |
Vestas |
|
| 27.7 | % |
|
| 35.0 | % |
|
| 18.7 |
|
|
| 10.7 |
|
Enercon |
|
| 10.7 | % |
|
| 8.3 | % |
|
| 12.7 |
|
|
| 14.7 |
|
Note 14.16. Segment Reporting
Our operating segments are defined geographically into 5 geographic operating segments—(1) the United States (U.S.)U.S., (2) Asia, (3) Mexico, (4) EMEA and (5) India. For a detailed discussion of our operating segments, refer to the discussion in Note 19,21, Segment Reporting, to the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K.10-K for the year ended December 31, 2021.
All of ourOur U.S. and India segments operate in U.S. dollars. Our Mexico and Asia segments operate in their local currency except for the Mexico and Asia segments, which both include a U.S. parent company and India and Switzerland, which operatethat operates in the U.S. dollar.
The following tables set forth certain information regarding each ofdollars. Our EMEA segment operates in Euros, effective January 1, 2022. Prior to this, our segments:EMEA segment operated in Turkish Lira.
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
| (in thousands) |
| |||||||||||||
Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. |
| $ | 47,702 |
|
| $ | 46,799 |
|
| $ | 153,749 |
|
| $ | 136,309 |
|
Asia |
|
| 51,869 |
|
|
| 163,458 |
|
|
| 219,903 |
|
|
| 400,513 |
|
Mexico |
|
| 200,332 |
|
|
| 161,563 |
|
|
| 461,961 |
|
|
| 363,233 |
|
EMEA |
|
| 129,444 |
|
|
| 83,640 |
|
|
| 347,160 |
|
|
| 260,138 |
|
India |
|
| 50,252 |
|
|
| 18,653 |
|
|
| 160,347 |
|
|
| 44,373 |
|
Total net sales |
| $ | 479,599 |
|
| $ | 474,113 |
|
| $ | 1,343,120 |
|
| $ | 1,204,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales by geographic location (1): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
United States |
| $ | 47,702 |
|
| $ | 46,799 |
|
| $ | 153,749 |
|
| $ | 136,309 |
|
China |
|
| 51,869 |
|
|
| 163,458 |
|
|
| 219,903 |
|
|
| 400,513 |
|
Mexico |
|
| 200,332 |
|
|
| 161,563 |
|
|
| 461,961 |
|
|
| 363,233 |
|
Turkey |
|
| 129,444 |
|
|
| 83,640 |
|
|
| 347,160 |
|
|
| 260,138 |
|
India |
|
| 50,252 |
|
|
| 18,653 |
|
|
| 160,347 |
|
|
| 44,373 |
|
Total net sales |
| $ | 479,599 |
|
| $ | 474,113 |
|
| $ | 1,343,120 |
|
| $ | 1,204,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. (2) |
| $ | (24,598 | ) |
| $ | (6,360 | ) |
| $ | (36,070 | ) |
| $ | (33,991 | ) |
Asia |
|
| (3,607 | ) |
|
| 25,779 |
|
|
| 7,207 |
|
|
| 49,343 |
|
Mexico |
|
| (3,802 | ) |
|
| 11,986 |
|
|
| (33,082 | ) |
|
| (1,106 | ) |
EMEA |
|
| 9,423 |
|
|
| 1,795 |
|
|
| 29,993 |
|
|
| 3,314 |
|
India |
|
| (1,403 | ) |
|
| (4,195 | ) |
|
| 2,725 |
|
|
| (17,214 | ) |
Total loss from operations |
| $ | (23,987 | ) |
| $ | 29,005 |
|
| $ | (29,227 | ) |
| $ | 346 |
|
22
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables set forth certain information regarding each of our segments:
|
| September 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
| (in thousands) |
| |||||
Property, plant and equipment, net: |
|
|
|
|
|
| ||
U.S. |
| $ | 27,258 |
|
| $ | 31,811 |
|
Asia (China) |
|
| 37,555 |
|
|
| 46,075 |
|
Mexico |
|
| 75,573 |
|
|
| 78,813 |
|
EMEA (Turkey) |
|
| 20,776 |
|
|
| 28,312 |
|
India |
|
| 31,164 |
|
|
| 23,990 |
|
Total property, plant and equipment, net |
| $ | 192,326 |
|
| $ | 209,001 |
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
| (in thousands) |
| |||||||||||||
Net sales by segment: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. |
| $ | 20,657 |
|
| $ | 59,449 |
|
| $ | 42,214 |
|
| $ | 110,442 |
|
Asia |
|
| 59,865 |
|
|
| 91,106 |
|
|
| 101,211 |
|
|
| 168,034 |
|
Mexico |
|
| 191,985 |
|
|
| 140,482 |
|
|
| 322,381 |
|
|
| 257,234 |
|
EMEA |
|
| 129,610 |
|
|
| 105,350 |
|
|
| 279,295 |
|
|
| 217,716 |
|
India |
|
| 50,251 |
|
|
| 62,454 |
|
|
| 92,137 |
|
|
| 110,095 |
|
Total net sales |
| $ | 452,368 |
|
| $ | 458,841 |
|
| $ | 837,238 |
|
| $ | 863,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales by geographic location (1): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. |
| $ | 20,657 |
|
| $ | 59,449 |
|
| $ | 42,214 |
|
| $ | 110,442 |
|
China |
|
| 59,865 |
|
|
| 91,106 |
|
|
| 101,211 |
|
|
| 168,034 |
|
Mexico |
|
| 191,985 |
|
|
| 140,482 |
|
|
| 322,381 |
|
|
| 257,234 |
|
Turkey |
|
| 129,610 |
|
|
| 105,350 |
|
|
| 279,295 |
|
|
| 217,716 |
|
India |
|
| 50,251 |
|
|
| 62,454 |
|
|
| 92,137 |
|
|
| 110,095 |
|
Total net sales |
| $ | 452,368 |
|
| $ | 458,841 |
|
| $ | 837,238 |
|
| $ | 863,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. (2) |
| $ | (16,643 | ) |
| $ | 2,836 |
|
| $ | (23,177 | ) |
| $ | (7,077 | ) |
Asia |
|
| (156 | ) |
|
| 8,105 |
|
|
| (6,265 | ) |
|
| 10,814 |
|
Mexico |
|
| (14,268 | ) |
|
| (27,944 | ) |
|
| (37,972 | ) |
|
| (33,675 | ) |
EMEA |
|
| 20,102 |
|
|
| 10,782 |
|
|
| 43,719 |
|
|
| 20,570 |
|
India |
|
| 2,927 |
|
|
| 4,188 |
|
|
| 2,818 |
|
|
| 4,128 |
|
Total loss from operations |
| $ | (8,038 | ) |
| $ | (2,033 | ) |
| $ | (20,877 | ) |
| $ | (5,240 | ) |
|
| June 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
|
| (in thousands) |
| |||||
Property, plant and equipment, net: |
|
|
|
|
|
| ||
U.S. |
| $ | 23,450 |
|
| $ | 25,522 |
|
Asia (China) |
|
| 22,898 |
|
|
| 26,965 |
|
Mexico |
|
| 63,741 |
|
|
| 71,208 |
|
EMEA (Turkey) |
|
| 25,974 |
|
|
| 14,413 |
|
India |
|
| 31,035 |
|
|
| 31,470 |
|
Total property, plant and equipment, net |
| $ | 167,098 |
|
| $ | 169,578 |
|
(1) Net sales are attributable to countries based on the location where the product is manufactured or the services are performed.
(2) The losses from operations in our U.S. segment includes corporate general and administrative costs of $8.26.6 million and $9.314.5 million for the three and six months ended SeptemberJune 30, 2021 and 2020,2022, respectively, and $23.86.7 million and $25.615.6 million, for the nine months ended September 30, 2021 and 2020, respectively.
Note 15. Subsequent Events
Credit Agreement Limited Waiver
On November 8, 2021 (the Waiver Effective Date), we executed a limited waiver in connection with our Credit Agreement, dated as of April 6, 2018 (as amended, restated, supplemented or otherwise modified from time to time), by and among ourselves, JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the Administrative Agent), and the lenders from time to time party thereto, with respect to our failure to comply with the Total Net Leverage Ratio (as definedrespectively, in the Credit Agreement) financial covenant as of September 30, 2021. Pursuant to the terms of the limited waiver, the lenders have agreed to temporarily waive our compliance with this financial covenant from the Waiver Effective Date through December 8, 2021 (the Waiver Period). We also must maintain domestic U.S. cash of at least $20.0 million and global available liquidity (as defined in the Credit Agreement) of at least $50.0 million as of the close of business on each Friday commencing as of November 5, 2021 through the maturity date of the Credit Agreement. From and after the Waiver Effective Date, we may not allow any of our subsidiaries that are not loan parties to the Credit Agreement to incur any additional indebtedness and we may not make any investment in any of our subsidiaries that are not loan parties to the Credit Agreement in an aggregate amount greater than $5.0 million. We had $68.3 million of domestic U.S cash and $132.9 million of global available liquidity as of October 29, 2021.comparative prior year periods.
Series A Preferred Stock Purchase Agreement
On November 8, 2021, we entered into a Series A Preferred Stock Purchase Agreement (the Purchase Agreement) with Oaktree Power Opportunities Fund V (Delaware) Holdings, L.P., OPPS TPIC Holdings, LLC, and Oaktree Phoenix Investment Fund L.P. (collectively, the Purchasers). Pursuant to the Purchase Agreement, we agreed to issue and sell to the Purchasers an aggregate of 350,000 shares of our newly designated Series A Preferred Stock, par value $0.01 per share (the Series A Preferred Stock), for an aggregate purchase price of $350.0 million, with the Series A Preferred Stock having the powers, designations, preferences, and other rights set forth in the Certificate of Designations (as defined below). The issuance and sale of the Series A Preferred Stock will occur on or after the date upon which customary closing conditions set forth in the Purchase Agreement have been satisfied (the Closing Date), which we expect will occur prior to December 8, 2021. We also may elect at our option to require Oaktree to purchase an additional $50.0 million of Series A Preferred Stock upon the same terms and conditions as the initial issuance of the Series A Preferred Stock during the two-year period following the Closing Date. We intend to use the net proceeds from the issuance and sale of the Series A Preferred Stock on the Closing Date to repay all outstanding indebtedness under our Credit Agreement, which is a condition to closing, and the remainder for general corporate purposes.
Warrant
On the Closing Date, we will also issue the Purchasers a warrant to purchase an aggregate of 4,666,667 shares of our Common Stock, at an exercise price of $0.01 per share (the “Warrant”). The Warrant will have a five-year term and may be exercised at any time
23
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
during that period. The number of shares issuable upon exercise of the Warrant is subject to customary adjustments upon the occurrence of certain events such as stock splits, reclassifications, combinations, dividends, distributions, mergers and other similar events.
Certificate of Designations
The Series A Preferred Stock will have the powers, designations, preferences, and other rights as set forth in a Certificate of Designations of the Series A Preferred Stock that will be filed by us with the Secretary of State of the State of Delaware on or before the Closing Date (the Certificate of Designations).
Voting and Consent Rights
The Series A Preferred Stock will not have any voting or rights to convert such preferred shares into shares of Common Stock (the Common Stock). We must obtain the prior written consent of holders of a majority of the outstanding shares of Series A Preferred Stock for, among other things: (i) amending our organizational documents to the extent such amendment has an adverse effect on the holders of our Series A Preferred Stock, (ii) effecting any change of control, liquidation event or merger or consolidation of us unless the entirety of the applicable Series A Redemption Price (as defined below) has been paid with respect to all issued and outstanding Series A Preferred Stock, (iii) increasing or decreasing the number of authorized shares of Series A Preferred Stock; (iv) making certain material acquisitions or dispositions or entering into joint ventures or similar transactions, (v) incurring indebtedness except for indebtedness incurred under our existing loan facilities and agreements so long as the total amount of such indebtedness does not exceed $100.0 million as of the Closing Date through December 31, 2021 and $80.0 million thereafter, (vi) committing to any capital expenditures to construct or acquire new manufacturing facilities, subject to limited exceptions; and (vii) certain other specified actions.
Dividends
The dividend rate with respect to the Series A Preferred Stock is 11.0% per annum and will compound on a quarterly basis. The dividend rate will increase by 2.0% per annum: (i) on the fifth anniversary date of the Closing Date and on each anniversary thereafter, (ii) to the extent that we fail to pay any dividend that is required to be paid in cash, if we are in material breach of its covenants under the Purchase Agreement, the Certificate of Designations or Investor Rights Agreement, or if we experience a bankruptcy or insolvency event, or if certain other Events of Non-compliance (as defined in the Certificate of Designations) occur; (iv) in the event we fail to maintain a specified fixed charge dividend coverage ratio, and (v) in respect of any Series A Preferred Stock issued as curative equity in accordance with the Investor Rights Agreement (each, an “Incremental Dividend”); provided that in no event shall the dividend rate exceed 20.0%. On or prior to the second anniversary of the Closing Date, we may pay dividends on the Series A Preferred Stock either in cash or “in kind”, through accrual to the liquidation preference of the Series A Preferred Stock or a combination thereof.Following the second anniversary of the Closing Date, dividends shall be payable only in cash.Incremental Dividends must be made in cash.
Ranking and Liquidation Preference
The Series A Preferred Stock ranks senior to the Common Stock with respect to dividend rights and rights upon the voluntary or involuntary liquidation, dissolution or winding up of our affairs (a Liquidation). Upon a Liquidation, each share of our Series A Preferred Stock would be entitled to the applicable Series A Redemption Price. The initial liquidation preference of the Series A Preferred Stock shall be equal to $1,000 plus any dividends that have accrued as the date of determination (the Series A Liquidation Preference).
Redemption Rights and Series A Redemption Price
We will have the right to redeem all or any portion of the Series A Preferred Stock at any time by paying the applicable Series A Redemption Price; provided, however, that no optional redemption will be permitted that would result in less than 10% of the shares of Series A Preferred Stock that are issued on the Closing Date remaining outstanding following such redemption unless all remaining shares of Series A Preferred Stock are redeemed.
24
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Each holder of Series A Preferred Stock will have the option to require us to redeem any portion of the Series A Preferred Stock at any time after the fifth anniversary of the Closing Date or an Event of Noncompliance occurs. We will be required to redeem all of the outstanding shares of Series A Preferred Stock automatically upon the occurrence of a change of control, Liquidation or insolvency event.
The following table sets forth the procedure for calculating the Series A Redemption Price at which the Series A Preferred Stock may be redeemed under the Certificate of Designations:
|
|
|
|
|
|
|
|
The “Make-Whole Amount” means, with respect to any redemption of any share of the Series A Preferred Stock prior to the third anniversary of the Closing Date (the First Optional Call Date) is defined in the Certificate of Designations as an amount equal to the present value (calculated as provided below) as of the redemption date of the sum of (A) the remaining dividends that would accrue on such shares being redeemed from the day immediately following the redemption date to the First Optional Call Date plus (B) 102% of the Liquidation Preference of such shares being redeemed on the redemption date assuming that, for purposes of calculating clauses (A) and (B), such shares were to remain outstanding through the First Optional Call Date, and with the present value of such sum being computed using an annual discount rate (applied quarterly) equal to the rate on U.S. Treasury notes with maturity closest to the applicable redemption date plus 50 basis points.
Minimum Cash Balance
We are also required to maintain a minimum cash balance of $50.0 million, which will be measured on a monthly basis, so long as the Series A Preferred Stock remains outstanding.
Investor Rights Agreement
As a condition to the closing of the transactions contemplated by the Purchase Agreement, In connection with the Purchase Agreement, we and the Purchasers will enter into an Investor Rights Agreement (the Investor Rights Agreement) pursuant to which, among other things, we will grant the Purchasers certain customary registration rights with respect to the shares of Common Stock underlying the Warrants and certain other securities that may be issued to the Purchasers in respect of the Warrant. Pursuant to the Investors Rights Agreement, the Purchasers will be entitled to designate one representative (the Series A Director) to be appointed to our board of directors (the Board) or to appoint one non-voting observer to the Board, in each case so long as 33% of the Series A Preferred Stock issued on the Closing Date remains outstanding.. The Investor Rights Agreement further contains a number of other customary covenants and agreements, including certain standstill provisions, preemptive rights, rights of first refusal with respect to future debt financing transactions, and information rights.
The Investor Rights Agreements provides that the Purchasers will be restricted from transferring the Series A Preferred Stock to parties unaffiliated with the Purchasers without our prior written consent, which consent shall not be unreasonably withheld by us.
25
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 (Form 10-Q). Some of the information contained in this discussion and analysis or set forth elsewhere in this 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 Form 10-Q or in our previously filed Annual Report on Form 10-K for the year ended December 31, 2021, 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 and transportation markets.market. We also provide field service inspection and repair services to our OEM customers and wind farm owners and operators, and supply high strength, lightweight and durable composite products to the transportation market. We are headquartered in Scottsdale, Arizona and operate factories throughout the U.S.United States (U.S)., China, Mexico, Turkey, and India. We operate additional engineering development centers in Denmark and Germany.Germany and a service facility in Spain.
Our business operations are defined geographically into five geographic operating segments—(1) the United States (U.S.), (2) Asia, (3) Mexico, (4) Europe, the Middle East and Africa (EMEA) and (5) India. See Note 14,16, Segment Reporting, to our condensed consolidated financial statements for more details about our operating segments.
KEY TRENDS AND RECENT DEVELOPMENTS AFFECTING OUR BUSINESS
Our results of operations for the three months ended September 30, 2021 were adversely affected by significant production delays that occurred at the Matamoros, Mexico manufacturing facility that we took over from Nordex in July 2021, as well as significant production delays in one of our Juarez, Mexico manufacturing facilities in connection with the ongoing transition to an innovative new blade for one of our customers. We expect that production will be stabilized in both of these manufacturing facilities by the end of the year.
Our results of operations forDuring the three and ninesix months ended SeptemberJune 30, 2021 were adversely impacted by continued supply chain challenges, raw material shortages and increased logistics costs. During 2021,2022, there have been both significant price increases and supply constraints with respectas compared to resin and carbon fiber, which arethe same prior year comparative periods, for key raw materials that we use to manufacture our products, as well as increases in logistics costs to obtain raw materials. The resin price increases and supply constraints are due to a multitude of factors, including the extreme cold weather in Texas in February 2021, fires at resin manufacturing facilities in China and unplanned maintenance outages at resin manufacturing facilities in Europe. Carbon fiber and resin prices have increased primarily due to the cost of raw material inputs and petroleum-based feedstocks as well as increased global demand for carbon fiber across multiple industries. These raw material price and logistics cost increases adversely affected our results of operations by approximately $20 million and $24 million for the three and nine months ended September 30, 2021, respectively. We expect that the price of resin and carbon fiber will remain at elevated levels for the remainder of 20212022 and into 2022.2023. Approximately 55%60% of the resin and resin systems, and approximately 90% of the carbon fiber we use areis purchased under contracts either controlled or borne by two of our customers, and therefore these customers receive/bear 100% of any decrease or increase in resin and/or carbon fiber prices. With respect to our other customer supply agreements, our customers typically receive/bear 70% of any raw material price decreases or increases. After taking into account our contractual share of any price increases for resin and carbon fiber, we estimate that the impact of these raw materials price increases, together with increased logistics costs, will adversely impact our results of operations by approximately $30 million for 2021. If the supply of resin feedstocks and carbon fiber continue to be constrained for an extended period of time, such shortages could impact our ability to meet our customers’ forecasted demand for our products for the remainder of 2021and into 2022 and 2023 and could have a further material adverse impact on our results of operations for the remainder of 20212022 and 2022.2023.
Our manufacturing facility in Yangzhou, China was shut down for approximately three weeks during the three months ended September 30, 2021 due to an outbreak of positive COVID-19 cases in Yangzhou City, which had an adverse impact on our results of operations for the three months ended September 30, 2021. We expect to make up the lost volume from this shut down in the fourth quarter of 2021.
26
Despite this shutdown, the COVID-19 pandemic has not materially adversely affected our manufacturing operations during the nine months ended September 30, 2021. Although all of our manufacturing facilities currently are operating atwithout any COVID-19 impacts or near normal production levels,restrictions, we may be required to reinstate temporary production suspensions or volume reductions at our manufacturing facilities to the extent there are new resurgences of COVID-19 cases in the regions where we operate or there is an outbreak of positive COVID-19 cases in any of our manufacturing facilities. However,While our global supply chain has beenwas adversely affected by the COVID-19 pandemic in 2021, and our global supply chain may continue to be adversely affected ifhas not been materially impacted by the COVID-19 pandemic persists.in the first half of 2022. Our results of operations for 2022 have been adversely impacted by increased raw material and logistics costs arising from a variety of factors, including the current geopolitical climate, rising energy costs, curtailed energy supply in Europe and continued interruptions in logistics with global logistics strikes and labor negotiations in the U.S.. In addition, certain of our customers directly control the purchase ofsource certain key raw materials and components, including resin and carbon. In 2021,carbon fiber. If these customers have had challenges procuring adequate supplies of resin and carbon which has hadfiber, it may have an adverse impact on our production volumes and results of operations.operations and could adversely impact our business in the second half of 2022 if such challenges occur.
We expect decreased demand for our wind blades from our customers during the remainder of 20212022 and 2022.2023. We believe this decrease in demand is due to the continued global renewable energy regulatory and policy uncertainty and the raw material and logistics cost increases mentioned above. The result is an expected adverse impact to our Adjusted EBITDA in 2021 of approximately $33 million. We believe that general optimismuncertainty around potential legislation in the U.S. to extend the Production Tax Credit (PTC) on a long-term basis is causing developers to delay project timelines in anticipation of being able to build projects at higher PTC levels onceif such an extension is implemented. We are, however, encouraged by the expected extensionsproposed Inflation Reduction Act of 2022 and the stability the act could provide in the U.S. market as well as the impact this could have on demand should it ultimately get signed into law.
24
Furthermore, we are encouraged by the long-term prospects of the European wind market after the announcement of the European Commission's REPowerEU plan in place.May 2022.
We are forecasting to incur a total of approximately $45$1.6 million of restructuring and impairment charges in the second half of 2022 associated with our global footprint alignment and consolidation in 2021 and 2022 relating to our China and North America operations, including our planned suspension of production at our Iowa manufacturing facility at the end of 2021. Approximately $30 million of the total is forecasted to be incurred in 2021, with the remainder in 2022. We are forecasting that approximately 15% of the restructuring charges will be non-cash.operations.
We were notEffective January 1, 2022, the functional currency for our operations in compliance with our Total Net Leverage Ratio financial covenant as of September 30, 2021, primarily dueTurkey changed from Turkish Lira to the Mexico production delays and increased raw material costs and constraints described above. On November 8, 2021 (the Waiver Effective Date)Euros. The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 830 (ASC 830), we and the lenders that are parties“Foreign Currency Matters,” requires a change in functional currency to the Credit Agreement executed a limited waiver pursuant to which the lenders agreed to temporarily waive our compliance with this financial covenant from the Waiver Effective Date through December 8, 2021. We also must maintain domestic U.S. cash of at least $20.0 million and global available liquidity of at least $50.0 millionbe reported as of the closedate it is determined there has been a change, and it is generally accepted practice that the change is made at the start of business on each Friday commencing as of November 5, 2021 through the maturitymost recent period that approximates the date of the Credit Agreement. From and after the Waiver Effective Date, we may not allow any of our subsidiaries that are not loan parties to the Credit Agreement to incur any additional indebtedness and we may not make any investment in any of its subsidiaries that are not loan parties to the Credit Agreement in an aggregate amount greater than $5.0 million. We had $68.3 million of domestic U.S cash and $132.9 million of global available liquidity as of October 29, 2021.change.
While the change of the functional currency was based on a factual assessment, the determination of the date of the change required management’s judgement given the change over time in the primary economic and business environment in which we operate.
Given these near-term liquidity challenges,
Based on November 8,the analysis of the Turkish domestic renewable energy demand through 2021 we entered into a Series A Preferred Stock Purchase Agreement (the Purchase Agreement) with Oaktree Power Opportunities Fund V (Delaware) Holdings, L.P., OPPS TPIC Holdings, LLC, and Oaktree Phoenix Investment Fund L.P. (collectively,anticipated future demand, management concluded that Turkish domestic sales will not grow as previously envisioned and most of the Purchasers) pursuantfuture growth will continue to which we agreed to issue and sellbe predominately export sales to the Purchasers 350,000 shares of our newly designated Series A Preferred Stock, par value $0.01 per share,eurozone, which are primarily denominated in Euros. See Footnote 1, Significant Accounting Policies, for an aggregate purchase price of $350.0 million. We expect the closing of this equity financing transaction to occur in the fourth quarter of 2021 and intend to use the net proceeds from the issuance and sale of the Series A Preferred Stock to repay all outstanding indebtedness under our Credit Agreement and the remainder for general corporate purposes. We also may elect at our option to require Oaktree to purchase an additional $50.0 million of Series A Preferred Stock upon the same terms and conditions as the initial issuance of the Series A Preferred Stock during the two-year period following the Closing Date.more details.
See Note 15, Subsequent Events, to our condensed consolidated financial statements for more details on the limited waiver and the Purchase Agreement.
KEY METRICS USED BY MANAGEMENT TO MEASURE 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.
27
10-K for the year ended December 31, 2021.
KEY FINANCIAL MEASURES
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||||
|
| September 30, |
| September 30, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
Net sales |
| $ | 479,599 |
|
| $ | 474,113 |
|
| $ | 1,343,120 |
|
| $ | 1,204,566 |
|
| $ | 452,368 |
|
| $ | 458,841 |
|
| $ | 837,238 |
|
| $ | 863,521 |
|
Net income (loss) |
|
| (30,677 | ) |
|
| 42,382 |
|
|
| (72,271 | ) |
|
| (24,211 | ) | ||||||||||||||||
Net loss |
|
| (5,510 | ) |
|
| (39,797 | ) |
|
| (21,310 | ) |
|
| (41,594 | ) | ||||||||||||||||
EBITDA (1) |
|
| (6,478 | ) |
|
| 27,168 |
|
|
| 3,221 |
|
|
| 21,819 |
|
|
| 13,853 |
|
|
| 4,285 |
|
|
| 13,519 |
|
|
| 9,699 |
|
Adjusted EBITDA (1) |
|
| 179 |
|
|
| 49,131 |
|
|
| 30,635 |
|
|
| 53,722 |
|
|
| 10,288 |
|
|
| 17,361 |
|
|
| 16,405 |
|
|
| 30,456 |
|
Capital expenditures |
|
|
|
|
|
|
|
| 30,138 |
|
|
| 53,428 |
|
|
|
|
|
|
|
|
| 8,010 |
|
|
| 27,059 |
| ||||
Free cash flow (1) |
|
|
|
|
|
|
|
| (58,379 | ) |
|
| (19,563 | ) |
|
|
|
|
|
|
|
| (67,171 | ) |
|
| (30,314 | ) |
|
| September 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
| (in thousands) |
| |||||
Total debt, net of debt issuance costs |
| $ | 262,129 |
|
| $ | 216,867 |
|
Net debt (1) |
|
| (143,833 | ) |
|
| (88,061 | ) |
|
| June 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
|
| (in thousands) |
| |||||
Total debt |
| $ | 62,306 |
|
| $ | 74,646 |
|
Net cash (1) |
|
| 92,714 |
|
|
| 167,519 |
|
25
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 |
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||||
|
| September 30, |
| September 30, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||||||||||
Net income (loss) |
| $ | (30,677 | ) |
| $ | 42,382 |
|
| $ | (72,271 | ) |
| $ | (24,211 | ) | ||||||||||||||||
Net loss attributable to common stockholders |
| $ | (20,060 | ) |
| $ | (39,797 | ) |
| $ | (49,992 | ) |
| $ | (41,594 | ) | ||||||||||||||||
Preferred stock dividends and accretion |
|
| 14,550 |
|
|
| — |
|
|
| 28,682 |
|
|
| — |
| ||||||||||||||||
Net loss |
|
| (5,510 | ) |
|
| (39,797 | ) |
|
| (21,310 | ) |
|
| (41,594 | ) | ||||||||||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Depreciation and amortization |
|
| 13,289 |
|
|
| 14,031 | �� |
|
| 37,399 |
|
|
| 36,675 |
|
|
| 11,696 |
|
|
| 12,501 |
|
|
| 23,449 |
|
|
| 24,110 |
|
Interest expense, net |
|
| 2,662 |
|
|
| 3,093 |
|
|
| 8,057 |
|
|
| 7,409 |
|
|
| 913 |
|
|
| 2,691 |
|
|
| 1,682 |
|
|
| 5,395 |
|
Income tax provision (benefit) |
|
| 8,248 |
|
|
| (32,338 | ) |
|
| 30,036 |
|
|
| 1,946 |
| ||||||||||||||||
Income tax provision |
|
| 6,754 |
|
|
| 28,890 |
|
|
| 9,698 |
|
|
| 21,788 |
| ||||||||||||||||
EBITDA |
|
| (6,478 | ) |
|
| 27,168 |
|
|
| 3,221 |
|
|
| 21,819 |
|
|
| 13,853 |
|
|
| 4,285 |
|
|
| 13,519 |
|
|
| 9,699 |
|
Share-based compensation expense |
|
| 1,943 |
|
|
| 2,631 |
|
|
| 7,267 |
|
|
| 7,947 |
|
|
| 3,748 |
|
|
| 2,925 |
|
|
| 7,057 |
|
|
| 5,324 |
|
Foreign currency loss (income) |
|
| (3,958 | ) |
|
| 17,127 |
|
|
| 6,273 |
|
|
| 18,095 |
|
|
| (9,886 | ) |
|
| 6,504 |
|
|
| (10,096 | ) |
|
| 10,231 |
|
Loss on sale of assets and asset |
|
| 7,250 |
|
|
| 2,160 |
|
|
| 9,998 |
|
|
| 5,518 |
|
|
| 2,563 |
|
|
| 1,451 |
|
|
| 3,522 |
|
|
| 2,748 |
|
Restructuring charges, net |
|
| 1,422 |
|
|
| 45 |
|
|
| 3,876 |
|
|
| 343 |
|
|
| 10 |
|
|
| 2,196 |
|
|
| 2,403 |
|
|
| 2,454 |
|
Adjusted EBITDA |
| $ | 179 |
|
| $ | 49,131 |
|
| $ | 30,635 |
|
| $ | 53,722 |
|
| $ | 10,288 |
|
| $ | 17,361 |
|
| $ | 16,405 |
|
| $ | 30,456 |
|
Free cash flow is reconciled as follows:
|
| Nine Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| September 30, |
|
| June 30, |
| ||||||||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Net cash provided by (used in) operating activities |
| $ | (28,241 | ) |
| $ | 33,865 |
| ||||||||
Net cash used in operating activities |
| $ | (59,161 | ) |
| $ | (3,255 | ) | ||||||||
Less capital expenditures |
|
| (30,138 | ) |
|
| (53,428 | ) |
|
| (8,010 | ) |
|
| (27,059 | ) |
Free cash flow |
| $ | (58,379 | ) |
| $ | (19,563 | ) |
| $ | (67,171 | ) |
| $ | (30,314 | ) |
28
Net debtcash is reconciled as follows:
|
| September 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
| (in thousands) |
| |||||
Cash and cash equivalents |
| $ | 119,005 |
|
| $ | 129,857 |
|
Less total debt, net of debt issuance costs |
|
| (262,129 | ) |
|
| (216,867 | ) |
Less debt issuance costs |
|
| (709 | ) |
|
| (1,051 | ) |
Net debt |
| $ | (143,833 | ) |
| $ | (88,061 | ) |
|
| June 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
|
| (in thousands) |
| |||||
Cash and cash equivalents |
| $ | 155,020 |
|
| $ | 242,165 |
|
Less total debt |
|
| (62,306 | ) |
|
| (74,646 | ) |
Net cash |
| $ | 92,714 |
|
| $ | 167,519 |
|
KEY OPERATING METRICS
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||||||||||||
|
| September 30, |
| September 30, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||||||||
Sets |
|
| 830 |
|
|
| 1,037 |
|
|
| 2,487 |
|
|
| 2,556 |
|
|
| 783 |
|
|
| 843 |
|
|
| 1,385 |
|
|
| 1,657 |
|
Estimated megawatts |
|
| 3,395 |
|
|
| 3,571 |
|
|
| 9,770 |
|
|
| 8,555 |
|
|
| 3,410 |
|
|
| 3,303 |
|
|
| 6,054 |
|
|
| 6,375 |
|
Utilization |
|
| 76 | % |
|
| 93 | % |
|
| 78 | % |
|
| 78 | % |
|
| 84 | % |
|
| 82 | % |
|
| 75 | % |
|
| 80 | % |
Dedicated manufacturing lines |
|
| 54 |
|
|
| 55 |
|
|
| 54 |
|
|
| 55 |
|
|
| 43 |
|
|
| 50 |
|
|
| 43 |
|
|
| 50 |
|
Manufacturing lines installed |
|
| 54 |
|
|
| 54 |
|
|
| 54 |
|
|
| 54 |
|
|
| 43 |
|
|
| 51 |
|
|
| 43 |
|
|
| 52 |
|
26
RESULTS OF OPERATIONS
The following table summarizes our operating results as a percentage of net sales for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 that have been derived from our condensed consolidated statements of operations:
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||||
|
| September 30, |
| September 30, |
|
| June 30, |
|
| June 30, |
| ||||||||||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||||||
Net sales |
|
| 100.0 |
| % |
| 100.0 |
| % |
| 100.0 |
| % |
| 100.0 |
| % |
|
| 100 | % |
|
| 100 | % |
|
| 100 | % |
|
| 100 | % |
Cost of sales |
|
| 98.5 |
|
|
| 89.7 |
|
|
| 96.5 |
|
|
| 94.8 |
|
|
|
| 97.5 |
|
|
| 96.0 |
|
|
| 97.0 |
|
|
| 95.4 |
|
Startup and transition costs |
|
| 3.0 |
|
|
| 1.8 |
|
|
| 2.9 |
|
|
| 2.6 |
|
|
|
| 2.2 |
|
|
| 2.2 |
|
|
| 3.1 |
|
|
| 2.8 |
|
Total cost of goods sold |
|
| 101.5 |
|
|
| 91.5 |
|
|
| 99.4 |
|
|
| 97.4 |
|
|
|
| 99.7 |
|
|
| 98.2 |
|
|
| 100.1 |
|
|
| 98.2 |
|
Gross profit (loss) |
|
| (1.5 | ) |
|
| 8.5 |
|
|
| 0.6 |
|
|
| 2.6 |
|
|
|
| 0.3 |
|
|
| 1.8 |
|
|
| (0.1 | ) |
|
| 1.8 |
|
General and administrative expenses |
|
| 1.7 |
|
|
| 2.0 |
|
|
| 1.8 |
|
|
| 2.1 |
|
|
|
| 1.5 |
|
|
| 1.5 |
|
|
| 1.7 |
|
|
| 1.8 |
|
Loss on sale of assets and asset impairments |
|
| 1.5 |
|
|
| 0.4 |
|
|
| 0.7 |
|
|
| 0.5 |
|
|
|
| 0.6 |
|
|
| 0.3 |
|
|
| 0.4 |
|
|
| 0.3 |
|
Restructuring charges, net |
|
| 0.3 |
|
|
| 0.0 |
|
|
| 0.3 |
|
|
| 0.0 |
|
|
|
| 0.0 |
|
|
| 0.5 |
|
|
| 0.3 |
|
|
| 0.3 |
|
Income (loss) from operations |
|
| (5.0 | ) |
|
| 6.1 |
|
|
| (2.2 | ) |
|
| 0.0 |
|
| ||||||||||||||||
Loss from operations |
|
| (1.8 | ) |
|
| (0.5 | ) |
|
| (2.5 | ) |
|
| (0.6 | ) | |||||||||||||||||
Total other income (expense) |
|
| 0.3 |
|
|
| (4.0 | ) |
|
| (1.0 | ) |
|
| (1.9 | ) |
|
|
| 2.1 |
|
|
| (1.9 | ) |
|
| 1.1 |
|
|
| (1.7 | ) |
Income (loss) before income taxes |
|
| (4.7 | ) |
|
| 2.1 |
|
|
| (3.2 | ) |
|
| (1.9 | ) |
|
|
| 0.3 |
|
|
| (2.4 | ) |
|
| (1.4 | ) |
|
| (2.3 | ) |
Income tax benefit (provision) |
|
| (1.7 | ) |
|
| 6.8 |
|
|
| (2.2 | ) |
|
| (0.1 | ) |
| ||||||||||||||||
Net income (loss) |
|
| (6.4 | ) | % |
| 8.9 |
| % |
| (5.4 | ) | % |
| (2.0 | ) | % | ||||||||||||||||
Income tax provision |
|
| (1.5 | ) |
|
| (6.3 | ) |
|
| (1.2 | ) |
|
| (2.5 | ) | |||||||||||||||||
Net loss |
|
| (1.2 | %) |
|
| (8.7 | %) |
|
| (2.6 | %) |
|
| (4.8 | %) |
Net sales
Consolidated discussion
The following table summarizes our net sales by product/service for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Wind blade sales |
| $ | 450,725 |
|
| $ | 450,135 |
|
| $ | 590 |
|
|
| 0.1 | % |
| $ | 1,248,608 |
|
| $ | 1,134,535 |
|
| $ | 114,073 |
|
|
| 10.1 | % |
| $ | 414,036 |
|
| $ | 418,704 |
|
| $ | (4,668 | ) |
|
| (1.1 | )% |
| $ | 768,617 |
|
| $ | 797,883 |
|
| $ | (29,266 | ) |
|
| (3.7 | )% |
Precision molding and |
|
| 8,383 |
|
|
| 10,541 |
|
|
| (2,158 | ) |
|
| -20.5 | % |
|
| 30,913 |
|
|
| 24,198 |
|
|
| 6,715 |
|
|
| 27.8 | % |
|
| 2,834 |
|
|
| 13,603 |
|
|
| (10,769 | ) |
|
| (79.2 | ) |
|
| 6,840 |
|
|
| 22,530 |
|
|
| (15,690 | ) |
|
| (69.6 | ) |
Transportation sales |
|
| 6,815 |
|
|
| 7,007 |
|
|
| (192 | ) |
|
| -2.7 | % |
|
| 29,861 |
|
|
| 28,798 |
|
|
| 1,063 |
|
|
| 3.7 | % |
|
| 10,660 |
|
|
| 14,915 |
|
|
| (4,255 | ) |
|
| (28.5 | ) |
|
| 23,517 |
|
|
| 23,046 |
|
|
| 471 |
|
|
| 2.0 |
|
Field service, inspection and |
|
| 15,036 |
|
|
| 8,286 |
|
|
| 6,750 |
|
|
| 81.5 |
|
|
| 24,886 |
|
|
| 12,601 |
|
|
| 12,285 |
|
|
| 97.5 |
| ||||||||||||||||||||||||||||||||
Other sales |
|
| 13,676 |
|
|
| 6,430 |
|
|
| 7,246 |
|
|
| 112.7 | % |
|
| 33,738 |
|
|
| 17,035 |
|
|
| 16,703 |
|
|
| 98.1 | % |
|
| 9,802 |
|
|
| 3,333 |
|
|
| 6,469 |
|
|
| 194.1 |
|
|
| 13,378 |
|
|
| 7,461 |
|
|
| 5,917 |
|
|
| 79.3 |
|
Total net sales |
| $ | 479,599 |
|
| $ | 474,113 |
|
| $ | 5,486 |
|
|
| 1.2 | % |
| $ | 1,343,120 |
|
| $ | 1,204,566 |
|
| $ | 138,554 |
|
|
| 11.5 | % |
| $ | 452,368 |
|
| $ | 458,841 |
|
| $ | (6,473 | ) |
|
| (1.4 | )% |
| $ | 837,238 |
|
| $ | 863,521 |
|
| $ | (26,283 | ) |
|
| (3.0 | )% |
29
NetThe decrease in net sales of wind blades during the three and six months ended SeptemberJune 30, 2021,2022, as compared to the same periodperiods in 2020, were relatively flat. Net sales2021, was primarily driven by a 7% and 16% decrease in the number of wind blades during the three months ended September 30, 2021produced, respectively, due to a reduction in manufacturing lines, transitions of existing lines and currency fluctuations, which were positively impactedpartially offset by a higher average sales price due to the mix of wind blade models produced,produced. Net sales from the manufacturing of precision molding and assembly systems decreased during the three and six months ended June 30, 2022, as compared to the same periods in 2021 primarily due to a decrease in volume of molds produced. Additionally, there was an increase in the year over year number of wind blades still in the production process at the end of the period,our field service, inspection and foreign currency fluctuations. Additionally, when comparing our netrepair service sales during the three and six months ended SeptemberJune 30, 2022, as compared to the same periods in 2021, againstdue to an increase in demand for such services. The decrease in transportation sales for the comparablethree months ended June 30, 2022, as compared to the same period in 2021, was primarily due to a cumulative catch-up adjustment in the prior yearcomparative period our current year net sales were negatively impacted by the removal of five contracted manufacturing lines that expired in China at the end of 2020 as well as a further reductionresult of two contracted manufacturing lines in China in 2021, reduced production volumes resulting from certain of our customers’ challenges in procuring adequate supplies of resin and carbon, significant production delays that occurred ata previous contract modification under one of our Juarez, Mexico manufacturing facilities relatedsupply agreements. Transportation sales have remained consistent for the six months ended June 30, 2022, as compared to the same period in 2021. The increase in other sales for the three and six months ended June 30, 2022, as compared to the same periods in 2021, is primarily due to an ongoing transition,increase in volume of ancillary wind-related sales and a temporary shutdown of our Yangzhou manufacturing facility due to a COVID-19 outbreak in Yangzhou City, which was partially offset by the adverse impact that the COVID-19 pandemic had on our net sales in the prior year period. The reasons set forth above were the primary drivers of the 20% decrease in the number of wind blades produced year over year.services. The fluctuating U.S. dollar against the Euro in our operations in Turkey operations and the Chinese Renminbi in our China operations had a favorablean unfavorable impact of 0.3%3.1% and 2.8% on consolidated net sales for the three and six months ended SeptemberJune 30, 2021, as compared to the 2020 period.
The increase in net sales of wind blades during the nine months ended September 30, 2021,2022, respectively, as compared to the same periodperiods in 2020, was primarily driven by a higher average sales price due to the mix of wind blade models produced and foreign currency fluctuations.2021.
Additionally, when comparing our net sales during the nine months ended September 30, 2021, against the comparable prior year period, our current year net sales were negatively impacted by the removal of five contracted manufacturing lines that expired in China at the end of 2020 as well as a further reduction of two contracted manufacturing lines in China in 2021, reduced production volumes resulting from certain of our customers’ challenges in procuring adequate supplies of resin and carbon, and significant production delays that occurred at one of our Juarez, Mexico manufacturing facilities related to an ongoing transition, which was partially offset by the adverse impact that the COVID-19 pandemic had on our net sales in the prior year period. The reasons set forth above, mostly offset by increased production at our India, Turkey and Mexico facilities were the primary drivers of the 3% decrease in the number of wind blades produced year over year. The fluctuating U.S. dollar against the Euro in our Turkey operations and the Chinese Renminbi in our China operations had a favorable impact of 1.2% on consolidated net sales for the nine months ended September 30, 2021, as compared to the 2020 period.27
Segment discussion
The following table summarizes our net sales by our five geographic operating segments for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| ||||||||||||||
|
| September 30, |
|
| Change |
|
| September 30, |
|
| Change |
| ||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ |
|
| % |
|
| 2021 |
|
| 2020 |
|
| $ |
|
| % |
| ||||||||
|
| (in thousands) |
|
|
|
|
| (in thousands) |
|
|
|
| ||||||||||||||||||||
U.S. |
| $ | 47,702 |
|
| $ | 46,799 |
|
| $ | 903 |
|
|
| 1.9 | % |
| $ | 153,749 |
|
| $ | 136,309 |
|
| $ | 17,440 |
|
|
| 12.8 | % |
Asia |
|
| 51,869 |
|
|
| 163,458 |
|
|
| (111,589 | ) |
|
| -68.3 | % |
|
| 219,903 |
|
|
| 400,513 |
|
|
| (180,610 | ) |
|
| -45.1 | % |
Mexico |
|
| 200,332 |
|
|
| 161,563 |
|
|
| 38,769 |
|
|
| 24.0 | % |
|
| 461,961 |
|
|
| 363,233 |
|
|
| 98,728 |
|
|
| 27.2 | % |
EMEA |
|
| 129,444 |
|
|
| 83,640 |
|
|
| 45,804 |
|
|
| 54.8 | % |
|
| 347,160 |
|
|
| 260,138 |
|
|
| 87,022 |
|
|
| 33.5 | % |
India |
|
| 50,252 |
|
|
| 18,653 |
|
|
| 31,599 |
|
|
| 169.4 | % |
|
| 160,347 |
|
|
| 44,373 |
|
|
| 115,974 |
|
| NM |
| |
Total net sales |
| $ | 479,599 |
|
| $ | 474,113 |
|
| $ | 5,486 |
|
|
| 1.2 | % |
| $ | 1,343,120 |
|
| $ | 1,204,566 |
|
| $ | 138,554 |
|
|
| 11.5 | % |
NM - not meaningful
|
| Three Months Ended |
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
|
|
|
| ||||||||||||||
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||
|
| (in thousands) |
|
|
|
|
| (in thousands) |
|
|
|
| ||||||||||||||||||||
U.S. |
| $ | 20,657 |
|
| $ | 59,449 |
|
| $ | (38,792 | ) |
|
| (65.3 | )% |
| $ | 42,214 |
|
| $ | 110,442 |
|
| $ | (68,228 | ) |
|
| (61.8 | )% |
Asia |
|
| 59,865 |
|
|
| 91,106 |
|
|
| (31,241 | ) |
|
| (34.3 | ) |
|
| 101,211 |
|
|
| 168,034 |
|
|
| (66,823 | ) |
|
| (39.8 | ) |
Mexico |
|
| 191,985 |
|
|
| 140,482 |
|
|
| 51,503 |
|
|
| 36.7 |
|
|
| 322,381 |
|
|
| 257,234 |
|
|
| 65,147 |
|
|
| 25.3 |
|
EMEA |
|
| 129,610 |
|
|
| 105,350 |
|
|
| 24,260 |
|
|
| 23.0 |
|
|
| 279,295 |
|
|
| 217,716 |
|
|
| 61,579 |
|
|
| 28.3 |
|
India |
|
| 50,251 |
|
|
| 62,454 |
|
|
| (12,203 | ) |
|
| (19.5 | ) |
|
| 92,137 |
|
|
| 110,095 |
|
|
| (17,958 | ) |
|
| (16.3 | ) |
Total net sales |
| $ | 452,368 |
|
| $ | 458,841 |
|
| $ | (6,473 | ) |
|
| (1.4 | )% |
| $ | 837,238 |
|
| $ | 863,521 |
|
| $ | (26,283 | ) |
|
| (3.0 | )% |
U.S. Segment
The following table summarizes our net sales by product/service for the U.S. segment for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Wind blade sales |
| $ | 35,154 |
|
| $ | 37,272 |
|
| $ | (2,118 | ) |
|
| -5.7 | % |
| $ | 114,208 |
|
| $ | 99,514 |
|
| $ | 14,694 |
|
|
| 14.8 | % |
| $ | — |
|
| $ | 39,427 |
|
| $ | (39,427 | ) |
| NM |
| $ | — |
|
| $ | 79,054 |
|
| $ | (79,054 | ) |
| NM |
| |||
Transportation sales |
|
| 3,621 |
|
|
| 6,206 |
|
|
| (2,585 | ) |
|
| -41.7 | % |
|
| 22,272 |
|
|
| 27,424 |
|
|
| (5,152 | ) |
|
| -18.8 | % |
|
| 10,660 |
|
|
| 14,915 |
|
|
| (4,255 | ) |
|
| (28.5 | ) |
|
| 23,517 |
|
|
| 23,046 |
|
|
| 471 |
|
|
| 2.0 |
|
Field service, inspection and |
|
| 9,930 |
|
|
| 5,071 |
|
|
| 4,859 |
|
|
| 95.8 |
|
|
| 18,531 |
|
|
| 8,065 |
|
|
| 10,466 |
|
|
| 129.8 |
| ||||||||||||||||||||||||||||||||
Other sales |
|
| 8,927 |
|
|
| 3,321 |
|
|
| 5,606 |
|
|
| 168.8 | % |
|
| 17,269 |
|
|
| 9,371 |
|
|
| 7,898 |
|
|
| 84.3 | % |
|
| 67 |
|
|
| 36 |
|
|
| 31 |
|
|
| 86.1 |
|
|
| 166 |
|
|
| 277 |
|
|
| (111 | ) |
|
| (40.1 | ) |
Total net sales |
| $ | 47,702 |
|
| $ | 46,799 |
|
| $ | 903 |
|
|
| 1.9 | % |
| $ | 153,749 |
|
| $ | 136,309 |
|
| $ | 17,440 |
|
|
| 12.8 | % |
| $ | 20,657 |
|
| $ | 59,449 |
|
| $ | (38,792 | ) |
|
| (65.3 | )% |
| $ | 42,214 |
|
| $ | 110,442 |
|
| $ | (68,228 | ) |
|
| (61.8 | )% |
NM - not meaningful
30
The decrease in the U.S. segment’s net sales of wind blades during the three and six months ended SeptemberJune 30, 2022, as compared to the same periods in 2021, was due to the shutdown of production at our Newton, Iowa manufacturing facility at the end of the fourth quarter of 2021. The increase in the U.S. segment's field service, inspection and repair services sales was primarily due to increases in overall volume and demand for such services during the three and six months ended June 30, 2022, as compared to the same periods in 2021. The decrease in transportation sales for the three months ended June 30, 2022, as compared to the same period in 2020,2021, was primarily due to a 9% decreasecumulative catch-up adjustments in the numberprior comparative period as a result of wind blades produced, primarily related to volume reductions in anticipationa previous contract modification under one of our supply agreements. Transportation sales have remained consistent for the suspension of production at our Newton, Iowa facility by the end of 2021. This net sales decrease was partially offset by a higher average sales price of wind blade models produced in the two comparative periods.
The increase in the U.S. segment’s net sales of wind blades during the ninesix months ended SeptemberJune 30, 2021,2022 as compared to the same period in 2020, was primarily due to a 7% increase in the number of wind blades produced, primarily due to the adverse impact of the COVID-19 pandemic in the prior year period, as well as a higher average sales price of wind blade models produced in the two comparative periods.2021.
Asia Segment
The following table summarizes our net sales by product/service for the Asia segment for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
|
|
|
| ||||||||||||||
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||
|
| (in thousands) |
|
|
|
|
| (in thousands) |
|
|
|
| ||||||||||||||||||||
Wind blade sales |
| $ | 56,232 |
|
| $ | 82,491 |
|
| $ | (26,259 | ) |
|
| (31.8 | )% |
| $ | 92,631 |
|
| $ | 154,994 |
|
| $ | (62,363 | ) |
|
| (40.2 | )% |
Precision molding and |
|
| 2,607 |
|
|
| 7,634 |
|
|
| (5,027 | ) |
|
| (65.9 | ) |
|
| 6,466 |
|
|
| 11,598 |
|
|
| (5,132 | ) |
|
| (44.2 | ) |
Field service, inspection and |
|
| 812 |
|
|
| 981 |
|
|
| (169 | ) |
|
| (17.2 | ) |
|
| 1,780 |
|
|
| 1,289 |
|
|
| 491 |
|
|
| 38.1 |
|
Other sales |
|
| 214 |
|
|
| — |
|
|
| 214 |
|
| NM |
|
|
| 334 |
|
|
| 153 |
|
|
| 181 |
|
|
| 118.3 |
| |
Total net sales |
| $ | 59,865 |
|
| $ | 91,106 |
|
| $ | (31,241 | ) |
|
| (34.3 | )% |
| $ | 101,211 |
|
| $ | 168,034 |
|
| $ | (66,823 | ) |
|
| (39.8 | )% |
28
|
| Three Months Ended |
|
|
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
| ||||||||||||||
|
| September 30, |
|
| Change |
|
| September 30, |
|
| Change |
| ||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ |
|
| % |
|
| 2021 |
|
| 2020 |
|
| $ |
|
| % |
| ||||||||
|
| (in thousands) |
|
|
|
|
| (in thousands) |
|
|
|
| ||||||||||||||||||||
Wind blade sales |
| $ | 47,187 |
|
| $ | 158,120 |
|
| $ | (110,933 | ) |
|
| -70.2 | % |
| $ | 202,181 |
|
| $ | 385,536 |
|
| $ | (183,355 | ) |
|
| -47.6 | % |
Precision molding and |
|
| 3,869 |
|
|
| 4,451 |
|
|
| (582 | ) |
|
| -13.1 | % |
|
| 15,467 |
|
|
| 13,088 |
|
|
| 2,379 |
|
|
| 18.2 | % |
Other sales |
|
| 813 |
|
|
| 887 |
|
|
| (74 | ) |
|
| -8.3 | % |
|
| 2,255 |
|
|
| 1,889 |
|
|
| 366 |
|
|
| 19.4 | % |
Total net sales |
| $ | 51,869 |
|
| $ | 163,458 |
|
| $ | (111,589 | ) |
|
| -68.3 | % |
| $ | 219,903 |
|
| $ | 400,513 |
|
| $ | (180,610 | ) |
|
| -45.1 | % |
The decrease in the Asia segment’s net sales of wind blades during the three and six months ended SeptemberJune 30, 2021,2022, as compared to the same periodperiods in 2020,2021, was primarily due to a 71%43% and 56% decrease in the number of wind blades produced, primarilyrespectively, due to the removal of five contracted manufacturing lines that expired in China at the end of 2020, a further reduction of contracted manufacturing lines in 2021China and the startup of additional lines in China, and a temporary shutdown of our Yangzhou manufacturing facility due to a COVID-19 outbreak in Yangzhou City. Additionally, for the three months ended September 30, 2021, there was a decrease in the period over period number of wind blades still in the production process at the end of the period.2022. The net sales decrease during the three and six months ended SeptemberJune 30, 20212022 was partially offset by an increase in the average sales price of wind blades due to a change in the mix of wind blades produced in the two comparative periods.
The decrease in the Asia segment’s net sales of wind blades during the nine months ended September 30, 2021, as compared to the same period in 2020, was primarily due to a 49% decrease in the number of wind blades produced, primarily due to the removal of five contracted manufacturing lines that expired in China at the end of 2020 and a further reduction of contracted manufacturing lines in 2021 in China, which was partially offset by the adverse impact that the COVID-19 pandemic had on our net sales in the prior year period. The net sales decrease during the nine months ended September 30, 2021 was partially offset by an increase in the average sales price of wind blades due to a change in the mix of wind blades produced in the two comparative periods. The fluctuating U.S. dollar against the Chinese Renminbi in our China operations had a favorable impact of 0.1% on consolidated net sales for the nine months ended September 30, 2021, as compared to the 2020 period.
Mexico Segment
The following table summarizes our net sales by product/service for the Mexico segment for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Wind blade sales |
| $ | 191,499 |
|
| $ | 153,575 |
|
| $ | 37,924 |
|
|
| 24.7 | % |
| $ | 431,129 |
|
| $ | 346,954 |
|
| $ | 84,175 |
|
|
| 24.3 | % |
| $ | 181,273 |
|
| $ | 131,188 |
|
| $ | 50,085 |
|
|
| 38.2 | % |
| $ | 310,879 |
|
| $ | 239,630 |
|
| $ | 71,249 |
|
|
| 29.7 | % |
Precision molding and |
|
| 4,514 |
|
|
| 6,090 |
|
|
| (1,576 | ) |
|
| -25.9 | % |
|
| 15,446 |
|
|
| 11,110 |
|
|
| 4,336 |
|
|
| 39.0 | % |
|
| 227 |
|
|
| 5,969 |
|
|
| (5,742 | ) |
|
| (96.2 | ) |
|
| 374 |
|
|
| 10,932 |
|
|
| (10,558 | ) |
|
| (96.6 | ) |
Transportation sales |
|
| 3,194 |
|
|
| 801 |
|
|
| 2,393 |
|
| NM |
|
| 7,589 |
|
|
| 1,374 |
|
|
| 6,215 |
|
| NM |
| |||||||||||||||||||||||||||||||||||
Field service, inspection and |
|
| 3,015 |
|
|
| 962 |
|
|
| 2,053 |
|
| NM |
|
| 3,015 |
|
|
| 962 |
|
|
| 2,053 |
|
| NM |
| |||||||||||||||||||||||||||||||||||
Other sales |
|
| 1,125 |
|
|
| 1,097 |
|
|
| 28 |
|
|
| 2.6 | % |
|
| 7,797 |
|
|
| 3,795 |
|
|
| 4,002 |
|
|
| 105.5 | % |
|
| 7,470 |
|
|
| 2,363 |
|
|
| 5,107 |
|
| NM |
|
| 8,113 |
|
|
| 5,710 |
|
|
| 2,403 |
|
|
| 42.1 |
| ||
Total net sales |
| $ | 200,332 |
|
| $ | 161,563 |
|
| $ | 38,769 |
|
|
| 24.0 | % |
| $ | 461,961 |
|
| $ | 363,233 |
|
| $ | 98,728 |
|
|
| 27.2 | % |
| $ | 191,985 |
|
| $ | 140,482 |
|
| $ | 51,503 |
|
|
| 36.7 | % |
| $ | 322,381 |
|
| $ | 257,234 |
|
| $ | 65,147 |
|
|
| 25.3 | % |
31
The increase in the Mexico segment’s net sales of wind blades during the three and six months ended SeptemberJune 30, 2021,2022, as compared to the same periodperiods in 2020,2021, is primarily due to the commencement of production at our second manufacturing facility in Matamoros, Mexico that we took over from Nordex in July 2021, and also reflects an increase in the period over period number of wind blades still in the production process at the end of the period, as well as an increase in the average sales price of wind blades due to the mix of wind blades produced in the two comparative periods. These net sales increases wereThis increase was partially offset by a 17% net decreasethe stop of production in overall wind blade volume, primarily due to significant production delays that occurred at one of our Juarez, Mexico facilities at the end of the fourth quarter of 2021. The decrease in net sales from the manufacturing facilities relatedof precision molding and assembly systems is primarily due to customer supplied specialized equipment and supply constraints affecting carbona decrease in connection withvolume in the ongoing transition to an innovative new blade for one of our customers and production delays resulting from one of our customer's challenges in procuring adequate supplies of carbon at one of our Matamoros, Mexico manufacturing facilities.
comparative periods. The increase in other sales for the Mexico segment’s net sales of wind blades during the ninethree and six months ended SeptemberJune 30, 2021,2022, as compared to the same periodperiods in 2020, reflects a 5% net increase in overall wind blade volume,2021, is primarily due to the adverse impact of the COVID-19 pandemic in the prior year period partially offset by the production delays described above, an increase in the period over period numbervolume of wind blades still in the production process at the end of the period, as well as an increase in the averageancillary wind-related sales price of wind blades due to the mix of wind blades produced in the two comparative periods.and services.
EMEA Segment
The following table summarizes our net sales by product/service for the EMEA segment for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Wind blade sales |
| $ | 126,705 |
|
| $ | 82,550 |
|
| $ | 44,155 |
|
|
| 53.5 | % |
| $ | 340,933 |
|
| $ | 258,193 |
|
| $ | 82,740 |
|
|
| 32.0 | % |
| $ | 126,438 |
|
| $ | 103,201 |
|
| $ | 23,237 |
|
|
| 22.5 | % |
| $ | 273,287 |
|
| $ | 214,228 |
|
| $ | 59,059 |
|
|
| 27.6 | % |
Field service, inspection and |
|
| 1,277 |
|
|
| 1,272 |
|
|
| 5 |
|
|
| 0.4 |
|
|
| 1,558 |
|
|
| 2,285 |
|
|
| (727 | ) |
|
| (31.8 | ) | ||||||||||||||||||||||||||||||||
Other sales |
|
| 2,739 |
|
|
| 1,090 |
|
|
| 1,649 |
|
|
| 151.3 | % |
|
| 6,227 |
|
|
| 1,945 |
|
|
| 4,282 |
|
| NM |
|
|
| 1,895 |
|
|
| 877 |
|
|
| 1,018 |
|
|
| 116.1 |
|
|
| 4,450 |
|
|
| 1,203 |
|
|
| 3,247 |
|
| NM |
| ||
Total net sales |
| $ | 129,444 |
|
| $ | 83,640 |
|
| $ | 45,804 |
|
|
| 54.8 | % |
| $ | 347,160 |
|
| $ | 260,138 |
|
| $ | 87,022 |
|
|
| 33.5 | % |
| $ | 129,610 |
|
| $ | 105,350 |
|
| $ | 24,260 |
|
|
| 23.0 | % |
| $ | 279,295 |
|
| $ | 217,716 |
|
| $ | 61,579 |
|
|
| 28.3 | % |
The increase in the EMEA segment’s net sales of wind blades during the three and ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same periods in 2020,2021, was primarily driven by a 32%29% and 20%26% increase in wind blade production at our two Turkey plants, respectively, primarily due to transitions and the adverse impact of the COVID-19 pandemic in the prior year, as well as an increase in the average sales price of wind blades produced in the two comparative periods and foreign currency fluctuations.plants. These net sales increases were partially offset by reduced production volumes resulting from one of our customer's challenges in procuring adequate supplies of resin and carbon.currency fluctuations. The fluctuating U.S. dollar relative to the Euro had a favorablean unfavorable impact of 1.0%10.9% and 4.5%8.4% on net sales, respectively, during the three and ninesix months ended SeptemberJune 30, 2021, respectively,2022, as compared to the 2020 periods.same periods in 2021.
29
India Segment
The following table summarizes our net sales by product/service for the India segment for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| |||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| |||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Wind blade sales |
| $ | 50,180 |
|
| $ | 18,618 |
|
| $ | 31,562 |
|
|
| 169.5 | % |
| $ | 160,157 |
|
| $ | 44,338 |
|
| $ | 115,819 |
|
| NM |
| $ | 50,093 |
|
| $ | 62,397 |
|
| $ | (12,304 | ) |
|
| (19.7 | )% |
| $ | 91,820 |
|
| $ | 109,977 |
|
| $ | (18,157 | ) |
|
| (16.5 | )% |
Field service, inspection and |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
| NM |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
| NM |
| |||||||||||||||||||||||||||||||||
Other sales |
|
| 72 |
|
|
| 35 |
|
|
| 37 |
|
|
| 105.7 | % |
|
| 190 |
|
|
| 35 |
|
|
| 155 |
|
| NM |
|
| 156 |
|
|
| 57 |
|
|
| 99 |
|
|
| 173.7 |
|
|
| 315 |
|
|
| 118 |
|
|
| 197 |
|
|
| 166.9 |
|
Total net sales |
| $ | 50,252 |
|
| $ | 18,653 |
|
| $ | 31,599 |
|
|
| 169.4 | % |
| $ | 160,347 |
|
| $ | 44,373 |
|
| $ | 115,974 |
|
| NM |
| $ | 50,251 |
|
| $ | 62,454 |
|
| $ | (12,203 | ) |
|
| (19.5 | )% |
| $ | 92,137 |
|
| $ | 110,095 |
|
| $ | (17,958 | ) |
|
| (16.3 | )% |
The increasedecrease in the India segment’s net sales of wind blades during the three and ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same periodperiods in 2020,2021, was primarily driven by a decrease in the commencementaverage sales price of wind blades, a decrease in the year over year number of wind blades still in the production for oneprocess at the end of the period and the transition of two of our customersmanufacturing lines from one type of wind blade to a new type of wind blade in 2020, and the ramp up of such production in 2021.2022.
32
Total cost of goods sold
The following table summarizes our total cost of goods sold for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales |
| $ | 472,188 |
|
| $ | 425,064 |
|
| $ | 47,124 |
|
|
| 11.1 | % |
| $ | 1,295,660 |
|
| $ | 1,141,183 |
|
| $ | 154,477 |
|
|
| 13.5 | % |
| $ | 441,098 |
|
| $ | 440,416 |
|
| $ | 682 |
|
|
| 0.2 | % |
| $ | 812,052 |
|
| $ | 823,472 |
|
| $ | (11,420 | ) |
|
| (1.4 | )% |
Startup costs |
|
| 4,521 |
|
|
| 5,142 |
|
|
| (621 | ) |
|
| -12.1 | % |
|
| 13,577 |
|
|
| 19,895 |
|
|
| (6,318 | ) |
|
| -31.8 | % |
|
| 2,527 |
|
|
| 4,504 |
|
|
| (1,977 | ) |
|
| (43.9 | ) |
|
| 7,994 |
|
|
| 9,056 |
|
|
| (1,062 | ) |
|
| (11.7 | ) |
Transition costs |
|
| 10,020 |
|
|
| 3,434 |
|
|
| 6,586 |
|
|
| 191.8 | % |
|
| 25,417 |
|
|
| 11,635 |
|
|
| 13,782 |
|
|
| 118.5 | % |
|
| 7,520 |
|
|
| 5,595 |
|
|
| 1,925 |
|
|
| 34.4 |
|
|
| 17,596 |
|
|
| 15,397 |
|
|
| 2,199 |
|
|
| 14.3 |
|
Total startup and transition |
|
| 14,541 |
|
|
| 8,576 |
|
|
| 5,965 |
|
|
| 69.6 | % |
|
| 38,994 |
|
|
| 31,530 |
|
|
| 7,464 |
|
|
| 23.7 | % |
|
| 10,047 |
|
|
| 10,099 |
|
|
| (52 | ) |
|
| (0.5 | ) |
|
| 25,590 |
|
|
| 24,453 |
|
|
| 1,137 |
|
|
| 4.7 |
|
Total cost of goods sold |
| $ | 486,729 |
|
| $ | 433,640 |
|
| $ | 53,089 |
|
|
| 12.2 | % |
| $ | 1,334,654 |
|
| $ | 1,172,713 |
|
| $ | 161,941 |
|
|
| 13.8 | % |
| $ | 451,145 |
|
| $ | 450,515 |
|
| $ | 630 |
|
|
| 0.1 |
|
| $ | 837,642 |
|
| $ | 847,925 |
|
| $ | (10,283 | ) |
|
| (1.2 | ) |
% of net sales |
|
| 101.5 | % |
|
| 91.5 | % |
|
|
|
| 10.0 | % |
|
| 99.4 | % |
|
| 97.4 | % |
|
|
|
| 2.0 | % |
|
| 99.7 | % |
|
| 98.2 | % |
|
|
|
| 1.5 | % |
|
| 100.0 | % |
|
| 98.2 | % |
|
|
|
| 1.8 | % |
Total cost of goods sold as a percentage of net sales increased by approximately ten percentage points1.5% and 1.8% during the three and six months ended SeptemberJune 30, 2021,2022, respectively, as compared to the same periodperiods in 2020,2021, primarily driven primarily by increases in direct material costs, direct labor costs and foreign currency fluctuations. The significant production delays that occurred at the Matamoros, Mexico manufacturing facility, which we took over from Nordex in July 2021, during the three months ended September 30, 2021 were a major contributor to this increase. The fluctuating U.S. dollar against the Euro, Turkish Lira, Chinese Renminbi and Mexican Peso had an unfavorable impact of 0.5% on consolidated cost of goods sold for the three months ended September 30, 2021 as compared to the 2020 period.
Total cost of goods sold as a percentage of net sales increased by approximately two percentage points during the nine months ended September 30, 2021, as compared to the same period in 2020, driven primarily by an increase in direct material costs and foreign currency fluctuations, partially offset by a decrease in warranty costs. The fluctuating U.S. dollar against the Euro, Turkish Lira, Euro, Chinese Renminbi and Mexican Peso had an unfavorablea favorable impact of 1.2%5.8% and 5.4% on consolidated cost of goods sold, respectively, for the ninethree and six months ended SeptemberJune 30, 2021,2022 as compared to the 2020 period.2021 periods. Included in the cost of sales for the three and six months ended June 30, 2022, is approximately $8.0 million and $15.1 million, respectively, in non-restructuring related operating costs that were associated with certain manufacturing facilities in Newton, Iowa; Dafeng, China; and Juarez, Mexico, where production has stopped.
General and administrative expenses
The following table summarizes our general and administrative expenses for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
General and |
| $ | 8,185 |
|
| $ | 9,263 |
|
| $ | (1,078 | ) |
|
| -11.6 | % |
| $ | 23,819 |
|
| $ | 25,646 |
|
| $ | (1,827 | ) |
|
| -7.1 | % |
| $ | 6,688 |
|
| $ | 6,712 |
|
| $ | (24 | ) |
|
| (0.4 | )% |
| $ | 14,548 |
|
| $ | 15,634 |
|
| $ | (1,086 | ) |
|
| (6.9 | )% |
% of net sales |
|
| 1.7 | % |
|
| 2.0 | % |
|
|
|
| -0.3 | % |
|
| 1.8 | % |
|
| 2.1 | % |
|
|
|
| -0.3 | % |
|
| 1.5 |
|
|
| 1.5 |
|
|
|
|
| 0.0 |
|
|
| 1.7 |
|
|
| 1.8 |
|
|
|
|
| (0.1 | ) |
The decrease in general30
General and administrative expenses as a percentage of net sales for the three and ninesix months ended SeptemberJune 30, 2021,2022, remained consistent as compared to the same periods in 2020, were primarily driven by our continued focus on reducing costs.
Loss on sale of assets and asset impairments
The increase in the loss on sale of assets and asset impairments for the three and nine months ended September 30, 2021, as compared to the same periods in 2020, were primarily driven by asset impairment charges of $5.9 million incurred at our Newton, Iowa blade facility related to the plant's expected shutdown at the end of the year.2021.
Restructuring costs, net
The following table summarizes our restructuring costs, net for the three and six months ended June 30, 2022 and 2021:
|
| Three Months Ended |
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
|
|
|
| ||||||||||||||
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||
|
| (in thousands) |
|
|
|
|
| (in thousands) |
|
|
|
| ||||||||||||||||||||
Restructuring charges, net |
| $ | 10 |
|
| $ | 2,196 |
|
| $ | (2,186 | ) |
|
| (99.5 | )% |
| $ | 2,403 |
|
| $ | 2,454 |
|
| $ | (51 | ) |
|
| (2.1 | )% |
% of net sales |
|
| 0.0 |
|
|
| 0.5 |
|
|
|
|
|
| (0.5 | ) |
|
| 0.3 |
|
|
| 0.3 |
|
|
|
|
|
| - |
|
The increasedecrease in restructuring costs, net for the three and ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same periods in 2020, were2021, was primarily due to a decrease in severance costs. The restructuring is associated with the optimization of our global footprint, comprised primarily of $1.4 million and $3.9 million, respectively, of
33
severance benefits to terminated employees. We expect that allemployees as a result of the severance benefits will be paid to the terminated employees by the endclosure of November 2021.our Newton, Iowa; Dafeng, China and Taicang, China manufacturing facilities.
Income (loss) from operations
Segment discussion
The following table summarizes our income (loss) from operations by our five geographic operating segments for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
U.S. |
| $ | (24,598 | ) |
| $ | (6,360 | ) |
| $ | (18,238 | ) |
| NM |
| $ | (36,070 | ) |
| $ | (33,991 | ) |
| $ | (2,079 | ) |
|
| -6.1 | % |
| $ | (16,643 | ) |
| $ | 2,836 |
|
| $ | (19,479 | ) |
| NM |
| $ | (23,177 | ) |
| $ | (7,077 | ) |
| $ | (16,100 | ) |
| NM |
| |||||
Asia |
|
| (3,607 | ) |
|
| 25,779 |
|
|
| (29,386 | ) |
|
| -114.0 | % |
|
| 7,207 |
|
|
| 49,343 |
|
|
| (42,136 | ) |
|
| -85.4 | % |
|
| (156 | ) |
|
| 8,105 |
|
|
| (8,261 | ) |
|
| (101.9 | ) |
|
| (6,265 | ) |
|
| 10,814 |
|
|
| (17,079 | ) |
|
| (157.9 | ) |
Mexico |
|
| (3,802 | ) |
|
| 11,986 |
|
|
| (15,788 | ) |
|
| -131.7 | % |
|
| (33,082 | ) |
|
| (1,106 | ) |
|
| (31,976 | ) |
| NM |
|
|
| (14,268 | ) |
|
| (27,944 | ) |
|
| 13,676 |
|
|
| 48.9 |
|
|
| (37,972 | ) |
|
| (33,675 | ) |
|
| (4,297 | ) |
|
| (12.8 | ) | |
EMEA |
|
| 9,423 |
|
|
| 1,795 |
|
|
| 7,628 |
|
| NM |
|
| 29,993 |
|
|
| 3,314 |
|
|
| 26,679 |
|
| NM |
|
|
| 20,102 |
|
|
| 10,782 |
|
|
| 9,320 |
|
|
| 86.4 |
|
|
| 43,719 |
|
|
| 20,570 |
|
|
| 23,149 |
|
|
| 112.5 |
| |||
India |
|
| (1,403 | ) |
|
| (4,195 | ) |
|
| 2,792 |
|
|
| 66.6 | % |
|
| 2,725 |
|
|
| (17,214 | ) |
|
| 19,939 |
|
|
| 115.8 | % |
|
| 2,927 |
|
|
| 4,188 |
|
|
| (1,261 | ) |
|
| (30.1 | ) |
|
| 2,818 |
|
|
| 4,128 |
|
|
| (1,310 | ) |
|
| (31.7 | ) |
Total income (loss) |
| $ | (23,987 | ) |
| $ | 29,005 |
|
| $ | (52,992 | ) |
|
| -182.7 | % |
| $ | (29,227 | ) |
| $ | 346 |
|
| $ | (29,573 | ) |
| NM |
| |||||||||||||||||||||||||||||||||
Total loss from operations |
| $ | (8,038 | ) |
| $ | (2,033 | ) |
| $ | (6,005 | ) |
| NM |
| $ | (20,877 | ) |
| $ | (5,240 | ) |
| $ | (15,637 | ) |
| NM |
| |||||||||||||||||||||||||||||||||||
% of net sales |
|
| -5.0 | % |
|
| 6.1 | % |
|
|
|
| -11.1 | % |
|
| -2.2 | % |
|
| 0.0 | % |
|
|
|
| -2.2 | % |
|
| -1.8 | % |
|
| -0.4 | % |
|
|
|
| (1.4 | )% |
|
| -2.5 | % |
|
| -0.6 | % |
|
|
|
| (1.9 | )% |
U.S. Segment
The increase in the loss from operations in the U.S. segment for the three and six months ended SeptemberJune 30, 2021,2022, as compared to the same periodperiods in 2020,2021, was primarily due to the decrease in wind blade volume an increase in direct material and direct labor costs and impairment charges incurreddue to the shutdown of production at our Newton, Iowa blademanufacturing facility, related to the suspension of production by the end of 2021, partially offset by an increase in the average sales price of wind blades produced.
The increase in the loss from operations in the U.S. segment for the nine months ended September 30, 2021, as compared to the same period in 2020, was primarily due to an increase in direct material costs and impairment charges incurred at our Newton, Iowa blade facility related to the suspension of production by the end of 2021, partially offset by an increase in wind blade volume, an increase in the average sales price of wind blades produced and a decrease in directtransportation sales, and increased labor costs.costs for our field services, inspection and repair services.
Asia Segment
The decrease in the income from operations in the Asia segment for the three and ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same periods in 2020,2021, was primarily due to the decrease in the net sales of wind blades, an increase in direct material costsrestructuring charges incurred at our Taicang City, China and Dafeng, China manufacturing facilities and foreign currency fluctuations. TheThis was partially offset by the fluctuating U.S. dollar against the Chinese Renminbi which had an unfavorablea favorable impact of 4.9%1.7% and 5.9%0.5% on cost of goods sold, respectively, for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, as compared to the 20202021 periods.
Mexico Segment
The increasedecrease in the loss from operations in the Mexico segment for the three and nine months ended SeptemberJune 30, 2021,2022, as compared to the same periodsperiod in 2020,2021, was primarily due to an increase in average sales price and wind blade volume, partially offset by increased direct material and startup and transition costs at our Mexico manufacturing facilities. The increase in the loss from operations for the six
31
months ended June 30, 2022, as compared to the same period in 2021, was primarily due to direct material and startup and transition costs related to the Matamoros, and Juarez, Mexico production delays described above, partially offset by an increasefacility that we took over from Nordex in the period over period number of wind blades still in the production process at the end of the period, an increase in the average sales price of wind blades, and a decrease in warranty costs as compared to the 2020 periods. The fluctuating U.S. dollar relative to the Mexican Peso had an unfavorable impact of 1.5% and 1.2% on cost of goods sold for the three and nine months ended September 30, 2021, respectively, as compared to the 2020 periods.July 2021.
EMEA Segment
The increase in the income from operations in the EMEA segment for the three and ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same periods in 2020,2021, was primarily driven by increased wind blade production at our two Turkey manufacturing facilities and an increase in the average sales price of wind blades produced. In addition, for the three and nine months ended September 30, 2021, there was a decrease in startup and transition costs, andpartially offset by an increase in direct material costs as compared to the 2020 period. Additionally, for the nine months ended September 30, 2021, there was a decreasesame periods in warranty costs as compared to the
34
2020 period.2021. The fluctuating U.S. dollar relative to the Turkish Lira and Euro had ana favorable impact of 2.8%22.4% and 0.9%19.4% on cost of goods sold, respectively, for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, as compared to the 2020 periods.same periods in 2021.
India Segment
The decrease in the lossincome from operations in the India segment for the three and ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same periods in 2020,2021, was primarily driven by a decrease in the commencementaverage sales price of production for onewind blades, a decrease in volume due to the transition of two of our customers in 2020,manufacturing lines from one type of wind blade to a new type of wind blade and the ramp upcontinued expansion of such productionour India manufacturing facility, resulting in 2021.an increase in manufacturing overhead costs.
Other income (expense)
The following table summarizes our total other income (expense) for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
|
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| ||||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Interest expense, net |
| $ | (2,662 | ) |
| $ | (3,093 | ) |
| $ | 431 |
|
|
| 13.9 | % |
| $ | (8,057 | ) |
| $ | (7,409 | ) |
| $ | (648 | ) |
|
| -8.7 | % |
| $ | (913 | ) |
| $ | (2,691 | ) |
| $ | 1,778 |
|
|
| 66.1 | % |
| $ | (1,682 | ) |
| $ | (5,395 | ) |
| $ | 3,713 |
|
|
| 68.8 | % |
Foreign currency income |
|
| 3,958 |
|
|
| (17,127 | ) |
|
| 21,085 |
|
|
| 123.1 | % |
|
| (6,273 | ) |
|
| (18,095 | ) |
|
| 11,822 |
|
|
| 65.3 | % |
|
| 9,886 |
|
|
| (6,504 | ) |
|
| 16,390 |
|
| NM |
|
| 10,096 |
|
|
| (10,231 | ) |
|
| 20,327 |
|
|
| 198.7 |
| ||
Miscellaneous income |
|
| 262 |
|
|
| 1,259 |
|
|
| (997 | ) |
|
| -79.2 | % |
|
| 1,322 |
|
|
| 2,893 |
|
|
| (1,571 | ) |
|
| -54.3 | % |
|
| 309 |
|
|
| 321 |
|
|
| (12 | ) |
|
| (3.7 | ) |
|
| 851 |
|
|
| 1,060 |
|
|
| (209 | ) |
|
| (19.7 | ) |
Total other income |
| $ | 1,558 |
|
| $ | (18,961 | ) |
| $ | 20,519 |
|
|
| 108.2 | % |
| $ | (13,008 | ) |
| $ | (22,611 | ) |
| $ | 9,603 |
|
|
| 42.5 | % |
| $ | 9,282 |
|
| $ | (8,874 | ) |
| $ | 18,156 |
|
| NM |
| $ | 9,265 |
|
| $ | (14,566 | ) |
| $ | 23,831 |
|
|
| 163.6 | % |
The decreasechange in the total other expenseincome (expense) for the three and ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same periods in 2020,2021, was primarily due to favorable foreign currency fluctuations, as well as a decrease in the foreign currency loss primarilyinterest expense due to net Euro liability exposure against the Turkish Lirarepayment of the outstanding senior revolving credit facility in the current year periods as compared to the same periods in 2020.prior year.
Income taxes
The following table summarizes our income taxes for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Three Months Ended |
|
|
|
|
| Nine Months Ended |
|
|
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
|
| September 30, |
| Change |
|
| September 30, |
| Change |
| June 30, |
|
| Change |
|
| June 30, |
|
| Change |
| |||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
| 2020 |
| $ |
| % |
|
| 2021 |
| 2020 |
| $ |
| % |
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
|
| 2022 |
|
| 2021 |
|
| $ |
|
| % |
| |||||||||||||||||||||
|
| (in thousands) |
|
|
| (in thousands) |
|
| (in thousands) |
|
|
| (in thousands) |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Income tax benefit |
| $ | (8,248 | ) |
| $ | 32,338 |
|
| $ | (40,586 | ) |
|
| -125.5 | % |
| $ | (30,036 | ) |
| $ | (1,946 | ) |
| $ | (28,090 | ) |
| NM |
| $ | (6,754 | ) |
| $ | (28,890 | ) |
| $ | 22,136 |
|
|
| 76.6 | % |
| $ | (9,698 | ) |
| $ | (21,788 | ) |
| $ | 12,090 |
|
|
| 55.5 | % |
Effective tax rate |
|
| -36.8 | % |
|
| -322.0 | % |
|
|
|
|
|
| -71.1 | % |
|
| -8.7 | % |
|
|
|
|
| 542.9 | % |
|
| -264.9 | % |
|
|
|
|
|
| -83.5 | % |
|
| -110.0 | % |
|
|
|
|
|
See Note 9,11, Income Taxes, to our condensed consolidated financial statements for more details about our income taxes for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020.2021.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources were adversely affected by certain events that occurred during the three months ended September 30, 2021. We experienced significant production delays that occurred at the Matamoros, Mexico manufacturing facility that we took over from Nordex in July 2021, as well as significant production delays in one of our Juarez, Mexico manufacturing facilities in connection with the ongoing transition to an innovative new blade for one of our customers. Although we expect that production will be stabilized in both of these manufacturing facilities by the end of the year, we expect that these transitions will continue to have an adverse impact on our liquidity for the remainder of the year. We also expect decreased demand for our wind blades from our customers during the remainder of 2021 and 2022. We believe this decrease in demand is due to the continued global renewable energy regulatory and policy uncertainty and raw material cost increases and constraints. We believe this decreased demand will also adversely impact our profitability and liquidity for the remainder of 2021 and 2022.
We were not in compliance with our Total Net Leverage Ratio financial covenant as of September 30, 2021, primarily due to the Mexico production delays and increased raw material costs and constraints described above. On November 8, 2021 (the Waiver Effective Date), we and the lenders that are parties to the Credit Agreement executed a limited waiver pursuant to which the lenders
35
agreed to temporarily waive our compliance with this financial covenant from the Waiver Effective Date through December 8, 2021. We also must maintain domestic U.S. cash of at least $20.0 million and global available liquidity of at least $50.0 million as of the close of business on each Friday commencing as of November 5, 2021 through the maturity date of the Credit Agreement. From and after the Waiver Effective Date, we may not allow any of our subsidiaries that are not loan parties to the Credit Agreement to incur any additional indebtedness and we may not make any investment in any of its subsidiaries that are not loan parties to the Credit Agreement in an aggregate amount greater than $5.0 million. We had $68.3 million of domestic U.S cash and $132.9 million of global available liquidity as of October 29, 2021.
Given these near-term liquidity challenges, on November 8, 2021, we entered into the Purchase Agreement pursuant to which we agreed to issue and sell to the Purchasers 350,000 shares of our newly designated Series A Preferred Stock, par value $0.01 per share, for an aggregate purchase price of $350.0 million. We expect the closing of this equity financing transaction to occur in the fourth quarter of 2021 and intend to use the net proceeds from the issuance and sale of the Series A Preferred Stock to repay all outstanding indebtedness under our Credit Agreement and the remainder for general corporate purposes. We also may elect at our option to require Oaktree to purchase an additional $50.0 million of Series A Preferred Stock upon the same terms and conditions as the initial issuance of the Series A Preferred Stock during the two-year period following the Closing Date.
See Note 15, Subsequent Events, to our condensed consolidated financial statements for more details on the limited waiver and the Purchase Agreement.
Our primary needs for liquidity have been, and in the future will continue to be, capital expenditures, new facility startup costs, the impact of transitions, raw materials purchases, 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 at our
32
new facilities and expansion and improvements at our existing facilities. Historically, we have funded our working capital needs through cash flows from operations, the proceeds received from our credit facilities and from proceeds received from the issuance of stock. We had net proceedsrepayments under our financing arrangements of $43.1$12.4 million for the ninesix months ended SeptemberJune 30, 20212022 as compared to net proceeds under our financing arrangements of $96.5$19.0 million in the comparable period of 2020.2021. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, we had $262.8$62.3 million and $217.9$74.6 million in outstanding indebtedness, excluding debt issuance costs, respectively. As of SeptemberJune 30, 2021,2022, we had an aggregate of $103.6$88.9 million of remaining capacity for cash and $66.2non-cash financing, including $64.5 million of remaining availability for cash borrowing under our various credit facilities. Working capital requirements have increased as a resultIn addition, we also may elect, at our option through November 2023, to require the holders of our overall growthSeries A Preferred Stock to purchase an additional $50.0 million of Series A Preferred Stock on the same terms and conditions as the need to fund higher accounts receivable and inventory levels as our business volumes have increased, as well as increased raw material costs primarily related to resin, carbon fiber and logistics.initial issuance of the Series A Preferred Stock. Based upon current and anticipated levels of operations, we believe that cash on hand, available credit facilities, the anticipated net proceeds from the preferred equity financing described above, which we believe is probable, and cash flows 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. At SeptemberJune 30, 20212022 and December 31, 2020,2021, we had unrestricted cash, cash equivalents and short-term investments totaling $119.0$155.0 million and $129.9$242.2 million, respectively. The SeptemberJune 30, 20212022 balance includes $48.5$59.8 million of cash located outside of the United States, including $20.7$12.5 million in China, $17.9$39.3 million in Turkey, $7.3$4.9 million in India, $1.9$2.4 million in Mexico and $0.7 million in other countries.
Our ability to repatriate funds from China is subject to a number of restrictions imposed by the Chinese government. We repatriate funds through several technology license and corporate/administrative service agreements. We are compensated quarterly based on agreed upon royalty rates for such intellectual property licenses and quarterly fees for those services. Certain of our subsidiaries are limited in their ability to declare dividends without first meeting statutory restrictions of China, including retained earnings as determined under Chinese-statutory accounting requirements. Until 50% ($26.6 million and $26.7 million, respectively, as of SeptemberJune 30, 20212022 and December 31, 2020)2021) of registered capital is contributed to a surplus reserve, our China operations can only pay dividends equal to 90% of after-tax profits (10% must be contributed to the surplus reserve). Once the surplus reserve fund requirement is met, our China operations can pay dividends equal to 100% of after-tax profit assuming other conditions are met. At SeptemberJune 30, 20212022 and December 31, 2020,2021, the amount of the surplus reserve fund was $9.4$9.5 million and $7.0$10.0 million, respectively. In July 2021, China paid a dividend of approximately $19.5 million, net of withholding taxes, to our subsidiary in Switzerland.
36
Financing Facilities
Our total principal amount of debt outstanding as of SeptemberJune 30, 20212022 was $262.8$62.3 million, including our Credit Agreement, secured and unsecured financing, working capital and term loan agreements and equipment finance leases. See Note 5,6, Long-Term Debt, Net of Current Maturities, and Note 15, Subsequent Events, to our condensed consolidated financial statements for more details on our debt balances.
Cash Flow Discussion
The following table summarizes our key cash flow activity for the ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
|
| Nine Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||||
|
| September 30, |
|
|
|
|
| June 30, |
|
|
|
| ||||||||||||
|
| 2021 |
| 2020 |
|
| $ Change |
|
| 2022 |
|
| 2021 |
|
| $ Change |
| |||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||||||||
Net cash provided by (used in) operating activities |
| $ | (28,241 | ) |
| $ | 33,865 |
|
| $ | (62,106 | ) | ||||||||||||
Net cash used in operating activities |
| $ | (59,161 | ) |
| $ | (3,255 | ) |
| $ | (55,906 | ) | ||||||||||||
Net cash used in investing activities |
|
| (30,138 | ) |
|
| (53,428 | ) |
|
| 23,290 |
|
|
| (8,010 | ) |
|
| (27,059 | ) |
|
| 19,049 |
|
Net cash provided by financing activities |
|
| 48,280 |
|
|
| 102,427 |
|
|
| (54,147 | ) | ||||||||||||
Net cash provided by (used in) financing activities |
|
| (12,726 | ) |
|
| 23,702 |
|
|
| (36,428 | ) | ||||||||||||
Impact of foreign exchange rates on cash, cash equivalents |
|
| (939 | ) |
|
| (3,204 | ) |
|
| 2,265 |
|
|
| (8,649 | ) |
|
| (323 | ) |
|
| (8,326 | ) |
Net change in cash, cash equivalents and restricted cash |
| $ | (11,038 | ) |
| $ | 79,660 |
|
| $ | (90,698 | ) |
| $ | (88,546 | ) |
| $ | (6,935 | ) |
| $ | (81,611 | ) |
Operating Cash Flows
Net cash provided byused in operating activities decreasedincreased by $62.1$55.9 million for the ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same period in 2020, primarily2021, as a result of lower operating results and unfavorable working capital usage.usage, primarily related to an increase in accounts receivable, and a decrease in accounts payable. In addition, the increase in net cash used in operating activities for the six months ended June 30, 2022, as compared to the same period in 2021, is due to an increase in contract assets, which was the result of increased procurement of customer specific
33
materials in order to minimize the risk of potential production disruptions that may occur given the recent COVID-19 impacts in China and geopolitical uncertainties with the ongoing Russia and Ukraine war.
Investing Cash Flows
Net cash used in investing activities decreased by $23.3$19.0 million for the ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same period in 2020,2021, as a result of a decrease in capital expenditures.
We anticipate fiscal year 20212022 capital expenditures of between $40 million to $45approximately $17 million and we estimate that the cost that we will incur after SeptemberJune 30, 20212022 to complete our current projects in process will be approximately $7.0$6.8 million. We have used, and will continue to use, cash flows from operations, the proceeds received from our credit facilities and the proceeds received from the issuance of stock for major projects currently being undertaken, which include newthe expansion of our manufacturing facilitiesfacility in Chennai, India and the continued investment in our existing Tukey, Mexico, Chinafacilities in Turkey and U.S. facilities.Mexico.
Financing Cash Flows
Net cash provided by financing activities decreased by $54.1$36.4 million for the ninesix months ended SeptemberJune 30, 2021,2022, as compared to the same period in 2020,2021, primarily as a result of decreased net borrowings on our revolving loans.
OFF-BALANCE SHEET TRANSACTIONSincreased repayments of outstanding borrowings.
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 segment’ssegments' customers at an agreed-upon discount rate.
37
The following table summarizes certain key details of each of the accounts receivable assignment agreements in place as of SeptemberJune 30, 2021:2022:
Year Of Initial Agreement | Segment(s) Related To | Current Annual | |||
2014 | Mexico | LIBOR plus 0.75% | |||
2018 | Mexico | LIBOR plus 1.25% | |||
2018 | EMEA | EURIBOR plus 0.75% | |||
2019 | Asia and Mexico | LIBOR plus 1.00% | |||
2019 | Asia | Fixed rate of 3.85% | |||
2020 | EMEA | EURIBOR plus 1.95% | |||
2020 | India | LIBOR plus 1.00% | |||
2020 | U.S. |
|
| ||
2021 | Mexico | SOFR plus 0.16% | |||
2022 | EMEA |
| EURIBOR plus |
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 six months ended SeptemberJune 30, 2021 and 2020, $346.32022, $321.0 million and $343.0 million, respectively, and during the nine months ended September 30, 2021 and 2020, $1,001.2 million and $802.9$541.1 million, respectively, of receivables were sold under the accounts receivable assignment agreements described above.above as compared to $360.8 million and $654.9 million, respectively, in the comparative prior year periods.
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.10-K for the year ended December 31, 2021.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1,2, Basis of Presentation, under the heading “Accounting Pronouncements” to our condensed consolidated financial statements for a discussion of recent accounting pronouncements.
CONTRACTUAL OBLIGATIONS34
During the nine months ended September 30, 2021, there have been no material changes to the contractual obligations reported in our Annual Report on Form 10-K, other than in the ordinary course of business.
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 China, Mexico, Turkey, India and India.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 localfunctional 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 domesticfunctional 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 $21.5$9.3 million for the ninesix months ended SeptemberJune 30, 2021.2022.
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, and resin systems, and carbon fiber are the primary commodities for which we do not have fixed pricing. Approximately 55%60% of the resin and resin systems, and approximately 90% of the carbon fiber, we use areis 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.
Prior to takingTaking into account anythe 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, and resin systems, and carbon fiber we believe that a 10% change in the current forecasted price of resin, and resin systems, and carbon fiber for the customers in which we are exposed to fluctuating prices would have had an impact to income from
38
operations of approximately $12.4$8.6 million for the full year 2021.2022. With respect to our other customer supply agreements, our customers typically receive/bear 70% of the cost savings or increases resulting from a change in the price of resin, resin systems, and resin systems.carbon fiber.
Interest Rate Risk. As of SeptemberJune 30, 2021, our Credit Agreement includes interest on the unhedged principal amount of $106.2 million which is tied to the London Interbank Offered Rate (LIBOR), our India segment has two credit agreements outstanding which are tied to LIBOR, and our EMEA segment has one general credit agreement outstanding which is tied to the Euro Interbank Offered Rate (EURIBOR). For a discussion of the interest rate swap arrangement we entered into related to our Credit Agreement, see Note 13, Financial Instruments, to the notes to the consolidated financial statements within our 2020 Annual Report on Form 10-K. The India credit agreements had secured and unsecured working capital financing of $10.3 million and unsecured term loan financing of $8.1 million outstanding as of September 30, 2021. The two EMEA credit agreements had unsecured financing of $5.7 million and financing of capital expenditures of $1.0 million outstanding as of September 30, 2021. Our Credit Agreement, the two India credit agreements, and the one EMEA general credit agreement are the only variable rate debt agreements that we had outstanding as of September 30, 2021 as2022, all remaining secured and unsecured financing and finance lease obligations are fixed rate instruments and are not subject to fluctuations in interest rates. Due to the relatively low LIBOR and EURIBOR rates in effect as of September 30, 2021, a 10% change in the LIBOR or EURIBOR rate would not have had a material impact on our future earnings, fair values or cash flows.
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 SeptemberJune 30, 20212022 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 SeptemberJune 30, 2021.2022.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended SeptemberJune 30, 20212022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
3935
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Note 12,14, 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
Except as noted below, thereThere 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, 2021, as amended by our disclosure to the Risk Factors (Part II, Item 1A) in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, which could materially affect our business, financial condition, and/or future results.
The pending Series A Preferred Stock financing may not be completed, which could adversely affect our business, results of operations and/or financial condition or the price of our shares of Common Stock.
On November 8, 2021, we entered into a Series A Preferred Stock Purchase Agreement (the Purchase Agreement) with Oaktree Power Opportunities Fund V (Delaware) Holdings, L.P., OPPS TPIC Holdings, LLC, and Oaktree Phoenix Investment Fund L.P. (collectively, the Purchasers), pursuant to which we have agreed to issue and sell to the Purchasers an aggregate of 350,000 shares of our newly designated Series A Preferred Stock, par value $0.01 per share (the Series A Preferred Stock), for an aggregate purchase price of $350.0 million. On the closing date for the sale of the Series A Preferred Stock, we will also issue the Purchasers a warrant to purchase an aggregate of 4,666,667 shares of our Common Stock, at an exercise price of $0.01 per share. The transaction is expected to close in the fourth quarter of 2021, subject to the conditions set forth in the Purchase Agreement. We cannot assure that all closing conditions will be satisfied or waived. The Purchase Agreement will expire if the closing has not occurred by the 60th day following the date of the Purchase Agreement. If the transaction is not completed, we will be subject to a number of risks, including: we must pay costs related to the transaction, including legal and financial advisory fees, whether the transaction is completed or not; the trading price of our shares of Common Stock may decline if the transaction is not completed, to the extent that the market price reflects a market assumption that the transaction will be completed; we may be required to seek alternative sources of liquidity, as to the availability or terms of which we cannot provide assurance, and we could be subject to litigation related to the failure to complete the transaction or other factors, all of which may adversely affect our business, results of operations and/or financial results and the price of our shares of Common Stock.
Our business, operations and financial condition during the nine months ended September 30, 2021 were not materially adversely affected by the COVID-19 pandemic however we cannot estimate the duration of the COVID-19 pandemic and our business may be adversely affected in the future if the COVID-19 pandemic persists.
The COVID-19 pandemic did not materially adversely affect our manufacturing operations during the nine months ended September 30, 2021. However, our manufacturing facility in Yangzhou, China was shut down for approximately three weeks during the three months ended September 30, 2021 due to an outbreak of positive COVID-19 cases in Yangzhou City, which had an adverse impact on our results of operations for the three months ended September 30, 2021. Although all of our manufacturing facilities currently are operating at or near normal production levels, we may be required to reinstate temporary production suspensions or volume reductions at our manufacturing facilities to the extent there are new resurgences of COVID-19 cases in the regions where we operate or there is an outbreak of positive COVID-19 cases in any of our manufacturing facilities. However, our global supply chain has been adversely affected by the COVID-19 pandemic in 2021 and our global supply chain may continue to be adversely affected if the COVID-19 pandemic persists.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
Not applicable.
Period |
| Total Number |
|
| Average Price |
|
| Total Number |
|
| Maximum Number of Shares That May |
| ||||
April (April 1 - April 30) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
May (May 1 - May 31) |
|
| 3,745 |
|
|
| 12.07 |
|
|
| — |
|
|
| — |
|
June (June 1 - June 30) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| 3,745 |
|
| $ | 12.07 |
|
|
| — |
|
|
| — |
|
Use of Proceeds
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
40
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
None.
4136
Item 6. EXHIBITS
Exhibit Number |
| Exhibit Description |
3.2+ | Third Amended and Restated Bylaws of the Company | |
31.1* |
| Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2* |
| Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1** |
| Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2** |
| Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS* | 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* |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) |
+ Incorporated by reference to the Company's Current Report on Form 8-K filed on May 19, 2022.
* 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.
4237
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TPI COMPOSITES, INC. | ||||
Date: | By: | /s/ | ||
| ||||
Chief | ||||
(Principal |
4338