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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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.

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 ~~7(a)(2)(B)~~13(a) of the ~~Securities~~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 ~~November 3, 2017,~~April 30, 2020, there were ~~34,010,015~~35,263,082 shares of common stock outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities ~~laws.~~law. 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:

These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We have described in the “Risk Factors” section of our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (SEC) on March ~~17, 2017 (the Annual Report on Form 10-K) and in subsequent periodic and current reports filed with the SEC~~2, 2020 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.~~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. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

	September 30,			December 31,			March 31,			December 31,
	2017			2016			2020			2019
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	139,065		$	119,066		$	109,473		$	70,282
Restricted cash		3,802			2,259			662			992
Accounts receivable (Note 3)		134,458			67,842
Accounts receivable								127,354			184,012
Contract assets								192,109			166,515
Prepaid expenses								14,118			10,047
Other current assets								24,448			29,843
Inventories		60,593			53,095			9,904			6,731
Inventories held for customer orders		69,788			52,308
Prepaid expenses and other current assets		29,776			30,657
Total current assets		437,482			325,227			478,068			468,422
Property, plant, and equipment, net		119,635			91,166			217,568			205,007
Operating lease right of use assets								170,381			122,351
Other noncurrent assets		19,244			20,813			49,387			30,897
Total assets	$	576,361		$	437,206		$	915,404		$	826,677
Liabilities and Shareholders’ Equity

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	160,858		$	112,281		$	275,695		$	293,104
Accrued warranty		28,150			19,912			51,528			47,639
Deferred revenue (Note 3)		87,294			69,568
Customer deposits and customer advances		10,409			1,390
Current maturities of long-term debt		44,498			33,403			19,610			13,501
Current operating lease liabilities								17,435			16,629
Contract liabilities								2,571			3,008
Total current liabilities		331,209			236,554			366,839			373,881
Long-term debt, net of debt issuance costs and current maturities		89,139			89,752			186,564			127,888
Noncurrent operating lease liabilities								163,125			113,883
Other noncurrent liabilities		4,245			4,393			7,838			5,975
Total liabilities		424,593			330,699			724,366			621,627
Commitments and contingencies (Note 10)
Shareholders’ equity: (Note 3)
Preferred shares, $0.01 par value, 5,500 shares authorized, no shares issued or outstanding at September 30, 2017 and December 31, 2016		—			—
Common shares, $0.01 par value, 100,000 shares authorized and 34,046 shares issued and 33,994 shares outstanding at September 30, 2017 and 100,000 shares authorized and 33,737 shares issued and outstanding at December 31, 2016		340			337
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common shares, $0.01 par value, 100,000 shares authorized, 35,435 shares issued and 35,263 shares outstanding at March 31, 2020 and 100,000 shares authorized, 35,326 shares issued and 35,181 shares outstanding at December 31, 2019								354			353
Paid-in capital		299,532			292,833			326,737			322,906
Accumulated other comprehensive loss		(1,054	)		(3,862	)		(40,505	)		(23,612	)
Accumulated deficit		(146,087	)		(182,801	)		(91,181	)		(90,689	)
Treasury stock, at cost, 52 shares at September 30, 2017		(963	)		—
Total shareholders’ equity		151,768			106,507
Total liabilities and shareholders’ equity	$	576,361		$	437,206
Treasury stock, at cost, 172 shares at March 31, 2020 and 145 shares at December 31, 2019								(4,367	)		(3,908	)
Total stockholders’ equity								191,038			205,050
Total liabilities and stockholders’ equity							$	915,404		$	826,677

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2020			2019
	(Unaudited)												(Unaudited)
Net sales (Note 3)	$	243,354		$	198,938		$	683,142		$	569,303
Net sales													$	356,636		$	299,780
Cost of sales		198,141			171,648			568,659			499,896			348,475			283,038
Startup and transition costs		12,352			5,088			29,051			11,449			12,034			18,178
Total cost of goods sold		210,493			176,736			597,710			511,345			360,509			301,216
Gross profit		32,861			22,202			85,432			57,958
Gross loss														(3,873	)		(1,436	)
General and administrative expenses		9,315			14,065			28,373			24,154			9,496			7,985
Income from operations		23,546			8,137			57,059			33,804
Realized loss on sale of assets and asset impairments														1,918			2,235
Restructuring charges, net														117			—
Loss from operations														(15,404	)		(11,656	)
Other income (expense):
Interest income		48			27			78			76			32			51
Interest expense		(3,254	)		(4,663	)		(9,215	)		(12,709	)		(1,803	)		(1,999	)
Realized gain (loss) on foreign currency remeasurement		39			(243	)		(2,575	)		(700	)		960			(3,802	)
Miscellaneous income (expense)		390			(152	)		968			192
Miscellaneous income														695			702
Total other expense		(2,777	)		(5,031	)		(10,744	)		(13,141	)		(116	)		(5,048	)
Income before income taxes		20,769			3,106			46,315			20,663
Income tax provision		(371	)		(309	)		(8,514	)		(4,565	)
Net income		20,398			2,797			37,801			16,098
Net income attributable to preferred shareholders		—			596			—			5,471
Net income attributable to common shareholders	$	20,398		$	2,201		$	37,801		$	10,627
Loss before income taxes														(15,520	)		(16,704	)
Income tax benefit														15,028			4,600
Net loss													$	(492	)	$	(12,104	)

Weighted-average common shares outstanding:
Basic		33,891			27,284			33,789			12,042			35,213			34,906
Diluted		35,015			27,375			34,748			12,133			35,213			34,906
Net income per common share:

Net loss per common share:
Basic	$	0.60		$	0.08		$	1.12		$	0.88		$	(0.01	)	$	(0.35	)
Diluted	$	0.58		$	0.08		$	1.09		$	0.88		$	(0.01	)	$	(0.35	)

See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(Unaudited)

Net income

$
20,398

$
2,797

$
37,801

$
16,098

Other comprehensive income:

Foreign currency translation adjustments

1,231

(344
)

2,808

(1,169
)
Comprehensive income

$
21,629

$
2,453

$
40,609

$
14,929

	Three Months Ended
	March 31,
	2020			2019
	(Unaudited)
Net loss	$	(492	)	$	(12,104	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(9,224	)		1,333
Unrealized loss on hedging derivatives, net of taxes of $2,039 and $481, respectively		(7,669	)		(1,810	)
Comprehensive loss	$	(17,385	)	$	(12,581	)

See accompanying notes to unaudited condensed consolidated financial statements.

							Accumulated
	Common				Paid-in		other comprehensive			Accumulated			Treasury stock,			Total stockholders'
	Shares		Amount		capital		loss			deficit			at cost			equity
	(Unaudited)
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 expense		—		—		2,970		—			—			—			2,970
Issuances under share-based compensation plan		109		1		861		—			—			—			862
Common stock repurchased for treasury		—		—		—		—			—			(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

See accompanying notes to unaudited condensed consolidated financial statements.

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2020			2019
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net income	$	37,801		$	16,098
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss							$	(492	)	$	(12,104	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		13,622			9,703			11,028			10,659
Realized loss on sale of assets and asset impairments								1,918			2,235
Restructuring charges, net								117			—
Share-based compensation expense		4,794			8,117			2,942			985
Amortization of debt issuance costs		430			1,273			56			51
Amortization of debt discount		—			3,018
Changes in assets and liabilities:
Accounts receivable		(66,438	)		(27,237	)		50,328			8,489
Contract assets and liabilities								(32,574	)		(15,899	)
Operating lease right of use assets and operating lease liabilities								2,018			4,169
Inventories		(24,979	)		(6,592	)		(3,515	)		(419	)
Prepaid expenses and other current assets		881			4,922
Prepaid expenses								(4,558	)		(4,171	)
Other current assets								4,552			(13,046	)
Other noncurrent assets		3,067			(6,900	)		(17,445	)		(14,052	)
Accounts payable and accrued expenses		47,498			6,339			(17,557	)		17,782
Accrued warranty		8,238			17,461			3,889			2,768
Customer deposits		9,019			4,870
Deferred revenue		17,726			(3,571	)
Other noncurrent liabilities		(136	)		475			1,861			462
Net cash provided by operating activities		51,523			27,976
Net cash provided by (used in) operating activities								2,568			(12,091	)
Cash flows from investing activities:
Purchase of property and equipment		(35,312	)		(18,917	)
Purchases of property, plant and equipment								(26,983	)		(18,709	)
Net cash used in investing activities		(35,312	)		(18,917	)		(26,983	)		(18,709	)
Cash flows from financing activities:
Proceeds from issuance of common stock in initial public offering, net of underwriters discount and offering costs		—			67,199
Repayments of term loan		(2,812	)		(617	)
Net proceeds from (repayments of) accounts receivable financing		8,196			(6,050	)
Net repayments of working capital loans		(4,638	)		(4,097	)
Net proceeds from (repayments of) other debt		4,556			(3,415	)
Proceeds from revolving loans								50,000			6,000
Net proceeds (repayments) of accounts receivable financing								(101	)		13,208
Proceeds from working capital loans								—			2,228
Principal repayments of finance leases								(1,492	)		(2,929	)
Net proceeds (repayments) of other debt								16,505			(1,445	)
Debt issuance costs								(183	)		—
Proceeds from exercise of stock options		988			—			812			4,572
Repurchase of common stock including shares withheld in lieu of income taxes		(1,264	)		—			(459	)		(559	)
Restricted cash		(1,543	)		(649	)
Net cash provided by financing activities		3,483			52,371			65,082			21,075
Impact of foreign exchange rates on cash and cash equivalents		305			(545	)
Net change in cash and cash equivalents		19,999			60,885
Cash and cash equivalents, beginning of year		119,066			45,917
Cash and cash equivalents, end of period	$	139,065		$	106,802
Impact of foreign exchange rates on cash, cash equivalents and restricted cash								(1,806	)		993
Net change in cash, cash equivalents and restricted cash								38,861			(8,732	)
Cash, cash equivalents and restricted cash, beginning of year								71,749			89,376
Cash, cash equivalents and restricted cash, end of period							$	110,610		$	80,644

Supplemental disclosures of cash flow information:
Cash paid for interest	$	8,717		$	9,505		$	1,773		$	1,940
Cash paid for income taxes, net		14,134			5,191			3,414			4,781
Supplemental disclosures of noncash investing and financing activities:
Conversion of subordinated convertible promissory notes into common stock		—			11,877
Equipment acquired through capital lease and financing obligations		4,749			1,464
Accrued capital expenditures in accounts payable		3,689			3,610			14,669			6,409

See accompanying notes to unaudited condensed consolidated financial statements.

TPI Composites, Inc. is the holding company that conducts substantially all of its business operations through its direct and indirect subsidiaries (collectively, the Company). The Company was founded in 1968 and has been producing composite wind blades since 2001. The Company’s knowledge and experience of composite materials and manufacturing originates with its predecessor company, Tillotson Pearson Inc., a leading manufacturer of high-performance sail and powerboats along with a wide range of composite structures used in other industrial applications. Following the separation from the boat building business in 2004, the Company reorganized in Delaware as LCSI Holding, Inc. and then changed its corporate name to TPI Composites, Inc. in 2008. ~~Today, the~~The Company is headquartered in Scottsdale, Arizona and has expanded its global footprint to include domestic facilities in Newton, Iowa; ~~Fall River, Massachusetts;~~ Warren, Rhode Island and Santa Teresa, New Mexico and international facilities in Dafeng, China; Taicang Port, China; ~~Taicang City,~~Yangzhou, China; Juárez, ~~Mexico~~Mexico; Matamoros, Mexico; Izmir, Turkey; Chennai, India; Kolding, Denmark and ~~Izmir, Turkey. In April 2017,~~Berlin, Germany.

References to TPI Composites, Inc, the ~~Company entered into a new lease agreement with a third party for a new manufacturing facility~~“Company,” “we,” “us” or “our” in ~~Matamoros, Mexico,~~these notes refer to TPI Composites, Inc. and ~~the Company expects to commence operations at this facility in the second half of 2018.~~

In July 2016, the Company completed an initial public offering (IPO) of 7,187,500 shares of the Company’s common stock at a price of $11.00 per share, which included 937,500 shares issued pursuant to the underwriters’ over-allotment option. Certain of the Company’s existing shareholders, a director and executive officers purchased an aggregate of 1,250,000 shares of common stock in the IPO included in the total issuance above. The net proceeds from the IPO were $67.2 million after deducting underwriting discounts and offering expenses. Immediately prior to the closing of the IPO, all shares of the then-outstanding redeemable preferred shares converted into an aggregate of 21,110,204 shares of common stock and the redeemable preferred share warrants converted on a net issuance basis into 120,923 shares of common stock. In addition, concurrent with the closing of the IPO, certain subordinated convertible promissory notes in the aggregate principal and interest amount of $11.9 million were converted into 1,079,749 shares of common stock at the public offering price of $11.00 per share.

~~Prior to the IPO, in July 2016 the Company amended~~ its amended and restated certificate of incorporation to effect a 360-for-1 forward stock split of its common stock. As a result of the stock split, the Company has adjusted the share amounts authorized and issuable under the share-based compensation plans. All share and per share common stock information (including the share-based compensation plans) referenced throughout the unaudited condensed consolidated financial statements and notes thereto have been retroactively adjusted to reflect this stock split. The stock split did not cause an adjustment to the par value of the authorized shares of common stock.

In May 2017, the Company completed a secondary public offering of 5,075,000 shares of its common stock at a price of $16.35 per share, which included 575,000 shares issued pursuant to the underwriters’ option to purchase additional shares. All of the shares were sold by existing shareholders and certain executive officers of the Company. The selling shareholders received all of the net proceeds of $78.8 million from the secondary public offering. The Company did not sell any shares and did not receive any of the proceeds from the offering and the costs paid by the Company in connection with the offering of $0.8 million were recorded in general and administrative costs in the accompanying condensed consolidated income statement. subsidiaries.

~~The Company divides its~~We divide our business operations into ~~four~~4 geographic operating segments—(1) the United States (U.S.), (2) Asia, (3) Mexico and (4) Europe, the Middle East, Africa and ~~Africa (EMEA)~~India (EMEAI) as follows:

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. 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 condensed consolidated financial statements included herein have been prepared by ~~the Company~~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, ~~2016~~2019 included in ~~the Company’s~~our Annual Report on Form 10-K. 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 ~~the Company believes~~we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in the opinion of our management, all normal recurring adjustments necessary to present fairly ~~the Company’s~~our financial position at ~~September 30, 2017,~~March 31, 2020, and the results of ~~the Company’s~~our operations, comprehensive ~~income~~loss and cash flows for the periods presented. ~~The Company derived the December 31, 2016 condensed consolidated balance sheet data from audited financial statements, but does not include all disclosures required by GAAP.~~ Interim results for the three ~~and nine~~ months ended ~~September 30, 2017 and 2016~~March 31, 2020 are not necessarily indicative of the results to be expected for the full years.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held at each reporting date.

We adopted this standard on January 1, 2020 and it did not have a material effect on our condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements in Topic 820.

We adopted this standard on January 1, 2020 and it did not have a material effect on our condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which primarily removes specific exemptions to the general principles in Topic 740 in GAAP and improves the financial statement preparers’ application of income tax-related guidance and simplifies GAAP.

We adopted this standard on January 1, 2020 and it did not have a material effect on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance 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. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

We are currently evaluating our contracts and the optional expedients provided by the new standard.

The majority of our revenue is generated from long-term contracts associated with manufacturing of wind blades and related services. We account for a long-term contract when it has the approval from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and the collectability of consideration is probable.

To determine the proper revenue recognition method for each long-term contract, we evaluate whether the original contract should be accounted for as one or more performance obligations. This evaluation requires judgment and the decisions reached could change the amount of revenue and gross profit recorded in a given period. As most of our contracts contain multiple performance obligations, we allocate the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. Our manufacturing services are customer specific and involve production of items that cannot be sold to other customers due to the customers’ protected intellectual property; therefore, we allocate the total transaction price under our contracts with multiple performance obligations using the contractually stated prices, as these prices represent the relative standalone selling price based on an expected cost plus margin model.

Revenue is primarily recognized over time as we have an enforceable right to payment upon termination and we may not use or sell the product to fulfill other customers’ contracts. In addition, the customer does not have return or refund rights for items produced that conform to the specifications included in the contract. Because control transfers over time, revenue is recognized based on the

extent of progress towards the completion of the performance obligation. We use the cost-to-cost input measure of progress for our contracts as this method provides the best representation of the production progress towards satisfaction of the performance obligation as the materials are distinct to the product being manufactured because of customer specifications provided for in the contract, the costs incurred are proportional to the progress towards completion of the product, and the products do not involve significant pre-fabricated component parts. Under the cost-to-cost method, progress and the related revenue recognition is determined by a ratio of direct costs incurred to date in fulfillment of the performance obligation to the total estimated direct costs required to complete the performance obligation.

Determining the revenue to be recognized for services performed under our manufacturing contracts involves judgments and estimates relating to the total consideration to be received and the expected direct costs to complete the performance obligation. As such, revenue recognized reflects our estimates of future contract volumes and the direct costs to complete the performance obligation. The judgments and estimates relating to the total consideration to be received include the amount of variable consideration as our contracts typically provide the customer with a range of production output options from guaranteed minimum volume obligations to the production capacity of the facility, and customers will provide periodic non-cancellable commitments for the number of wind blades to be produced over the term of the agreement. The total consideration also includes payments expected to be received associated with wind blade model transitions. We use historical experience, customer commitments and forecasted future production based on the capacity of the plant to estimate the total revenue to be received to complete the performance obligation. In addition, the amount of revenue per unit produced may vary based on the costs of production of the wind blades as we may be able to change the price per unit based on changes in the cost of production. Further, some of our contracts provide opportunities for us to share in labor and material cost savings as well as absorb some additional costs as an incentive for more efficient production, both of which impact the margin realized on the contract and ultimately the total amount of revenue to be recognized. Additionally, certain of our customer contracts provide for us to make concessions, such as in the form of liquidated damages, for missed production deadlines which are paid over a negotiated timeline.

We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information available to us at the time of the estimate and may materially change as additional information becomes known.

Our contracts may be modified to account for changes in specifications of products and changing requirements. If the contract modifications are for goods or services that are not distinct from the existing contract, they are accounted for as if they were part of the original contract. The effect of a contract modification on the transaction price and the measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue on a cumulative catch-up basis. If contract modifications are for goods and services that are distinct from the existing contract and increases the amount of consideration reflecting the standalone sale price of the additional goods or services, then the contract modification is accounted for as a separate contract and is evaluated for one or more performance obligations.

Each reporting period, we evaluate the progress towards satisfaction of each performance obligation based on any contract modifications that have occurred, cost incurred to date, and an estimate of the expected future revenue and costs to be incurred to complete the performance obligation. Based on this analysis, any changes in estimates of revenue, cost of sales, contract assets and liabilities and the related impact to operating income are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on the percentage of completion of the performance obligation.

Wind blade pricing is based on annual commitments of volume as established in our customer contracts and orders less than committed volume may result in a higher price per wind blade to our customers. Orders in excess of annual commitments may result in discounts to our customers from the contracted price for the committed volume. Our customers typically provide periodic purchase orders with the price per wind blade given the current cost of the bill of materials, labor requirements and volume desired. We record an allowance for expected utilization of early payment discounts which are reported as a reduction of the related revenue.

Precision molding and assembly systems included in a customer’s contract are based upon the specific engineering requirements and design determined by the customer and are specific to the wind blade design and function desired. From the customer’s engineering specifications, a job cost estimate is developed along with a production plan, and the desired margin is applied based on the location the work is to be performed and complexity of the customer’s design. Precision molding and assembly systems are generally built to produce wind blades which may be manufactured by us in production runs specified in the customer contract.

Contract assets primarily relate to our rights to consideration for work completed but not billed at the reporting date on manufacturing services contracts. The contract assets are transferred to accounts receivable when the rights become unconditional, which generally occurs when customers are invoiced upon the determination that a product conforms to the contract specifications and invoices are due based on each customer’s negotiated payment terms, which, when factoring in supply chain financing arrangements, range from 5 to 25 days. We apply the practical expedient that allows us to exclude payment terms under one year from the transfer of a promised good or service from consideration of a significant financing component in its contracts. With regards to the production of precision molding and assembly systems, our contracts generally call for progress payments to be made in advance of production. Generally, payment is made at certain percentage of completion milestones with the final payment due upon delivery to the manufacturing facility. These progress payments are recorded within contract liabilities as current liabilities in the condensed consolidated balance sheets and are reduced as we record revenue over time. We evaluate indications that a customer may not be able to meet the obligations under our long-term supply agreements to determine if an account receivable or contract asset may be impaired.

Our customers may request, in situations where they do not have space available to receive products or do not want to take possession of products immediately for other reasons, that their finished products be stored by us in one of our facilities. Most of our contracts provide for a limited number of wind blades to be stored during the period of the contract with any additional wind blades stored subject to additional storage fees, which are included in the wind blade product revenue.

Revenue related to non-recurring engineering and freight services provided under our customer contracts is recognized at a point in time following the transfer of control of the promised services to the customer. Customers usually pay the carrier directly for the cost of shipping associated with items produced. When we pay the shipping costs, we apply the practical expedient that allows us to account for shipping and handling as a fulfillment costs and include the revenue in the associated performance obligation and the costs are included in cost of goods sold.

Taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions, that are collected by us from a customer, are excluded from revenue.

~~The Company provides~~We provide a limited warranty for ~~its mold~~our wind blades and ~~wind blade products,~~related precision molding and assembly systems, including ~~parts~~materials and ~~labor,~~workmanship, with terms and conditions that vary depending on the product sold, generally for periods that range from two to five years. We also provide a limited warranty for our transportation products, including materials and workmanship, with terms and conditions that vary depending on the product sold, generally for a period of approximately two years. Warranty expense is recorded based upon estimates of future repairs using a probability-based ~~methodology.~~methodology that considers previous warranty claims, identified quality issues and industry practices. Once the warranty period has expired, any remaining unused warranty accrual for the specific products is generally reversed against the current year warranty expense amount.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right of use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt, net of debt issuance costs and current maturities in the condensed consolidated balance sheets.

~~Warranty accrual~~Operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at ~~September 30 consisted~~commencement date. Variable payments are not included in ROU assets or lease liabilities and can vary from period to period based on asset usage or our proportionate share of common costs. The implicit rate within our leases is generally not determinable and, therefore, the incremental borrowing rate at lease commencement is utilized to determine the present value of lease payments. We estimate our incremental borrowing rate based on third-party lender quotes to obtain secured debt in a like currency for a similar asset over a timeframe similar to the term of the ~~following (in thousands):~~lease. The ROU asset also includes any lease prepayments made and any initial direct costs incurred and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have elected not to recognize ROU assets or lease liabilities for leases with a term of 12 months or less.

We have lease agreements with lease and non-lease components. We have elected to apply the practical expedient to account for these components as a single lease component for all classes of underlying assets.

Our restructuring charges consist of employee severance, one-time termination benefits and ongoing benefits related to the reduction of our workforce and other costs associated with exit activities, which may include costs related to leased facilities to be abandoned and facility and employee relocation costs. Liabilities for costs associated with a restructuring activity are measured at fair value and are recognized when the liability is incurred, except for one-time termination benefits. One-time termination benefits are expensed at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Ongoing benefits are expensed when restructuring activities are probable and the benefit amounts are estimable.

Common stock purchased for treasury is recorded at historical cost. Transactions in treasury shares ~~are primarily related~~relate to share-based compensation plans and are recorded at weighted-average cost.

Net income attributable to preferred shareholders related to the accrual of dividends on previously outstanding convertible and senior redeemable preferred shares, the accretion to redemption amounts on the convertible preferred shares and warrant fair value adjustment. Immediately prior to the closing of the Company’s IPO, all preferred shares were converted into shares of the Company’s common stock and as a result, the accrual of dividends ceased.

~~The basic~~Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during a period. Diluted net income per common share is computed by ~~dividing~~giving effect to all potentially dilutive securities, unless there is a net loss for the period. In computing diluted net income byper common share, we use the ~~weighted-average number of common shares outstanding plus potentially dilutive securities.~~treasury stock method. The table below reflects the calculation of the weighted-average number of common shares outstanding, using the treasury stock method, used in computing basic and diluted ~~earnings~~net income (loss) per common ~~share (in thousands):~~share:

									Three Months Ended
	Three Months Ended				Nine Months Ended				March 31,
	September 30,				September 30,				2020		2019
	2017		2016		2017		2016		(in thousands)
Basic weighted-average shares outstanding		33,891		27,284		33,789		12,042		35,213		34,906
Effect of dilutive stock options and warrants		1,124		91		959		91
Effect of dilutive awards										—		—
Diluted weighted-average shares outstanding		35,015		27,375		34,748		12,133		35,213		34,906

Share-based compensation awards of approximately 66,000 and 100,000 shares were excluded from the computation of net loss per share for the three months ended March 31, 2020 and 2019, respectively, because their effect would be anti-dilutive. Further, since there were net losses for the three months ended March 31, 2020 and 2019, approximately 890,000 and 1,580,000 potentially dilutive shares were excluded from the calculation.

We use interest rate swap contracts to mitigate our exposure to interest rate fluctuations associated with our credit agreement (the Credit Agreement) that we entered into in April 2018. We do not use such swap contracts for speculative or trading purposes.

To partially offset the variability of future interest payments on the Credit Agreement arising from changes in the London Interbank Offered Rate (LIBOR), in April 2018, we entered into an interest rate swap agreement with a financial institution for a notional amount of $75.0 million with an expiration date of April 2023. This interest rate swap effectively hedges $75.0 million of the future variable rate LIBOR interest expense to a fixed rate interest expense. The derivative instrument qualified for accounting as a cash flow hedge in accordance with FASB Accounting Standard Codification (ASC) Topic 815, Derivatives and Hedging, and we designated it as such.

The ~~Company did not have any potentially dilutive securities outstanding that are not~~settlement value of the interest rate swap is $5.3 million as of March 31, 2020 and is included in other noncurrent liabilities in the ~~diluted~~condensed consolidated balance sheet. The unrealized loss on the swap of $4.2 million, net ~~income per share calculation~~of tax, as of March 31, 2020 is included in

accumulated other comprehensive loss in the condensed consolidated balance sheet. The settlement value of the interest rate swap was $2.7 million as of December 31, 2019 and was included in other noncurrent liabilities in the condensed consolidated balance sheet. The unrealized loss on the swap of $2.2 million, net of tax, is included in accumulated other comprehensive loss in the condensed consolidated balance sheet.

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. In September 2019 we entered into the first of these foreign exchange forward contracts. We do not use such forward contracts for speculative or trading purposes.

We expect certain of our subsidiaries to have future cash flows that will be denominated in currencies other than the ~~three~~subsidiaries’ functional currencies. Changes in the exchange rates between the functional currencies of our subsidiaries and the other currencies in which they transact will cause fluctuations in the cash flows we expect to receive or pay when these cash flows are realized or settled. Accordingly, we enter into foreign exchange forward contracts to hedge a portion of these forecasted cash flows. As of March 31, 2020, these foreign exchange forward contracts hedged our forecasted cash flows for periods up to nine ~~months ended September 30, 2017~~months. These foreign exchange forward contracts qualified for accounting as cash flow hedges in accordance with ASC Topic 815, and ~~2016.~~we designated them as such.

As of March 31, 2020, the notional values associated with our foreign exchange forward contracts qualifying as cash flow hedges were 1.2 billion Mexican Peso. The fair value of the foreign exchange forward contracts is $6.5 million as of March 31, 2020 and is included in accounts payable and accrued expense in the condensed consolidated balance sheet. The unrealized loss on the foreign exchange forward contracts of $5.1 million, net of tax, as of March 31, 2020 is included in accumulated other comprehensive loss in the condensed consolidated balance sheet.

All of our derivate assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy.

We provide for cash deposits for letters of guarantee used for customs clearance related to our China locations which are reported as restricted cash in our condensed consolidated balance sheets. We also maintain a long-term deposit in interest bearing accounts, related to fully cash-collateralized letters of credit in connection with an equipment lessor in Iowa which is reported within other noncurrent assets in our condensed consolidated balance sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets which total the same such amounts in the condensed consolidated statements of cash flows:

Other current assets primarily include refundable value-added taxes and deposits. As of March 31, 2020, we had $21.9 million of refundable value-added taxes and $2.3 million of deposits. As of December 31, 2019, we had $22.7 million of refundable value-added taxes and $6.1 million of deposits.

The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The following tables represents the disaggregation of our net sales revenue by product for each of our reportable segments:

In addition, most of our net sales are made directly to our customers, primarily large multi-national wind turbine manufacturers, under our long-term contracts which are typically five years in length.

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 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 were historically recorded as customer deposits which usually relate to progress payments received as precision molding and assembly systems were 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.

~~Recently Issued Accounting Pronouncements~~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, as demonstrated in the table below.

~~In March 2016, the Financial Accounting Standards Board (FASB) issued~~ ~~Accounting Standards Update (ASU) 2016-09,~~ ~~Compensation – Stock Compensation: Improvement to Employee Share-Based Payment Accounting, to simplify certain aspects~~Contract assets and contract liabilities consisted of the ~~accounting for share-based payment transactions~~following:

Contract assets increased by $25.6 million from December 31, 2019 to ~~employees. The new standard requires excess tax benefits and tax deficiencies~~March 31, 2020 due to be recorded in the consolidated income statements as a component of the provision for income taxes when stock awards vest or options are exercised. In addition, it eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. Further, the standard provides an accounting policy election to account for forfeitures as they occur, allows the Company to withhold more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activity on the Company’s consolidated statements of cash flows.

The Company adopted ASU 2016-09 in the first quarter of 2017 using the modified retrospective transition method through a cumulative effect adjustment to equity as of January 1, 2017. Upon adoption, the Company elected to eliminate application of a forfeiture assumption to share based compensation expense and account for forfeitures as they occur over the vesting period. The cumulative effect of this change increased additional paid-in capital and decreased retained earnings as of January 1, 2017 by $1.1 million. The Company did not have any previously unrecognized excess tax effects that had not been recorded as a reduction to the tax liability.

~~The Company did not recognize any excess tax benefits from the vesting of restricted stock units and stock options which were later exercised~~incremental unbilled production during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020. Contracts liabilities decreased by $0.4 million from December 31, 2019 to March 31, 2020 due to the ~~valuation allowance recorded against~~revenue earned related to precision molding and assembly systems and wind blades being produced exceeding the ~~U.S. federal and state deferred tax assets.~~ amounts billed to customers in the three months ended March 31, 2020.

The ~~provisions~~time it takes to produce a single blade is typically between 5 to 7 days. The time it takes to produce a mold is typically between 3 to 6 months.

For the three months ended March 31, 2020, we recognized $3.0 million of ~~the standard relating to the cash flow presentation and income taxes are~~revenue, which was included in the ~~accompanying statements of cash flows and income statements for applicable periods presented in~~corresponding contract liability balance at the accompanying financial statements. If or when the valuation allowance recorded against the U.S. federal and state deferred tax assets is released, the inclusion of excess tax benefits and deficiencies as a componentbeginning of the ~~Company’s income tax expense~~period.

Remaining performance obligations represent the transaction price for which work has not been performed and excludes any unexercised contract options. As discussed in Note 1, Summary of Operations and Significant Accounting Policies, the transaction price includes estimated variable consideration as determined based on the estimated production output within the range of the contractual guaranteed minimum volume obligations and production capacity.

As of March 31, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations to be satisfied in future periods was approximately $3.8 billion. We estimate that we will ~~increase volatility within~~recognize the ~~provision for income taxes~~remaining performance obligations as revenue as follows: 34 percent in the ~~amount~~remainder of excess tax benefits or deficiencies from share-based compensation awards are dependent on the Company’s stock price at the date the restricted awards vest, the stock price on the date an option is exercised2020, 33 percent in 2021, 20 percent in 2022 and the ~~quantity~~remaining 13 percent in 2023. The transaction price allocated to the remaining performance obligations excludes approximately $207.6 million of ~~options exercised.~~

~~In May 2014,~~variable consideration over the ~~FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers, (Topic 606), which provides new recognition and disclosure requirements for revenue from~~contractual guaranteed minimum volume obligations under current contracts with customers ~~that supersedes~~which has been constrained primarily due to uncertainty associated with production volume during the ~~existing revenue recognition guidance. The new recognition requirements focus on when the customer obtains control~~remaining term of the ~~goods or services, rather than~~agreements. We estimate the constraint will be resolved in subsequent periods when our customers provide additional information relevant to forecasted future production.

For the three months ended March 31, 2020, net revenue recognized from our performance obligations satisfied in previous periods was reduced by $5.2 million as compared to a reduction of $14.7 million in the same period of 2019. The current ~~risks~~year decrease primarily related to changes in certain of our estimated total contract values and ~~rewards model~~related percentage of ~~recognition. The core principle~~completion estimates.

We recognize an asset for deferred costs incurred to fulfill a contract when those costs meet all of the new standard is that an entity will recognize revenue when it transfers goods or services to its customers in an amount that reflects the consideration an entity expects to be entitled to for those goods or services. The new disclosure requirements will include information intended to communicate the nature, amount, timing and any uncertainty of revenue and cash flows from the applicable contracts, including any significant judgments and changes in judgments and assets recognized fromfollowing criteria: (a) the costs relate directly to ~~obtain~~a contract or ~~fulfill a contract. Entities will generally be required~~ to ~~make more estimates and use more judgment under~~an anticipated contract that we can specifically identify; (b) the ~~new standard.~~costs generate or enhance our

The new requirements are effective for the Company beginning January 1, 2018, and may be implemented either retrospectively for all periods presented, or as a cumulative-effect adjustment as of the date of adoption.

The Company will adopt Topic 606 as of January 1, 2018 with retrospective application to January 1, 2015 through December 31, 2017. Based on the Company’s evaluation of the new standard, revenue recognition in accordance with Topic 606 differs from the current guidance provided by GAAP as outlined in the SEC’s Staff Accounting Bulletin 104, which requires the Company to defer recognition of revenue until the risk of loss has passed to the customer and delivery has been made or a fixed delivery schedule has been provided by the customer. Since the Company’s products have no alternative use to the Company due to contractual restrictions placed by each customer on the technical specifications and design of the products, the Company’s assessment is that revenue upon adoption of Topic 606 will be recognized over time during the course of the production process and before the product is delivered to the customer.

~~The Company expects~~resources that will be used in satisfying performance obligations in the ~~adoption~~future; and, (c) the costs are expected to be recovered. We capitalize the costs related to training our workforce to execute the manufacturing services and other facility set-up costs related to preparing for production of ~~Topic 606 will have~~ a ~~material impact on~~specific contract. We factor these costs into our estimated cost analysis for the ~~amount~~overall contract. Costs capitalized are amortized over the number of ~~net sales,~~units produced during the contract term. As of March 31, 2020, the cost and accumulated amortization of such assets totaled $5.7 million and $2.8 million, respectively. As of December 31, 2019, the cost and accumulated amortization of such assets totaled $5.6 million and $2.7 million, respectively. These amounts are included in other noncurrent assets in the condensed consolidated balance sheets and in cost of goods sold ~~and income from operations reported in~~within the consolidated income statements in future periods. In accordance with Topic 606, revenues will be recognized over the time period of the production process, whereas currently it is recognized upon delivery to the customer. Further, since revenue will be recognized over time for manufacturing contracts, future net sales will include amounts related to products that are in production as of the period end. Finally, the gross margin realized in the period may be impacted by the changes related to the timing and amount of revenue recognized for products in the production process.

Although Topic 606 does not have a cash impact nor an effect on the economics of the Company's underlying customer contracts, applying Topic 606 to contracts in startup and transition will likely result in higher reported earnings in 2018 than under the previous guidance as revenue is shifted to the initial years of startup and transition activities of a contract. Topic 606 will not change the total amount of revenue recognized under the Company’s long-term supply contracts, only accelerate the timing of when the revenue is recognized. The Company expects a corresponding acceleration in timing of cost of goods sold recognition for these contracts upon adoption of Topic 606.

The changes noted above involving the timing of revenue recognition will materially impact the amount of reported assets and liabilities on the consolidated balance sheet associated with the Company’s manufacturing contracts. Upon adoption of Topic 606, the Company will include amounts recognized in revenue for products in production as contract assets on the consolidated balance sheet, which differs from the current practice of including the balances in inventory, and will include an amount for the margin recognized to date. The Company will no longer report inventory held for customer orders since revenue will be recognized over time during the course of the production process and before the product is delivered to the customer. Work performed as production takes place will lead to revenue recognition and be included in the consolidated balance sheet under contract assets until billed. The Company expects that contract liabilities will be reported for amounts collected from customers in advance of the production of products. The Company also expects that the amount of deferred revenue will be substantially reduced as revenue for products will be recognized over time.

The Company does not anticipate a change in the timing of cash receipts and payments from customers as customers will continue to be invoiced as products are completed. In addition, the Company does not expect changes to the aggregate amount of cash flows from operating activities in thecondensed consolidated statements of cash flows; however, the impact of changes in the captions on the consolidated balance sheet will have a material effect on the captions within cash flows from operating activities in the consolidated statements of cash flows.operations.

The Company has a project plan in place for the transition to revenue recognition in accordance with Topic 606 including necessary changes to accounting processes and procedures, the chart of accounts, the system of internal control and retrospective application of the standard to periods beginning January 1, 2015 through December 31, 2017. The Company expects to complete the plan in time to report in accordance with Topic 606 for the first quarterly filing on Form 10-Q for the period ended March 31, 2018.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments, that clarifies how certain cash receipts and cash payments are presented and classified in the consolidated statement of cash flows. In addition, in November 2016, the FASB issued ASU 2016-18,~~ ~~Restricted Cash~~, that requires restricted cash and cash equivalents to be included with the amount of cash and cash equivalents that are reconciled to on the consolidated statement of cash flows. These ASUs are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The Company does not believe that the adoption of ASU 2016-15 and 2016-18 on January 1, 2018 will have a material effect on the Company’s financial position or results of operations.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. ASU 2016-02 is a comprehensive new recognition model for leases requiring a lessee to recognize the asset and liability that arise from leases. For public companies, the amendment is effective for financial statements issued for annual periods beginning after December 16, 2018. Entities may elect to early adopt the lease standard in 2016. In adopting ASU 2016-02, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. Management is evaluating the provisions of ASU 2016-02 and has not yet selected a transition method nor determined what impact the adoption of ASU 2016-02 will have on the Company’s financial position or results of operations.

~~The Company’s~~Our revenues and receivables are earned from a small number of customers. As such, ~~the Company’s~~our production levels are dependent on these customers’ orders. See ~~note 11,~~ Note 12, Concentration of ~~Customers.~~Customers.

The ~~Company maintains its~~COVID-19 pandemic adversely impacted our operations and results of operations for the three months ended March 31, 2020 due primarily to reduced production levels at our China manufacturing facilities. See Note 14, Subsequent Events, for additional details on the COVID-19 pandemic.

We maintain our U.S. cash in bank deposit 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 ~~2017~~2020 and ~~2016.~~2019. At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016, the Company~~2019, we had ~~$105.6~~$71.6 million and ~~$103.4~~$45.8 million, respectively, of cash in deposit accounts in ~~high quality~~ U.S. banks, which was in excess of FDIC limits. ~~The Company has~~We have not experienced losses in any such accounts.

~~The Company~~We also ~~maintains~~maintain cash in bank deposit accounts outside the U.S. with no ~~deposit~~ insurance. ~~This includes $31.5~~At March 31, 2020, this included $21.1 million in Turkey, $11.5 million in China, ~~$1.2~~and $3.5 million in ~~Turkey and $0.8~~India, $1.6 million in Mexico ~~as of September 30, 2017. The Company has~~and $0.2 million in other countries. We have not experienced losses in these ~~accounts in the past.~~

Related party transactions include transactions between the Company and certain of its affiliates. The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

The Company has entered into several agreements with subsidiaries of General Electric Company and its consolidated affiliates (GE) relating to the operation of its business. As a result of these agreements, GE has been a debtor, creditor and holder of both preferred and common shares. During the second quarter of 2017, GE reduced its holdings of the Company’s common shares to less than five percent of the total shares outstanding and then completely divested of the Company’s common shares during the current quarter.

The Company has entered into five separate supply agreements with GE to manufacture wind blades in Newton, Iowa; Taicang Port, China; Juárez, Mexico (2) and Izmir, Turkey. The supply agreements in Taicang Port, China and Izmir, Turkey expire December 31, 2017 and GE has decided not to renew or extend these two contracts. As a result of the supply agreements, GE is the Company’s largest customer. For the six months ended June 30, 2017, the Company recorded related-party sales with GE of $187.3 million. As disclosed at note 11, ~~Concentration of Customers~~, for the three and nine months ended September 30, 2016, the Company recorded related-party sales with GE of $98.1 million and $292.4 million, respectively. As of June 30, 2017 and December 31, 2016, the Company had accounts receivables related to sales to GE of $26.7 million and $16.6 million, respectively.

~~In January 2016, the Company entered into an agreement with GE and received an advance of $2.0 million, which the Company repaid in full in August 2016.~~

Certain of the Company’s existing stockholders, consisting of entities associated with Element Partners, Angeleno Group and Landmark Partners, each of which is an affiliate of a member of the board of directors, as well as certain executive officers and a director, purchased an aggregate of 1,250,000 shares of common stock in the IPO.accounts. In addition, ~~all outstanding obligations and accrued~~at March 31, 2020, we had short-term deposits in interest ~~under~~bearing accounts of $0.6 million in China, which are reported as restricted cash in our condensed consolidated balance sheets. At March 31, 2020, we also had long-term deposits in interest bearing accounts of $0.5 million in Iowa which are reported as restricted cash within the Company’s subordinated convertible promissory notes held by certain existing stockholders, including Element Partners, Angeleno Group and Landmark Partners, were converted into an aggregate of 1,079,749 shares of common stock concurrent with the closing of the IPO at the public offering price of $11.00 per share. caption other noncurrent assets in our condensed consolidated balance sheets.

In connection with the Company’s secondary offering, certain entities associated with Element Partners, Angeleno Group, Landmark Partners and NGP Energy Technology Partners, L.P, as well as certain executive officers of the Company sold an aggregate of 5,075,000 shares of common stock at the public offering price of $16.35 per share.

					March 31,		December 31,
	September 30,		December 31,		2020		2019
	2017		2016		(in thousands)
Trade accounts receivable	$	130,578	$	66,612	$	123,466	$	180,051
Other accounts receivable		3,880		1,230		3,888		3,961
Total accounts receivable	$	134,458	$	67,842	$	127,354	$	184,012

~~Note 5. Inventories~~Notes to Unaudited Condensed Consolidated Financial Statements

Property, plant and equipment, net consisted of the ~~following (in thousands):~~following:

							March 31,			December 31,
	September 30,			December 31,			2020			2019
	2017			2016			(in thousands)
Machinery and equipment	$	92,938		$	70,481		$	183,155		$	159,176
Buildings		14,603			13,449			14,273			14,495
Leasehold improvements		21,518			16,818			55,883			56,414
Office equipment and software		11,061			6,403			32,373			32,284
Furniture		20,235			15,883			23,292			22,429
Vehicles		341			342			565			562
Construction in progress		16,472			11,592			17,944			20,677
Total		177,168			134,968
Total property, plant and equipment, gross								327,485			306,037
Accumulated depreciation		(57,533	)		(43,802	)		(109,917	)		(101,030	)
Property, plant and equipment, net	$	119,635		$	91,166		$	217,568		$	205,007

Total depreciation expense for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 was ~~$5.1~~$10.9 million and ~~$3.5~~$10.4 million, ~~respectively,~~respectively.

As of March 31, 2020, the cost and ~~for the nine months ended September 30, 2017~~accumulated depreciation of property, plant and ~~2016 was $13.5~~equipment that we are leasing under finance lease arrangements were $44.0 million and ~~$9.7~~$18.2 million, respectively. As of December 31, 2019, the cost and accumulated depreciation of property, plant and equipment that we are leasing under finance lease arrangements were $45.0 million and $17.0 million, respectively.

Long-term debt, net of debt issuance costs and current maturities, consisted of the ~~following (in thousands):~~following:

September 30,

December 31,

2017

2016

Senior term loan—U.S.

$
72,188

$
75,000

Senior revolving loan—U.S.

2,820

2,820

Accounts receivable financing—EMEA

23,316

15,120

Unsecured financing—EMEA

—

4,638

Equipment financing—EMEA

17,704

15,813

Equipment capital lease—Mexico

14,731

8,037

Equipment capital lease—U.S.

867

2,016

Equipment capital lease—EMEA

3,810

1,898

Equipment loan—Mexico

61

103

Total long-term debt

135,497

125,445

Less: Debt issuance costs

(1,860
)

(2,290
)
Total long-term debt, net of debt issuance costs

133,637

123,155

Less: Current maturities of long-term debt

(44,498
)

(33,403
)
Long-term debt, net of debt issuance costs and
current maturities

$
89,139

$
89,752

	March 31,			December 31,
	2020			2019
	(in thousands)
Senior revolving loan—U.S.	$	162,414		$	112,414
Accounts receivable financing—EMEAI		3,704			3,805
Unsecured financing—EMEA		17,716			—
Equipment financing—EMEAI		6,839			7,903
Equipment finance lease—U.S.		179			288
Equipment finance lease—EMEAI		5,120			5,732
Equipment finance lease—Mexico		11,000			11,919
Total debt - principal		206,972			142,061
Less: Debt issuance costs		(798	)		(672	)
Total debt, net of debt issuance costs		206,174			141,389
Less: Current maturities of long-term debt		(19,610	)		(13,501	)
Long-term debt, net of debt issuance costs and current maturities	$	186,564		$	127,888

In February 2020, we entered into an Incremental Facility Agreement with the current lenders to our Credit Agreement and an additional lender, pursuant to which the aggregate principal amount of our revolving credit facility under the Credit Agreement was increased from $150.0 million to $205.0 million. All other material terms and conditions of the Credit Agreement remained the same.

In the first quarter of 2020, we entered into a credit agreement with a Turkish financial institution to provide up to 15.0 million Euro (approximately $16.6 million as of March 31, 2020) of unsecured financing. Interest accrues at a fixed rate of 2.25% and is payable at the end of the term when the loan is repaid. As of March 31, 2020, there was $16.6 million outstanding under this credit agreement.

~~The Company has granted restricted stock unit (RSU) and stock option awards to certain employees and non-employee directors under the~~Our Amended and Restated 2015 Stock Option and Incentive Plan (the 2015 Plan)~~. Each award~~ provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights to certain employees, non-employee directors and consultants. Under the 2015 Plan, we have granted ~~prior~~awards of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PSUs) to certain employees and non-employee directors.

During the ~~consummation~~three months ended March 31, 2020, we issued to certain employees and non-employee directors an aggregate of ~~the IPO included a performance condition~~412,729 timed-based RSUs, 112,561 PSUs that ~~required the completion of an initial public offering by the Company and a required vesting period of one to four years, commencing~~vest upon achievement of ~~the performance condition. As the IPO was consummated in July 2016, the Company began recording compensation expense in the third quarter~~a cumulative, three-year Adjusted EBITDA target measured from January 1, 2020 through December 31, 2022, and 184,522 PSUs that vest upon achievement of ~~2016~~certain stock price hurdles for the ~~requisite service~~ period ~~from~~of the grant date through ~~the IPO date, with the balance~~December 31, 2022. All of the ~~share-based compensation~~time-based RSUs vest on the third anniversary date of the grant date. Each of the time-based and performance-based awards are subject to ~~be expensed over~~ the ~~remaining vesting period. Total share-based compensation expense recognized~~recipient’s continued service with us, the terms and conditions of the 2015 Plan and the applicable award agreement. In addition, during the three months ended ~~September 30, 2017 was $1.0 million, of which $0.2 million is included in cost of goods sold and the remaining $0.8 million is included in general and administrative expenses. The amount related~~March 31, 2020, we issued 7,082 stock options to ~~RSUs was $0.4 million while $0.6 million related to stock options. Total~~an employee.

The share-based compensation expense recognized in the condensed consolidated statements of operations was as follows:

Included in total share-based compensation expense for the three months ended March 31, 2020 is $1.7 million of compensation expense associated with the modification of certain employee and non-employee awards during the ~~nine~~quarter. The modifications primarily provided for the extension of the post termination exercise period of outstanding stock options, resulting in a one-time charge in the three months ended September 30, 2017 was $4.8 million, of which $0.8 million is included in cost of goods sold and the remaining $4.0 million is included in general and administrative expenses. The amount related to RSUs was $1.5 million while $3.3 million related to stock options. No share-based compensation costs were capitalized during the three or nine months ended September 30, 2017 and 2016.March 31, 2020.

As of ~~September 30, 2017,~~March 31, 2020, the unamortized cost of the ~~unvested~~outstanding RSUs and PSUs was ~~$1.8~~$10.1 million and $5.1 million, respectively, which ~~the Company expects~~we expect to recognize in the condensed consolidated financial statements over weighted-average periods of approximately 2.5 years and 2.5 years, respectively. Additionally, the total unrecognized cost related to non-vested stock option awards was $1.9 million, which we expect to recognize in the condensed consolidated financial statements over a weighted-average period of approximately ~~1.3~~1.7 years.

				Stock Options							RSUs					PSUs
	Shares Available for Grant			Shares			Weighted- Average Exercise Price		Options Exercisable		Units			Weighted- Average Grant Date Fair Value		Units			Weighted- Average Grant Date Fair Value
Balance as of December 31, 2019		6,621,512			2,594,228		$	14.29		1,697,272		354,427		$	24.99		491,718		$	26.20
Increase in shares authorized		1,407,228			—			—				—			—		—			—
Granted		(716,894	)		7,082			17.06				412,729			22.55		297,083			22.55
Exercised/vested		—			(36,484	)		11.45				(73,310	)		23.29		—			—
Forfeited/cancelled		95,268			(69,376	)		19.98				(8,213	)		27.32		(17,679	)		28.60
Balance as of March 31, 2020		7,407,114			2,495,450			14.18		1,807,018		685,633			23.68		771,122			24.74

The fair value of RSUs which vested during the three months ended March 31, 2020 was $1.3 million. In addition, during the three months ended March 31, 2020, we repurchased 26,099 shares for $0.5 million related to tax withholding requirements on vested RSU awards. The total ~~unrecognized cost related to unvested~~intrinsic value of stock ~~option awards was $5.3 million~~options outstanding and exercisable as of ~~September 30, 2017. The Company expects to recognize such costs in the consolidated financial statements over a weighted-average period of approximately 1.9 years.~~March 31, 2020 was $5.8 million and $5.0 million, respectively.

The following table summarizes the ~~activity~~outstanding and exercisable stock option awards as of March 31, 2020:

	Options Outstanding						Options Exercisable
Range of Exercise Prices:	Shares		Weighted- Average Remaining Contractual Life (in years)		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
$8.49		12,914		0.5	$	8.49		12,914	$	8.49
$10.87		1,441,721		5.2		10.87		1,240,796		10.87
$11.00 to $17.06		327,083		5.9		15.97		273,200		16.00
$18.70		181,059		6.3		18.70		157,906		18.70
$18.77 to $29.26		532,673		8.9		20.65		122,202		20.48
$8.49 to $29.26		2,495,450		6.1		14.18		1,807,018		12.96

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.

Future minimum lease payments under noncancelable leases as of March 31, 2020 were as follows:

See Note 5, Property, Plant and Equipment, Net for a discussion of the ~~stock options~~cost and ~~RSUs under the Company’s incentive plans:~~accumulated depreciation of assets financed through finance leases.

Stock Options

RSUs

Shares
Available
for Grant

Shares

Weighted-
Average
Exercise Price

Options
Exercisable

Units

Weighted-
Average
Grant Date
Fair Value

Balance as of December 31, 2016

3,587,692

3,331,418

$
12.72

25,828

636,120

$
10.90

Increase in shares authorized

1,349,475

—

—

—

—

Granted

(190,290
)

161,090

20.00

29,200

16.69

Exercised/vested

—

(107,527
)

10.81

(218,040
)

10.95

Forfeited/cancelled

227,650

(202,450
)

11.54

(25,200
)

10.87

Balance as of September 30, 2017

4,974,527

3,182,531

13.23

729,196

422,080

11.27

~~The following table summarizes the outstanding and exercisable stock option awards~~Other information related to leases was as ~~of September 30, 2017:~~follows:

Options Outstanding

Options Exercisable

Range of Exercise Prices:

Shares

Weighted-
Average
Remaining
Contractual Life
(in years)

Weighted-
Average
Exercise Price

Shares

Weighted-
Average
Exercise Price

$8.49

22,728

2.3

$
8.49

22,728

$
8.49

$
10.87

2,004,700

7.7

10.87

465,700

10.87

$11.00 to $16.53

656,523

8.3

16.12

157,072

16.33

$18.70

342,790

8.7

18.68

83,696

18.70

$20.05 to $22.34

155,790

9.9

20.14

—

—

$8.49 to $22.34

3,182,531

8.0

13.23

729,196

12.87

	Three Months Ended			Three Months Ended
	March 31,			March 31,
	2020			2019
	(in thousands)
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7,508		$	7,542
Operating cash flows from finance leases		279			408
Financing cash flows from finance leases		1,492			2,929

Right of use assets obtained in exchange for new lease obligations:
Operating leases		55,156			11,883
Finance leases		—			4,703

	March 31,			December 31,
	2020			2019
Weighted-Average Remaining Lease Term (In Years):
Operating leases		8.3			7.6
Finance leases		2.9			3.2

Weighted-Average Discount Rate:
Operating leases		8.1	%		7.5	%
Finance leases		6.4	%		6.4	%

As of March 31, 2020, we have additional leases related to new manufacturing facilities that have not yet commenced totaling approximately $10 million.

Income ~~tax expense was $0.4 million and $0.3 million in~~taxes for the three months ended ~~September 30, 2017 and 2016, respectively, and $8.5 million and $4.6 million in~~March 31, 2020 were lower than for the ~~nine months~~corresponding periods ended ~~September 30, 2017 and 2016, respectively. The lower effective tax rate was~~March 31, 2019 primarily due to the ~~release~~earning mix by jurisdiction in 2020 as compared to 2019.

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.

An ownership change under Sections 382 and 383 of the ~~valuation allowance which~~Internal Revenue Code of 1986, as amended (the Code) was ~~recorded against the Turkey operation’s deferred tax assets as well as the tax benefit received~~deemed to occur in June 2018. In general, a Section 382 and 383 ownership change occurs if there is a cumulative change in our ownership by ~~the Turkey operations~~“5% shareholders” (as defined in the ~~third quarter of 2017 from new tax incentives from~~Code) that exceeds 50 percentage points over a rolling three-year period. Based on the ~~Turkish government.~~

~~The Company has historically provided a valuation allowance to reduce its U.S. federal, state and non-U.S. deferred tax assets to the amount that is more likely than~~analysis performed, however, we do not to be realized. In the current quarter, the Company released the majority of its valuation allowance against its Turkey operation’s deferred tax assets, resulting in a non-cash benefit to income tax expense of approximately $2.6 million, $1.2 million of which was related to future earnings. Given the Turkey operation’s current level of pre-tax income, and assuming the Turkey operations maintains this current level of pre-tax income at a minimum, the Company expects to generate income before taxes in Turkey in future periods at a level that would fully realize the benefit of its deferred tax assets in Turkey. As of September 30, 2017, the Company continues to maintain a valuation allowance against net deferred tax assets in the U.S. and certain of its state jurisdictions where it does not currently believe that the ~~realization~~Section 382 and 383 annual limitation will materially impact our ability to utilize the tax attributes that existed as of the ~~deferred tax assets is more likely than not.~~

~~The Company evaluates its deferred tax assets quarterly to determine whether adjustments to~~date of the ~~valuation allowance are appropriate in light of~~ownership change. Additional ownership changes in ~~facts or circumstances, such as changes~~the future could result in ~~expected future pre-tax earnings, tax law, interactions with taxing authorities~~additional limitations to our net operating loss carryforwards and developments in case law. In making this evaluation, the Company relies on its recent history of pre-tax earnings. The Company's material assumptions are its forecasts of future pre-tax earnings and the nature and timing of future deductions and income represented by the deferred tax assets and liabilities, all of which involve the exercise of significant judgment.

~~The impact of the new tax incentives received related to the Turkey operations was $1.8 million, all of which will be used to reduce the taxes paid on future earnings.~~credits.

No ~~other~~ changes in tax law ~~since December 31, 2016~~occurred during the quarter which have ~~had~~ a material impact on ~~the Company’s~~our income tax provision.

In May 2019, we announced plans to consolidate certain of our manufacturing facilities, including our plan to shut down the 2 blade lines operating in our Taicang Port facility and move our tooling operation from Taicang City to the larger Taicang Port facility, thereby expanding our tooling capacity for larger blades and reducing overall costs. We substantially completed these plans by the end of 2019.

In accordance with these plans, during the three months ended March 31, 2020, we incurred total charges of $0.1 million. These charges are located within the caption “Restructuring charges, net” in the accompanying condensed consolidated statements of operations. We do not expect to incur any material additional charges under these plans throughout the remainder of 2020.

~~A complaint was filed against the Company in the Superior Court of the State of Arizona (Maricopa County) by a former employee of the Company, alleging that the Company had agreed~~From time to ~~make certain cash payments~~time, we are party to such employee upon any future sale of the Company. The Company denies the substantive allegations of the complaint and intends to vigorously defend this lawsuit; however, the Company is currently unable to determine the ultimate outcome of this case. The Court has set a trial date in August 2018.

In addition, the Company entered into a transition agreement with a former officer, pursuant to which he transitioned out of his role at the end of 2015 and was to serve in a consulting capacity in 2016 and 2017. In January 2016, following the discovery that he had materially violated the terms of his transition agreement, the Company terminated his consultancy for cause. In April 2016, the officer filed an arbitration claim alleging that the Company improperly terminated his transition agreement. The Company believes that the termination of his transition agreement was valid and the Company intends to vigorously defend this matter. The arbitration tribunal held that the former officer was entitled to a portion of the compensationvarious lawsuits, claims, and other ~~payments contemplated under the transition agreement. The Company has appealed the arbitration tribunal’s decision to a Chinese court and the appeal remains pending.~~

~~The Company is involved in various claims and~~ legal ~~actions arising~~proceedings that arise in the ordinary course of ~~business. In~~business, some of which are covered by insurance. Upon resolution of any pending legal matters, we may incur charges in excess of presently established reserves or our insurance policy limits. Our management does not believe that any such charges would, individually or in the ~~opinion of management, the ultimate disposition of these matters will not~~aggregate, have a material adverse effect on ~~the Company’s consolidated~~our financial ~~position,~~condition, results of operations or ~~liquidity.~~cash flows.

Revenues from certain customers (in thousands) in excess of 10 percent of our total consolidated ~~Company~~ revenues ~~(dollars in thousands)~~ are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Customer

Revenues

% of Total

Revenues

% of Total

Revenues

% of Total

Revenues

% of Total

GE

$
99,623

40.9
%

$
98,141

49.3
%

$
286,941

42.0
%

$
292,435

51.4
%
Vestas

69,125

28.4

50,300

25.3

195,556

28.6

120,716

21.2

Nordex Group

46,998

19.3

31,132

15.6

119,530

17.5

96,139

16.9

Gamesa

23,820

9.8

17,844

9.0

71,405

10.5

54,553

9.6

Other

3,788

1.6

1,521

0.8

9,710

1.4

5,460

0.9

Total

$
243,354

100.0
%

$
198,938

100.0
%

$
683,142

100.0
%

$
569,303

100.0
%

	Three Months Ended
	March 31,
	2020					2019
Customer	Revenues		% of Total			Revenues		% of Total
Vestas	$	157,412		44.1	%	$	128,614		42.9	%
GE		100,132		28.1	%		84,529		28.2	%
Nordex		53,257		14.9	%		54,868		18.3	%

Trade accounts receivable from certain customers in excess of 10 percent of our total consolidated ~~Company~~ trade accounts receivable are as follows:

~~The Company’s~~Our operating segments are defined geographically as the ~~United States,~~U.S., Asia, Mexico and ~~EMEA.~~EMEAI. Financial results are aggregated into ~~four~~4 reportable segments based on quantitative thresholds. All of ~~the Company’s~~our segments operate in their local currency, ~~except for~~however a portion of the ~~China~~revenue attributable to our Asia and Mexico segments ~~which both include a~~is derived in U.S. ~~parent company.~~dollars because certain of our domestic subsidiaries are the contracting parties to the associated customer supply agreements.

The following tables set forth certain information ~~(in thousands)~~ regarding each of ~~the Company’s~~our segments:

													Three Months Ended
													March 31,
	Three Months Ended September 30,						Nine Months Ended September 30,						2020			2019
	2017			2016			2017			2016			(in thousands)
Revenues by segment:
U.S.	$	44,599		$	45,090		$	136,314		$	141,920		$	47,431		$	41,628
Asia		102,463			86,834			278,284			232,639			91,137			68,718
Mexico		44,941			35,448			134,010			88,623			118,250			84,665
EMEA		51,351			31,566			134,534			106,121
EMEAI														99,818			104,769
Total revenues	$	243,354		$	198,938		$	683,142		$	569,303		$	356,636		$	299,780
Revenues by geographic location (1):
U.S.	$	44,599		$	45,090		$	136,314		$	141,920		$	47,431		$	41,628
China		102,463			86,834			278,284			232,639			91,137			68,718
Mexico		44,941			35,448			134,010			88,623			118,250			84,665
Turkey		51,351			31,566			134,534			106,121
Turkey and India														99,818			104,769
Total revenues	$	243,354		$	198,938		$	683,142		$	569,303		$	356,636		$	299,780
Income (loss) from operations:
U.S. (2)	$	(8,120	)	$	(12,929	)	$	(26,247	)	$	(18,052	)	$	(15,586	)	$	(14,503	)
Asia		24,031			17,291			64,191			48,055			5,072			(8,800	)
Mexico		3,286			3,574			5,254			6,197			(1,768	)		(424	)
EMEA		4,349			201			13,861			(2,396	)
Total income from operations	$	23,546		$	8,137		$	57,059		$	33,804
EMEAI														(3,122	)		12,071
Total loss from operations													$	(15,404	)	$	(11,656	)

					March 31,		December 31,
	September 30,		December 31,		2020		2019
	2017		2016		(in thousands)
Property, plant and equipment, net:
U.S.	$	21,693	$	16,740	$	35,241	$	36,410
Asia (China)		29,262		26,341		51,502		50,603
Mexico		40,359		24,842		79,504		81,654
EMEA (Turkey)		28,321		23,243
EMEAI (Turkey and India)						51,321		36,340
Total property, plant and equipment, net	$	119,635	$	91,166	$	217,568	$	205,007

During the second quarter of 2020, several of our manufacturing facilities have been required to temporarily suspend production or operate at reduced production levels due primarily to certain applicable government-mandated stay at home orders in response to the COVID-19 pandemic, demands from certain of our labor unions to suspend or reduce production and general safety concerns of our associates.

Currently, our manufacturing facilities in India and Matamoros, Mexico are operating at limited production levels, our manufacturing facilities in Juárez, Mexico are temporarily shutdown, our manufacturing facility in Iowa restarted operations at a limited production level on May 6, 2020 after a temporary shutdown and our manufacturing facilities in China, Turkey and Rhode Island are operating at normal production levels.

Although our China and Turkey manufacturing facilities have resumed full production and customer demand for our products remain strong, we expect that the COVID-19 pandemic will have an adverse effect on our operations, results of operations and financial condition for the balance of 2020 due to the impact of the COVID-19 pandemic on our manufacturing production levels. As a result of the uncertainty relating to: (i) the rapidly evolving nature, magnitude and duration of the COVID-19 pandemic, (ii) the variety of measures implemented by governments around the world to address its effects and (iii) the impact on our manufacturing operations,

we, however, are unable to currently estimate and quantify the actual impact of COVID-19 on our business, results of operations and financial condition for the balance of 2020.

As a result of such uncertainty, we are managing our liquidity to ensure our long-term viability until the COVID-19 pandemic abates. During the three months ended March 31, 2020, we drew down $50.0 million under our Credit Agreement and an additional $30.0 million in April 2020.

In October 2017, the Company granted an aggregate of 191,300 RSU awards to certain employees. Each of these RSU awards vests as follows: 20% on March 7, 2018, 30% on March 7, 2019 and the remaining 50% on March 7, 2020. The Company estimates that the total share-based-compensation expense for these RSU awards will be approximately $4.5 million and will be recognized over the requisite service period of approximately 1.7 years.

On November 8, 2017, the Company signed a new, five-year supply agreement with Proterra Inc. to produce composite bus bodies at the Company’s existing Rhode Island manufacturing facility and from a new facility in Newton, Iowa that the Company expects to open in the first half of 2018.

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”)~~(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, ~~and related financing,~~ 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, particularly those under “Risk Factors.”

We are the only independent manufacturer of composite wind blades for the wind energy market with a global manufacturing footprint. We enable many of the industry’s leading wind turbine original equipment manufacturers (OEM), who have historically relied on in-house production, to outsource the manufacturing of some of their wind blades through our global footprint of advanced manufacturing facilities strategically located to serve large and growing wind markets in a cost-effective manner. Given the importance of wind energy capture, turbine reliability and cost to power producers, the size, quality and performance of wind blades have become highly strategic to our OEM customers. As a result, we have become a key supplier to our OEM customers in the manufacture of wind blades and related precision molding and assembly systems. We have entered into long-term supply agreements pursuant to which we dedicate capacity at our facilities to our customers in exchange for their commitment to purchase minimum annual volumes of wind blade sets, which consist of three wind blades. As of ~~November 8, 2017,~~May 6, 2020, our long-term wind and transportation supply agreements provide for minimum aggregate volume commitments from our customers of approximately ~~$2.7~~$2.5 billion and encourage our customers to purchase additional volume up to, in the aggregate, a total contract value of ~~over~~ approximately ~~$4.4~~$5.0 billion through the end of 2023. This collaborative dedicated supplier model provides us with contracted volumes that generate significant revenue visibility, drive capital efficiency and allow us to produce wind blades at a lower total delivered cost, while ensuring critical dedicated capacity for our customers. Our wind blade and precision molding and assembly systems manufacturing businesses accounted for approximately ~~98%~~96% of our total net sales infor both the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~for approximately 99%~~2019. We also leverage our advanced composite technology and history of ~~our total net sales in~~innovation to supply high strength, lightweight and durable composite products to the ~~three and nine months ended September 30, 2016.~~transportation market.

We divide our business operations into four geographic operating ~~segments—~~segments - (1) the United States (U.S.), (2) Asia, (3) Mexico and (4) Europe, the Middle East, Africa and ~~Africa (EMEA)~~India (EMEAI) as follows:

The ~~trend~~COVID-19 pandemic adversely impacted our operations and results of ~~wind turbine OEMs outsourcing~~operations for the quarter ended March 31, 2020 due primarily to reduced production ~~of wind blades remains strong as evidenced by~~levels at our ~~signing in August 2017 of a new multiyear supply agreement with Senvion S.A. for two production lines in our Taicang Port,~~ China manufacturing ~~facility.~~facilities. We estimate that our net sales were adversely impacted

~~Our wind turbine OEMs are experiencing significant pricing pressure in many geographic markets~~by approximately $38 million, our net loss by approximately $9 million, which is net of approximately $2 million of income taxes, and our Adjusted EBITDA by approximately $11 million due to reduced production levels at our China manufacturing facilities due to the COVID-19 pandemic.

During the second quarter of 2020, several ~~factors, including~~of our manufacturing facilities have been required to temporarily suspend production or operate at reduced production levels due primarily to certain applicable government-mandated stay at home orders in response to the COVID-19 pandemic, demands from certain of our labor unions to suspend or reduce production and general safety concerns of our associates.

Although our China and Turkey manufacturing facilities have resumed full production and customer demand for our products remain strong, we expect that the COVID-19 pandemic will have an ~~increasing prevalence~~adverse effect on our operations, results of ~~“winner take all” auction-based pricing models~~operations and financial condition for ~~new wind farm projects, increasing competition from solar energy projects and market demand shifts driven by~~ the ~~current Production Tax Credit cycle in~~balance of 2020 due to the ~~United States.~~impact of the COVID-19 pandemic on our manufacturing production levels. As a result of ~~these market trends,~~the uncertainty relating to: (i) the rapidly evolving nature, magnitude and duration of the COVID-19 pandemic, (ii) the variety of measures implemented by governments around the world to address its effects and (iii) the impact on our ~~wind turbine OEM customers~~manufacturing operations, we, however, are ~~requiring~~unable to currently estimate and quantify the actual impact of COVID-19 on our business, results of operations and financial condition for the balance of 2020.

~~We expect that the increased number of wind blade model transitions in late 2017 and 2018 may reduce our year-over-year revenue growth rate in 2018.~~April 2020.

We recognize revenue from manufacturing services over time as our customers control the product as it is produced, and we may not use or sell the product to fulfill other customers’ contracts. Net sales ~~reflect sales of~~include amounts billed to our customers for our products, including wind blades, precision molding and assembly systems and ~~transportation~~other products and services, as well as fees and other amounts paid by our customers to compensate us for our costs and capital expenditures associated with wind blade model transitions. Several factors affect net sales in any period, including customer demand, wind blade model transitions, general economic conditions and weather conditions. We currently derive an immaterial amount of net sales from our transportation business. Under GAAP, we do not recognize revenue on our wind blade sales until the ~~wind blades have been delivered to our customers. Under our long-term supply agreements with our customers, we invoice our customers for wind blades once~~progress towards the ~~blades pass certain acceptance procedures and title passes to our customers. Our customers generally pay us for the wind blades between 15 to 65 days after receipt~~completion of the ~~invoice based~~performance obligation for products in progress, which is determined on ~~negotiated payment terms. However,~~a ratio of direct costs incurred to date in many cases, our customers request that we store their wind blades until they are ready to assemble wind turbines at a particular wind farm project. We have no control over when our customers decide to ship wind blades from our storage sites, and in some cases, our customers have stored large numbersfulfillment of ~~their wind blades at our sites for six months or more. Even if~~ the ~~customer has paid us for the wind blades and title has passed~~contract to the ~~customer, we do not recognize revenue for these wind blades until~~total estimated direct costs required to complete the ~~wind blades have been delivered to the customer. Instead, these transactions are recorded as deferred revenue in our condensed consolidated financial statements.~~performance obligation.

Cost of goods sold includes the costs ~~associated with~~we incur at our production facilities to make products saleable on both products invoiced during the period as well as ~~unallocated manufacturing overhead costs associated with startup and transition costs.~~products in progress towards the completion of each performance obligation. Cost of ~~sales~~goods sold includes ~~all costs incurred at our production facilities to make products saleable,~~ such items as raw materials, direct ~~labor~~ and indirect labor and facilities costs, including purchasing and receiving costs, plant management, inspection costs, production process improvement activities, product engineering and internal transfer costs. In addition, all depreciation associated with assets used ~~to produce composite~~in the production of our products ~~and make them saleable~~ is also included in cost of ~~sales.~~goods sold. Direct labor costs consist of salaries, benefits and other personnel related costs for employees engaged in the ~~manufacture~~manufacturing of our ~~products.~~products and services.

Startup costs represent the unallocated overhead related to both new manufacturing facilities as well as new lines in existing manufacturing facilities. Transition costs represent the unallocated overhead related to the transition of wind blade models at the request of our customers. The startup and transition costs are primarily unallocated fixed overhead costs and underutilized direct labor costs incurred during the period production facilities are ~~under-utilized while~~ transitioning wind blade models and ramping up ~~manufacturing, which~~manufacturing. All direct labor costs are ~~not allocated~~included in the measure of progress towards completion of the relevant performance obligation when determining revenue to ~~products and are expensed as incurred.~~be recognized during the period. The cost of sales for the initial wind blades from a new model manufacturing line is generally higher than when the line is operating at optimal production volume levels due to inefficiencies during ramp-up related to labor hours per blade, cycle times per blade and raw material usage. Additionally, ~~manufacturing overhead~~these costs as a percentage of net sales isare generally higher during the period in which a facility is ramping up to full production capacity due to underutilization of the facility. Manufacturing overhead at each of our facilities includes virtually all indirect costs (including share-based compensation costs) incurred at the plants, including engineering, finance, information technology, human resources and plant management.

General and administrative expenses ~~are~~ primarily relate to the unallocated portion of costs incurred at our corporate headquarters and our research facilities and include salaries, benefits and other personnel related costs for employees engaged in research and development, engineering, finance, internal audit, information technology, human resources, business development, global operational excellence,

global supply chain, in-house legal and executive management. Other costs include outside legal and accounting fees, risk management (insurance), share-based compensation and certain other administrative and global resources costs.

The research and development expenses incurred at our Warren, Rhode Island location, our Kolding, Denmark advanced engineering center and our Berlin, Germany engineering center are also included in general and administrative expenses. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 and for the nine months ended September 30, 2017 and 2016, our~~2019, research and development expenses ~~(included in general and administrative expenses)~~ totaled ~~$0.3 million, $0.4 million, $1.1~~$0.2 million and ~~$1.0~~$0.2 million, respectively.

Realized loss on sale of assets represents the realized losses on the sale of receivables under supply chain financing arrangements with our customers and realized gains and losses on the sale of other assets and asset impairments at our corporate and manufacturing facilities.

Restructuring charges primarily consist of employee severance, one-time termination benefits and ongoing benefits related to the reduction of our workforce and other costs associated with exit activities, which may include costs related to leased facilities to be abandoned and facility and employee relocation costs.

Other income (expense) consists primarily of interest expense on our ~~credit facilities~~debt borrowings and the amortization of deferred financing costs ~~and beneficial conversion features related to our debt~~on such borrowings. Other income (expense) also includes realized gains and losses on foreign currency remeasurement, interest income, losses on extinguishment of debt and miscellaneous income and expense.

Income ~~tax provision consists~~taxes consist of federal, state, provincial, local and foreign taxes based on income in jurisdictions in which we operate, including in the ~~United States,~~U.S., China, Mexico, Turkey and ~~Turkey.~~India. The composite income tax rate, tax provisions, deferred tax assets and ~~deferred tax~~ liabilities vary according to the jurisdiction in which the income or loss arises. Tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities, and require us to exercise judgment in determining our income tax provision, our deferred tax assets and liabilities and the valuation allowance recorded against our net deferred tax assets.

Net income attributable to preferred shareholders related to the accrual of dividends on our convertible and senior redeemable preferred shares, the accretion to redemption amounts on our convertible preferred shares and warrant fair value adjustment. Immediately prior to the closing of our IPO, all preferred shares were converted into shares of our common stock and as a result, the accrual of dividends ceased.

In addition to measures of financial performance presented in our condensed consolidated financial statements in accordance with GAAP, we use certain other financial ~~measures~~ and operating metrics to analyze ~~the performance of~~ our ~~company. The~~performance. These “non-GAAP” financial measures consist of ~~total billings,~~ EBITDA, adjusted EBITDA, free cash flow and net ~~debt,~~cash (debt), which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance. The key operating metrics consist of wind blade sets invoiced, estimated megawatts ~~(MWs)~~ of energy capacity for wind ~~blades~~blade sets invoiced, utilization percentage, manufacturing lines dedicated to customers under long-term supply agreements ~~total~~and manufacturing lines installed, ~~manufacturing lines in startup and manufacturing lines in transition,~~ which help us evaluate our operational performance. We believe that these measures are useful to investors in evaluating our performance.

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2020			2019
	(in thousands)								(in thousands)
Net sales	$	243,354	$	198,938	$	683,142	$	569,303	$	356,636		$	299,780
Total billings (1)	$	256,404	$	196,095	$	698,833	$	566,779
Net income	$	20,398	$	2,797	$	37,801	$	16,098
Net loss									$	(492	)	$	(12,104	)
EBITDA (1)	$	29,114	$	11,272	$	69,074	$	42,999	$	(2,721	)	$	(4,097	)
Adjusted EBITDA (1)	$	30,118	$	19,632	$	76,443	$	51,816	$	1,296		$	2,925
Capital expenditures	$	8,585	$	4,673	$	35,312	$	18,917	$	26,983		$	18,709
Free cash flow ⁽¹⁾									$	(24,415	)	$	(30,800	)

	September 30,			December 31,		March 31,			December 31,
	2017			2016		2020			2019
	(in thousands)					(in thousands)
Total debt, net of debt issuance costs	$	133,637		$	123,155	$	206,174		$	141,389
Net debt (1)	$	(3,568	)	$	6,379	$	(97,499	)	$	(71,779	)

We define total billings, a non-GAAP financial measure, as the total amounts we have invoiced our customers for products and services for which we are entitled to payment under the terms of our long-term supply agreements or other contractual agreements. We monitor total billings, and believe it is useful to present to investors as a supplement to our GAAP measures, because we believe it more directly correlates to sales activity and operations based on the timing of actual transactions with our customers, which facilitates comparison of our performance between periods and provides a more timely indication of trends in sales. Under GAAP, we do not recognize revenue on our wind blade sales until the wind blades have been delivered to our customers. Under our long-term supply agreements with our customers, we invoice our customers for wind blades once the blades pass certain acceptance procedures and title passes to our customers. Our customers generally pay us for the wind blades between 15 to 65 days after receipt of the invoice based on negotiated payment terms. However, in many cases, our customers request that we store their wind blades until they are ready to assemble wind turbines at a particular wind farm project. We have no control over when our customers decide to ship wind blades from our storage sites, and in some cases, our customers have stored large numbers of their wind blades on our sites for six months or more. Even if the customer has paid us for the wind blades and title has passed to the customer, we do not recognize revenue for these wind blades until the wind blades have been delivered to the customer. Instead, these transactions are recorded as deferred revenue in our condensed consolidated financial statements. However, we are contractually entitled to payment for those wind blades and, accordingly, invoice them when the blades are placed in storage.

~~Our use of total billings has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.~~

We define EBITDA, a non-GAAP financial measure, as net income or loss plus interest expense (including losses on extinguishment of debt and net of interest income), income taxes and depreciation and amortization. We define adjusted EBITDA as EBITDA plus any share-based compensation expense, ~~plus or minus~~ any realized gains or losses from foreign currency ~~remeasurement.~~remeasurement, any gains or losses from the sale of assets and asset impairments and any restructuring charges. Adjusted EBITDA is the primary metric used by our management and our board of directors to establish budgets and operational goals for managing our business and evaluating our performance. In addition, our credit agreement (the Credit ~~Facility~~Agreement) that we entered into in April 2018 contains minimum EBITDA (as defined in the Credit ~~Facility)~~Agreement) covenants with which we must comply. We monitor adjusted EBITDA as a supplement to our GAAP measures, and believe it is useful to present to investors, because we believe that it facilitates evaluation of our period-to-period operating performance by eliminating items that are not operational in nature, allowing comparison of our recurring core business operating results over multiple periods unaffected by differences in capital structure, capital investment cycles and fixed asset base. In addition, we believe adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and debt-service capabilities.

Our ~~uses~~use of EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.

In evaluating EBITDA and adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments noted ~~in this presentation.~~herein. Our presentations of EBITDA and adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider EBITDA and adjusted EBITDA alongside other financial performance measures, including our net income (loss) and other GAAP measures.

We define free cash flow as net cash provided by (used in) operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding business acquisitions.

We define net ~~debt~~cash (debt) as total unrestricted cash and cash equivalents less the total principal amount of debt ~~outstanding less unrestricted cash and cash equivalents.~~outstanding. The total principal amount of debt outstanding is comprised of the long-term debt and current maturities of long-term debt as presented in our condensed consolidated balance sheets adding back any debt issuance costs and ~~discount.~~discounts. We believe that the presentation of net ~~debt~~cash (debt) provides useful information to investors because our management reviews net ~~debt~~cash (debt) as part of our oversight of overall liquidity, financial flexibility and leverage. Net ~~debt~~cash (debt) is important when we consider opening new plants and expanding existing plants, as well as for capital expenditure requirements.

The following tables reconcile our non-GAAP key financial measures to the most directly comparable GAAP measures:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(in thousands)

Net sales

$
243,354

$
198,938

$
683,142

$
569,303

Change in deferred revenue:

Blade-related deferred revenue at beginning of period (1)

(74,255
)

(65,656
)

(69,568
)

(65,520
)
Blade-related deferred revenue at end of period (1)

87,294

61,949

87,294

61,949

Foreign exchange impact (2)

11

864

(2,035
)

1,047

Change in deferred revenue

13,050

(2,843
)

15,691

(2,524
)
Total billings

$
256,404

$
196,095

$
698,833

$
566,779

Net income

$
20,398

$
2,797

$
37,801

$
16,098

Adjustments:

Depreciation and amortization

5,139

3,530

13,622

9,703

Interest expense (net of interest income)

3,206

4,636

9,137

12,633

Income tax provision

371

309

8,514

4,565

EBITDA

29,114

11,272

69,074

42,999

Share-based compensation expense

1,043

8,117

4,794

8,117

Realized loss (gain) on foreign currency remeasurement

(39
)

243

2,575

700

Adjusted EBITDA

$
30,118

$
19,632

$
76,443

$
51,816

	Three Months Ended
	March 31,
	2020			2019
	(in thousands)
Net loss	$	(492	)	$	(12,104	)
Adjustments:
Depreciation and amortization		11,028			10,659
Interest expense (net of interest income)		1,771			1,948
Income tax benefit		(15,028	)		(4,600	)
EBITDA		(2,721	)		(4,097	)
Share-based compensation expense		2,942			985
Realized (gain) loss on foreign currency remeasurement		(960	)		3,802
Realized loss on sale of assets and asset impairments		1,918			2,235
Restructuring charges, net		117			—
Adjusted EBITDA	$	1,296		$	2,925

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2020			2019
Sets		739		581		2,067		1,613		738			662
Estimated megawatts		1,796		1,321		4,876		3,686		2,329			1,861
Utilization										70	%		64	%
Dedicated manufacturing lines		48		38		48		38		52			54
Total manufacturing lines installed		38		32		41		32
Manufacturing lines in startup		10		2		12		2
Manufacturing lines in transition		—		—		—		3
Manufacturing lines installed										52			49

Key operating metrics consist of sets invoiced, estimated megawatts of energy capacity for wind blade sets invoiced, utilization, dedicated manufacturing lines and manufacturing lines installed.

Sets represents the number of wind blade sets, consisting of three wind blades each, which we invoiced worldwide during the period. We monitor sets and believe that presenting sets to investors is helpful because we believe that it is the most direct measurement of our manufacturing output during the period. Sets primarily impact net ~~sales and total billings.~~sales.

Estimated megawatts are the energy capacity to be generated by wind blade sets invoiced in the period. Our estimate is based solely on name-plate capacity of the wind turbine on which ~~our~~the wind blades we manufacture are expected to be installed. We monitor estimated megawatts and believe that presenting estimated megawatts to investors is helpful because we believe that it is a commonly followed measurement of energy capacity across our industry and provides an indication of our share of the overall wind blade market.

Utilization represents the percentage of the number of wind blades invoiced during the period compared to the total potential wind blade capacity of manufacturing lines installed at the end of the period.

Dedicated manufacturing lines are the number of wind blade manufacturing lines that we have dedicated to our customers pursuant to our long-term supply ~~agreements.~~agreements at the end of the period. We monitor dedicated manufacturing lines and believe that presenting this metric to investors is helpful because we believe that the number of dedicated manufacturing lines is the best indicator of demand for ~~our~~the wind blades ~~from~~we manufacture for customers under our long-term supply agreements in any given period. We believe that dedicated manufacturing lines provide an understanding of additional capacity within an existing facility. Dedicated manufacturing lines primarily impacts our net ~~sales and total billings. In April 2017, we entered into a multiyear supply agreement with Vestas to supply wind blades from two manufacturing~~sales.

Manufacturing lines at a new manufacturing facility that will be constructed in Matamoros, Mexico. We expect to commence operations at this facility in the second half of 2018. In August 2017, we entered into a multiyear supply agreement with Senvion S.A. to supply wind blades from two manufacturing lines at our Taicang Port, China facility. We expect to commence operations for this customer before the end of the first quarter of 2018.

~~Total manufacturing lines~~ installed represents the number of wind blade manufacturing lines installed and either in operation, startup or ~~transition.~~

~~Manufacturing~~transition at the end of the period. We believe that total manufacturing lines ~~in startup~~ isinstalled provides an understanding of the number of ~~dedicated wind blade~~ manufacturing lines ~~that were~~installed and either in aoperation, startup ~~phase during the pre-production and production ramp up period, pursuant to the opening of a new manufacturing facility, the expansion of an existing manufacturing facility~~ or the addition of new manufacturing lines in an existing manufacturing facility. We monitor and present this metric because we believe it helps investors to better understand the impact of the startup phase of our new manufacturing facilities on our gross profit and net income.

~~Manufacturing lines in transition~~ is the number of wind blade manufacturing lines that were being transitioned to a new wind blade model during the period. We monitor and present this metric because we believe it helps investors to better understand the impact of these transitions on our gross profit and net income.transition.

Three Months Ended ~~September 30, 2017~~March 31, 2020 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2019

The following table summarizes certain information relating to our operating results and related percentage of net sales for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 that has been derived from our unaudited condensed consolidated financial statements.

Three Months Ended

September 30,

2017

2016

(dollars in thousands)

Net sales

$
243,354

100.0
%

$
198,938

100.0
%
Cost of sales

198,141

81.4

171,648

86.3

Startup and transition costs

12,352

5.1

5,088

2.5

Total cost of goods sold

210,493

86.5

176,736

88.8

Gross profit

32,861

13.5

22,202

11.2

General and administrative expenses

9,315

3.8

14,065

7.1

Income from operations

23,546

9.7

8,137

4.1

Other expense

(2,777
)

(1.2
)

(5,031
)

(2.5
)
Income before income taxes

20,769

8.5

3,106

1.6

Income tax provision

(371
)

(0.1
)

(309
)

(0.2
)
Net income

20,398

8.4

2,797

1.4

Net income attributable to preferred shareholders

—

—

596

0.3

Net income attributable to common shareholders

$
20,398

8.4
%

$
2,201

1.1
%

	Three Months Ended
	March 31,
	2020					2019
	(dollars in thousands)
Net sales	$	356,636		100.0	%	$	299,780		100.0	%
Cost of sales		348,475		97.7			283,038		94.4
Startup and transition costs		12,034		3.4			18,178		6.1
Total cost of goods sold		360,509		101.1			301,216		100.5
Gross loss		(3,873	)	(1.1	)		(1,436	)	(0.5	)
General and administrative expenses		9,496		2.7			7,985		2.7
Realized loss on sale of assets and asset impairments		1,918		0.5			2,235		0.7
Restructuring charges, net		117		0.0			—		0.0
Loss from operations		(15,404	)	(4.3	)		(11,656	)	(3.9	)
Other expense		(116	)	0.0			(5,048	)	(1.6	)
Loss before income taxes		(15,520	)	(4.3	)		(16,704	)	(5.5	)
Income tax benefit		15,028		4.2			4,600		1.5
Net loss	$	(492	)	(0.1	)%	$	(12,104	)	(4.0	)%

Net sales for the three months ended ~~September 30, 2017~~March 31, 2020 increased by ~~$44.4~~$56.9 million or ~~22.3%~~19.0% to ~~$243.4~~$356.6 million compared to ~~$198.9~~$299.8 million in the same period in ~~2016.~~2019. Net sales of wind blades increased by ~~20.3%~~21.4% to ~~$233.5~~$336.3 million for the three months ended ~~September 30, 2017~~March 31, 2020 as compared to ~~$194.2~~$277.0 million in the same period in ~~2016.~~2019. The increase was primarily driven by a ~~21%~~10.8% increase in the number of wind blades ~~delivered~~produced during the three months ended ~~September 30, 2017~~March 31, 2020 compared to the same period in 2016 primarily from our China, Mexico and Turkey plants as well as from foreign currency fluctuations in Turkey, partially offset by a decline in the average sales prices of the same wind blade models delivered in both periods2019 largely as a result of ~~geographic~~increased production at our Mexico facilities. Although our net sales increased for the three months ended March 31, 2020 compared to the same period in 2019, our net sales for the three months ended March 31, 2020 were adversely impacted by approximately $38 million due to reduced production levels at our China manufacturing facilities due to the COVID-19 pandemic. This increase was also due to a higher average sales price due to the mix ~~and savings~~of wind blade models produced during the three months ended March 31, 2020 compared to the same period in ~~raw material costs, a portion~~2019 as well as an increase in the year over year number of ~~which we share with our customers.~~wind blades still in

the production process at the end of the period. Net sales from the manufacturing of precision molding and assembly systems during the three months ended ~~September 30, 2017 increased~~March 31, 2020 were $6.8 million as compared to ~~$5.9 million from $3.3~~$11.2 million in the same period in ~~2016. This~~2019. Additionally, there was a $1.9 million increase ~~was primarily the result of our customers requiring more precision molding~~in transporation and ~~assembly systems from our Taicang facility~~other sales during the three months ended ~~September 30, 2017~~March 31, 2020 as compared to the same period in ~~2016. Total billings~~2019. The impact of the fluctuating U.S. dollar against the Euro in our Turkey operations and the Chinese Renminbi in our China operations on consolidated net sales for the three months ended ~~September 30, 2017 increased by $60.3 million or 30.8% to $256.4 million~~March 31, 2020 was a decrease of 0.9% as compared to ~~$196.1 million in~~ the same period in 2016. The favorable impact of the weakening of the U.S. dollar against the Euro at our Turkey operations on consolidated net sales and total billings for the three months ended September 30, 2017 were increases of 1.0% and 0.9%, respectively. For the three months ended September 30, 2016, the impact of foreign currency fluctuations on consolidated net sales and total billings were both reductions of 0.4%.2019.

Total cost of goods sold for the three months ended ~~September 30, 2017~~March 31, 2020 was ~~$210.5~~$360.5 million and included ~~aggregate costs of $12.4~~$7.8 million related to lines in startup ~~costs~~ in our ~~new~~ plants in ~~Mexico~~India and ~~Turkey~~China and $4.2 million of transition costs related to lines in transition during the ~~startup of new wind blade models for certain of our customers in Turkey and Dafeng, China.~~quarter. This compares to total cost of goods sold for the three months ended ~~September 30, 2016~~March 31, 2019 of ~~$176.7~~$301.2 million ~~including aggregate costs of $5.1~~and included $16.1 million related to lines in startup ~~costs~~ in our ~~new~~ plants in Mexico, Iowa and ~~Turkey as well as~~China and the ~~transition~~startup of new wind blade models for a customer in ~~our original plant~~Turkey and $2.1 million of transition costs related to lines in ~~Mexico. Cost~~transition during the quarter. Total cost of goods sold as a percentage of net sales ~~of wind blades decreased slightly~~remained relatively consistent during the three months ended ~~September 30, 2017~~March 31, 2020 as compared to the same period in ~~2016,~~2019, driven primarily by ~~improved operating efficiencies~~the increase in direct labor and warranty costs, offset by the impact of savings in raw material costs, ~~partially offset by~~ the ~~increase~~decrease in startup and transition ~~costs.~~costs and the impact of foreign currency. The ~~net~~ impact of the fluctuating U.S. dollar against the Euro, Turkish Lira, Chinese Renminbi and Mexican Peso ondecreased consolidated cost of goods sold by 2.5% for three months ended ~~September 30, 2017 was not significant~~March 31, 2020 as compared to ~~a favorable impact of 1.9% for~~ the ~~three months ended September 30, 2016.~~same period in 2019.

General and administrative expenses for the three months ended ~~September 30, 2017~~March 31, 2020 totaled ~~$9.3~~$9.5 million, asor 2.7% of net sales, compared to ~~$14.1~~$8.0 million, or 2.7% of net sales, for the same period in ~~2016. As a percentage~~2019.

Realized loss on sale of ~~net sales, general~~assets and ~~administrative expenses were 3.8%~~asset impairments for the three months ended ~~September 30, 2017, down from 7.1%~~March 31, 2020 totaled $1.9 million and was comprised primarily of realized losses on the sale of receivables under supply chain financing arrangements with our customers. Realized loss on sale of assets and asset impairments for the three months ended March 31, 2019 totaled $2.2 million and was comprised of $1.3 million of realized losses on the sale of receivables under supply chain financing arrangements with our customers and $0.9 million of realized losses on the sale of assets at our corporate and manufacturing facilities.

Restructuring charges for the three months ended March 31, 2020 totaled $0.1 million related to the closing of our Taicang City China manufacturing facility. There were no restructuring charges in the ~~same~~comparable period in 2016. The decrease was primarily driven by a $6.1 million decrease in share-based compensation costs in the 2017 period as compared to the 2016 period, which was the period in which we recorded the expense from grant date through the end of the third quarter of 2016 for the performance awards upon consummation of the IPO. This decrease was partially offset by additional costs incurred to enhance our corporate support functions to support our growth and public company governance.2019.

Other expense totaled ~~$2.8~~$0.1 million for the three months ended ~~September 30, 2017~~March 31, 2020 as compared to other expense totaling $5.0 million for the same period in ~~2016.~~2019. The ~~amount for~~decrease in the ~~three months ended September 30, 2017~~expense was primarily ~~comprised of~~due to a $4.8 million decrease in realized losses on foreign currency remeasurement and a $0.2 million decrease in interest expense ~~of $3.3 million. This compares to interest expense of $4.7 million~~ in the three months ended ~~September 30, 2016.~~March 31, 2020 as compared to the same period in 2019.

Income ~~tax provision increased to $0.4~~taxes reflected a benefit of $15.0 million for the three months ended ~~September 30, 2017 from $0.3~~March 31, 2020 as compared to a benefit of $4.6 million for the same period in ~~2016.~~2019. The ~~lower effective tax rate~~increase in the benefit was primarily due to the ~~release of the valuation allowance which was recorded against our Turkey operation’s deferred tax assets as well as the tax benefit received~~earnings mix by jurisdiction in the ~~2017~~three months ended March 31, 2020 as compared to the same period ~~by the Turkey operations from new tax incentives from the Turkish government.~~in 2019.

Net ~~income~~loss for the three months ended ~~September 30, 2017~~March 31, 2020 was ~~$20.4~~$0.5 million as compared to ~~$2.8~~a net loss of $12.1 million in the same period in ~~2016.~~2019. The ~~increase~~decrease in the loss was primarily due to the reasons set forth above.

~~Net income attributable to preferred shareholders was $0.6 million~~ Although our net loss decreased for the three months ended ~~September 30, 2016 and there was none~~March 31, 2020 compared to the same period in ~~the 2017 period as following~~2019, our ~~IPO in July 2016, all of the previously outstanding preferred shares were converted to common shares.~~

~~Net income attributable to common shareholders was $20.4 million~~net loss for the three months ended ~~September 30, 2017, compared to $2.2~~March 31, 2020 was adversely impacted by approximately $9 million, ~~in the same period in 2016. This increase was~~net of approximately $2 million of income taxes, primarily due to reduced production levels at our China manufacturing facilities due to the ~~improved operating results discussed above. Diluted earnings~~COVID-19 pandemic. The net loss per share was ~~$0.58~~$0.01 for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~$0.08~~a net loss per share of $0.35 for the three months ended ~~September 30, 2016.~~March 31, 2019.

The following table summarizes our net sales and income (loss) from operations by our four geographic operating ~~segments:~~segments for the three months ended March 31, 2020 and 2019 that has been derived from our unaudited condensed consolidated financial statements.

	Three Months Ended				Three Months Ended
	September 30,				March 31,
	2017		2016		2020		2019
Net Sales	(in thousands)				(in thousands)
U.S.	$	44,599	$	45,090	$	47,431	$	41,628
Asia		102,463		86,834		91,137		68,718
Mexico		44,941		35,448		118,250		84,665
EMEA		51,351		31,566
EMEAI						99,818		104,769
Total net sales	$	243,354	$	198,938	$	356,636	$	299,780

	Three Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2020			2019
Income (Loss) from Operations	(in thousands)						(in thousands)
U.S. (1)	$	(8,120	)	$	(12,929	)	$	(15,586	)	$	(14,503	)
Asia		24,031			17,291			5,072			(8,800	)
Mexico		3,286			3,574			(1,768	)		(424	)
EMEA		4,349			201
EMEAI								(3,122	)		12,071
Total income from operations	$	23,546		$	8,137		$	(15,404	)	$	(11,656	)

Net sales infor the three months ended ~~September 30, 2017 decreased slightly~~March 31, 2020 increased by $5.8 million or 13.9% to ~~$44.6~~$47.4 million compared to ~~$45.1~~$41.6 million in the same period in ~~2016.~~2019. Net sales of wind blades ~~decreased~~increased to ~~$39.5~~$35.9 million during the three months ended ~~September 30, 2017~~March 31, 2020 as compared to ~~$41.8~~$31.9 million in the same period of ~~2016~~2019. The increase was primarily due to a ~~slight reduction~~higher average sales price due to the mix of wind blade models produced in both periods and a 2% increase in the number of wind blades ~~delivered~~produced in the three months ended March 31, 2020 as compared to the same period in 2019. There were no net sales from the manufacturing of precision molding and assembly systems during the three months ended March 31, 2020 compared to $0.1 million during the same period in 2019. Additionally, there was a ~~decline~~$1.9 million increase in transportation and other sales during the three months ended March 31, 2020 as compared to the same period in 2019.

The loss from operations in the U.S. segment for the three months ended March 31, 2020 was $15.6 million as compared to a loss from operations of $14.5 million in the same period in 2019. As previously discussed, the loss amounts include corporate general and administrative costs of $9.5 million and $8.0 million for the three months ended March 31, 2020 and 2019, respectively. The 2020 operating results were also unfavorably impacted by increased direct labor and direct material costs at our Newton, Iowa blade facility, offset by the decreased costs related to the shutdown of our Newton, Iowa transportation facility and by the higher average sale price of wind blade models produced and wind blade volumes discussed above.

Net sales for the three months ended March 31, 2020 increased by $22.4 million or 32.6% to $91.1 million compared to $68.7 million in the same period in 2019. Net sales of wind blades were $85.9 million in the three months ended March 31, 2020 compared to $62.1 million in the same period of 2019. This increase reflects an increase in the year over year number of wind blades still in the production process at the end of the period as well as an increase in the average sales ~~prices~~price of wind blades due to a change in the mix of wind blades between the two periods, notwithstanding a 8% net decrease in overall wind blade volume. Although our Asia net sales increased for the three months ended March 31, 2020 compared to the same period in 2019, our Asia net sales for the three months ended March 31, 2020 were adversely impacted by approximately $38 million due to reduced production levels at our China manufacturing facilities due to the COVID-19 pandemic. Net sales from the manufacturing of precision molding and assembly systems totaled $5.1 million during the three months ended March 31, 2020 compared to $6.2 million during the same period in 2019. The impact of the fluctuating U.S. dollar against the Chinese Renminbi had an unfavorable impact of 0.9% on net sales during the three months ended March 31, 2020 as compared to the same period in 2019.

The income from operations in the Asia segment for the three months ended March 31, 2020 was $5.1 million as compared to a loss from operations of $8.8 million in the same period in 2019. This increase was primarily due to the increase in the year over year number of wind ~~blade models delivered~~blades still in ~~both periods as a result~~the production process at the end of the period, an increase in the average sales price of wind blades noted above and by the impact of savings in raw material ~~costs,~~costs. Although our income from operations increased for the three months ended March 31, 2020 compared to the same period in 2019, our income from operations for the three months ended March 31, 2020 was adversely impacted by approximately $11 million due to reduced production levels at our China manufacturing facilities due to the COVID-19 pandemic. The impact of the fluctuating U.S. dollar against the Chinese Renminbi had a ~~portion~~favorable impact of 1.6% on cost of goods sold for the three months ended March 31, 2020 as compared to the same period in 2019.

Net sales in the three months ended March 31, 2020 increased by $33.6 million or 39.7% to $118.3 million compared to $84.7 million in the same period in 2019. The increase reflects a 57% net increase in overall wind blade volume which ~~we share with our customers.~~was partially related to the

Matamoros strike during 2019 and an increase in the average sales price of wind blades due to a change in the mix of wind blades between the two periods. Net sales from the manufacturing of precision molding and assembly systems during the three months ended ~~September 30, 2017~~March 31, 2020 were ~~$1.2~~$1.7 million compared to ~~$1.9~~$4.8 million during the same period in ~~2016. These decreases were partially offset by a $2.5 million increase in non-wind related net sales during the three months ended September 30, 2017 as compared to the same period in 2016.~~

The loss from operations for the three months ended September 30, 2017 was $8.1 million as compared to a loss of $12.9 million in the same period in 2016. These amounts include corporate general and administrative costs of $9.3 million and $14.1 million for the three months ended September 30, 2017 and 2016, respectively. The decrease in the corporate general and administrative costs was primarily due to a $6.1 million decrease in share-based compensation costs, partially offset by additional costs incurred to enhance our corporate support functions to support our growth and public company governance. The operating results were also unfavorably impacted by lower precision molding volume discussed above during the three months ended September 30, 2017 as compared to the 2016 period.

Net sales in the three months ended September 30, 2017 increased by $15.6 million or 18.0% to $102.5 million compared to $86.8 million in the same period in 2016. Net sales of wind blades were $97.8 million in the three months ended September 30, 2017 as compared to $85.4 million in the same period of 2016. The increase was the result of a 24% increase in the number of wind blades delivered during the three months ended September 30, 2017 compared to the same period in 2016. These increases were partially offset by a change in the mix of wind blade models sold and lower average sales prices of wind blades delivered in both periods due to savings in raw material costs, a portion of which we share with our customers. The impact of the fluctuating U.S. dollar against the Chinese Renminbi did not have a significant effect on net sales during the three months ended September 30, 2017, as compared to an unfavorable impact of 1.2% in the three months ended September 30, 2016. Net sales from the manufacturing of precision molding and assembly systems totaled $4.7 million during the three months ended September 30, 2017 compared to $1.4 million during the three months ended September 30, 2016.2019.

Income from operations in the Asia segment for the three months ended September 30, 2017 was $24.0 million as compared to $17.3 million in the same period in 2016. In addition to the factors noted above, the increase reflects lower overhead costs in the 2017 period as compared to 2016. As with net sales, the fluctuating U.S. dollar against the Chinese Renminbi did not have a significant effect on cost of goods sold for three months ended September 30, 2017 versus a favorable impact of 4.2% in the comparable 2016 period.

Net sales in the three months ended September 30, 2017 increased by $9.5 million or 26.8% to $44.9 million compared to $35.4 million in the same period in 2016, reflecting the beginning of wind blade production in our second and third plants and a slight increase in wind blade volume at our first Mexico plant. These increases were partially offset by lower average sales prices of wind blades delivered in both periods. Net sales of wind blades represents the entirety of net sales in the Mexico segment in the 2017 and 2016 periods.

~~Income~~The loss from operations in the Mexico segment for the three months ended ~~September 30, 2017~~March 31, 2020 was ~~$3.3~~$1.8 million as compared to ~~$3.6~~a loss from operations of $0.4 million in the same period in ~~2016.~~2019. The ~~decrease in income from operations~~increase was due primarily to the ~~startup losses incurred~~underutilization of labor at certain of our ~~three new Mexico~~Juarez facilities, ~~and the unfavorable impact of the weakening U.S. dollar relative to the Mexican Peso on cost of goods sold of 1.1%,~~ partially offset by the overall increase in wind blade volume noted, a decrease in ~~the 2017 period as compared to 2016~~startup and transition costs as well as from savings in raw material costs. The fluctuating U.S. dollar ~~against~~relative to the Mexican Peso had a favorable impact of ~~2.2%~~0.6% on cost of goods sold for the three months ended ~~September 30, 2016.~~March 31, 2020 as compared to 2019.

Net sales during the three months ended ~~September 30, 2017 increased~~March 31, 2020 decreased by ~~$19.8~~$5.0 million or ~~62.7%~~4.7% to ~~$51.4~~$99.8 million compared to ~~$31.6~~$104.8 million in the same period in ~~2016.~~2019. The ~~increase~~decrease was driven by a 9% decrease in wind blade volume at our two Turkey plants due to transitions and a decrease in the ~~beginning~~average sales price of wind blades delivered in the comparative periods. The fluctuating U.S. dollar relative to the Euro had an unfavorable impact of 2.4% on net sales during the three months ended March 31, 2020 as compared to 2019.

The loss from operations in the EMEAI segment for the three months ended March 31, 2020 was $3.1 million as compared to income from operations of $12.1 million in the same period in 2019. The decrease was primarily driven by increased warranty costs at our second Turkey plant, the decreased wind blade production inat our two Turkey plants and the increased startup costs at our India plant and transition costs at our second Turkey plant, partially offset by ~~a 34% decrease in wind blade volume at our first Turkey plant as a result of GE only requiring~~ the minimum volume required under its contract after its decision to not renew or extend its supply agreement with us beyond 2017. We completed 100% of this volume by the end of June to enable us to accelerate the transition of those manufacturing lines to two new manufacturing lines for Nordex Group. Other items having a favorable impact on net sales include the mix of wind blades sold during the period as well as overall higher average sales prices of wind blades delivered in the comparative periods due to the beginning of wind blade production in our second Turkey plant and the impact of the weakening U.S. dollar relative to the Euro of 5.2%. This compares to a favorable impact on net sales of 0.5% in the three months ended September 30, 2016. Net sales of wind blades represents the entirety of net sales in the EMEA segment in 2017 and 2016.

Income from operations in the EMEA segment for the three months ended September 30, 2017 was $4.3 million as compared to $0.2 million in the same period in 2016. The increase was primarily driven by the wind blade production in our second Turkey plant, improved operating efficiency at our first Turkey plant, savings in raw materials and the net favorable impact on cost of goods sold of the fluctuation of the U.S. dollar relative to the Turkish Lira and Euro of ~~1.1% compared to 0.2% in~~5.7% for the three months ended ~~September 30, 2016.~~

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

The following table summarizes certain information relating to our operating results and related percentage of net sales for the nine months ended September 30, 2017 and 2016 that has been derived from our unaudited condensed consolidated financial statements.

Nine Months Ended

September 30,

2017

2016

(dollars in thousands)

Net sales

$
683,142

100.0
%

$
569,303

100.0
%
Cost of sales

568,659

83.2

499,896

87.8

Startup and transition costs

29,051

4.3

11,449

2.0

Total cost of goods sold

597,710

87.5

511,345

89.8

Gross profit

85,432

12.5

57,958

10.2

General and administrative expenses

28,373

4.1

24,154

4.2

Income from operations

57,059

8.4

33,804

6.0

Other expense

(10,744
)

(1.6
)

(13,141
)

(2.3
)
Income before income taxes

46,315

6.8

20,663

3.7

Income tax provision

(8,514
)

(1.3
)

(4,565
)

(0.8
)
Net income

37,801

5.5

16,098

2.9

Net income attributable to preferred shareholders

—

0.0

5,471

1.0

Net income attributable to common shareholders

$
37,801

5.5
%

$
10,627

1.9
%

Net sales for the nine months ended September 30, 2017 increased by $113.8 million or 20.0% to $683.1 million compared to $569.3 million in the same period in 2016. Net sales of wind blades increased by 21.4% to $657.6 million for the nine months ended September 30, 2017March 31, 2020 as compared to $541.7 million in the same period in 2016. The increase was primarily driven by a 24% increase in the number of wind blades delivered during the nine months ended September 30, 2017 compared to the same period in 2016 from each of our segments, partially offset by a decline in the average sales prices of the same wind blade models delivered in both periods as a result of geographical mix and savings in raw material costs, a portion of which we share with our customers, as well as from foreign currency fluctuations in China. Net sales from the manufacturing of precision molding and assembly systems during the nine months ended September 30, 2017 decreased to $15.3 million from $23.2 million in the same period in 2016. This decrease was primarily the result of our customers requiring less precision molding and assembly systems from our Rhode Island facility during the nine months ended September 30, 2017 as compared to the same period in 2016. Total billings for the nine months ended September 30, 2017 increased by $132.1 million or 23.3% to $698.8 million compared to $566.8 million in the same period in 2016. The net unfavorable impact of foreign currency fluctuations on consolidated net sales and total billings of 0.6% and 0.7%, respectively, was driven by the strengthening of the U.S. dollar against the Chinese Renminbi at our China operations for the nine months ended September 30, 2017 compared to reductions of 0.5% for both categories during the nine months ended September 30, 2016.

Total cost of goods sold for the nine months ended September 30, 2017 was $597.7 million and included aggregate costs of $29.1 million related to startup costs in our new plants in Mexico and Turkey and the startup of new wind blade models for certain of our customers in Turkey and Dafeng, China. This compares to total cost of goods sold for the nine months ended September 30, 2016 of $511.3 million, including aggregate costs of $11.4 million related to startup costs in our new plants in Mexico and Turkey as well as the transition of wind blade models in our original plant in Mexico. Cost of goods sold as a percentage of net sales of wind blades decreased by two percentage points during the nine months ended September 30, 2017 as compared to the same period in 2016, driven by improved operating efficiencies and the impact of savings in raw material costs and foreign currency fluctuations, partially offset by the increase in startup and transition costs. The impact of the strengthening of the U.S. dollar against the Euro, Turkish Lira, Chinese Renminbi and Mexican Peso reduced consolidated cost of goods sold by 2.8% for nine months ended September 30, 2017, as compared to 1.3% in the same period in 2016.

General and administrative expenses for the nine months ended September 30, 2017 totaled $28.4 million as compared to $24.2 million for the same period in 2016. As a percentage of net sales, general and administrative expenses were 4.1% for the nine months ended September 30, 2017, down from 4.2% in the same period in 2016. The increase was primarily driven by additional costs incurred to enhance our corporate support functions to support our growth and public company governance, partially offset by a $2.9 million decrease in share-based compensation costs in the 2017 period as compared to the same period in 2016, which was the period in which we recorded the expense from grant date through the end of the third quarter of 2016 for the performance awards upon consummation of the IPO.

Other expense totaled $10.7 million for the nine months ended September 30, 2017 as compared to $13.1 million for the same period in 2016. The amount for the nine months ended September 30, 2017 was primarily comprised of interest expense of $9.2 million and the realized loss on foreign currency remeasurement of $2.6 million. This compares to interest expense of $12.7 million and $0.7 million related to the realized loss on foreign currency remeasurement in the nine months ended September 30, 2016.

Income tax provision increased to $8.5 million for the nine months ended September 30, 2017 from $4.6 million for the same period in 2016. The lower effective tax rate was primarily due to the release of the valuation allowance which was recorded against our Turkey operation’s deferred tax assets as well as the benefit received in the quarter by the Turkey operations from new tax incentives from its government.

~~Net income for the nine months ended September 30, 2017 was $37.8 million as compared to $16.1 million in the same period in 2016. The increase was primarily due to the reasons set forth above.~~

Net income attributable to preferred shareholders was $5.5 million for the nine months ended September 30, 2016 and there was none in the 2017 period as following our IPO in July 2016, all of the previously outstanding preferred shares were converted to common shares.

Net income attributable to common shareholders was $37.8 million during the nine months ended September 30, 2017, compared to $10.6 million in the same period in 2016. This was primarily due to the improved operating results discussed above. Diluted earnings per share was $1.09 for the nine months ended September 30, 2017, compared to $0.88 for the nine months ended September 30, 2016.

~~The following table summarizes our net sales and income (loss) from operations by our four geographic operating segments:~~

Net sales in the nine months ended September 30, 2017 decreased by $5.6 million or 4.0% to $136.3 million compared to $141.9 million in the same period in 2016. The decrease was driven by lower net sales from the manufacturing of precision molding and assembly systems at our Rhode Island facility during the nine months ended September 30, 2017 of $5.8 million compared to $17.0 million during the same period in 2016. There was also a slight decrease in our net sales of wind blades which totaled $120.3 million during the nine months ended September 30, 2017 as compared to $120.5 million in the same period of 2016. This decrease was driven by a decline in the average sales prices of the same wind blade models delivered in both periods as a result of savings in raw material costs, a portion of which we share with our customers, partially offset by a 4% increase in the number of wind blades delivered. These decreases were partially offset by a $5.9 million increase in non-wind related net sales during the nine months ended September 30, 2017 as compared to the same period in 2016.

The loss from operations for the nine months ended September 30, 2017 was $26.2 million as compared to a loss of $18.1 million in the same period in 2016. These amounts include corporate general and administrative costs of $28.4 million for the nine months ended September 30, 2017 compared to $24.2 million for the nine months ended September 30, 2016. The increase in the corporate general and administrative costs was primarily due to additional costs incurred to enhance our corporate support functions to support our growth and public company governance, partially offset by a $2.8 million decrease in share-based compensation costs during the nine months ended September 30, 2017 as compared to the same period in 2016. The operating results were also unfavorably impacted by slightly lower gross profit on wind blades delivered during the nine months ended September 30, 2017 as compared to the 2016 period as well as the lower precision molding volume discussed above during the nine months ended September 30, 2017 as compared to the 2016 period.

Net sales in the nine months ended September 30, 2017 increased by $45.6 million or 19.6% to $278.3 million compared to $232.6 million in the same period in 2016. Net sales of wind blades were $268.8 million in the nine months ended September 30, 2017 as compared to $226.4 million in the same period of 2016. The increase was the result of a 26% increase in the number of wind blades delivered during the nine months ended September 30, 2017 compared to the same period in 2016. These increases were partially offset by a change in the mix of wind blade models sold, lower average sales prices of wind blades due to savings in raw material costs, a portion of which we share with our customers and the unfavorable impact of the fluctuation of the U.S. dollar relative to the Chinese Renminbi of 1.0% during the nine months ended September 30, 2017 as compared to an unfavorable impact of 1.4% during the comparable 2016 period. Net sales from the manufacturing of precision molding and assembly systems totaled $9.5 million during the nine months ended September 30, 2017 as compared to $6.2 million during the nine months ended September 30, 2016.

Income from operations in the Asia segment for the nine months ended September 30, 2017 was $64.2 million as compared to $48.1 million in the same period in 2016. In addition to the factors noted above, the increase in income from operations reflects higher gross margins on wind blade sales driven by operating efficiencies and the favorable impact on cost of goods sold of the fluctuation of the U.S. dollar relative to the Chinese Renminbi of 3.2%, as well as lower overhead costs in the 2017 period as compared to 2016. The impact of the strengthening of the U.S. dollar against the Chinese Renminbi on cost of goods sold for nine months ended September 30, 2016 was 4.5%.

Net sales in the nine months ended September 30, 2017 increased by $45.4 million or 51.2% to $134.0 million compared to $88.6 million in the same period in 2016, reflecting a 35% increase in wind blade volume at our first Mexico plant and the beginning of wind blade production in our second plant, partially offset by lower average sales prices of wind blades delivered in both periods. Net sales of wind blades represents the entirety of net sales in the Mexico segment in the 2017 and 2016 periods.

Income from operations in the Mexico segment for the nine months ended September 30, 2017 was $5.3 million as compared to $6.2 million in the same period in 2016. The decrease was largely driven by the startup losses incurred at our three new Mexico facilities, partially offset by the increase in wind blade volume in the 2017 period as compared to 2016 and operating efficiencies at our first Mexico plant, as well as from savings in raw material costs and the favorable impact of the fluctuation of the U.S. dollar relative to the Mexican Peso on cost of goods sold of 0.6%. The fluctuating U.S. dollar against the Mexican Peso had a favorable impact of 3.0% for nine months ended September 30, 2016.

Net sales during the nine months ended September 30, 2017 increased by $28.4 million or 26.8% to $134.5 million compared to $106.1 million in the same period in 2016. The increase was driven by the beginning of wind blade production in our second Turkey plant, partially offset by a 24% decrease in wind blade volume at our first Turkey plant as a result of GE only requiring the minimum volume required under its contract after its decision to not renew or extend its supply agreement with us beyond 2017. We completed 100% of this volume by the end of June to enable us to accelerate the transition of those manufacturing lines to two new manufacturing lines for Nordex Group. Other items having a favorable impact on net sales include the mix of wind blades sold during the period as well as overall higher average sales prices of wind blades delivered in the comparative periods due to the beginning of wind blade production in our second Turkey plant. The fluctuating U.S. dollar against the Euro did not have a significant effect on net sales in either the nine months ended September 30, 2017 or 2016. Net sales of wind blades represents the entirety of net sales in the EMEA segment in 2017 and 2016.

Income from operations in the EMEA segment for the nine months ended September 30, 2017 was $13.9 million as compared to a loss of $2.4 million in the same period in 2016. The increase was primarily driven by the wind blade production in our second Turkey plant, improved operating efficiencies at our first Turkey plant, savings in raw material costs, and a large warranty reserve accrual expensed related to the settlement agreement and release with one of its customers to resolve a potential warranty claim related to

wind blades primarily manufactured in 2014 in the 2016 period as well as the net favorable impact on cost of goods sold of the fluctuation of the U.S. dollar relative to the Turkish Lira and Euro of 8.4%. This compares to the favorable impact of the fluctuation of the U.S. dollar relative to the Turkish Lira and Euro of 3.9% for nine months ended September 30, 2016.

As a result of the uncertainty relating to: (i) the rapidly evolving nature, magnitude and duration of the COVID-19 pandemic, (ii) the variety of measures implemented by governments around the world to address its effects and (iii) the impact on our manufacturing operations, we are managing our liquidity to ensure our long-term viability until the COVID-19 pandemic abates. During the three months ended March 31, 2020, we drew down $50.0 million under our Credit Agreement and an additional $30.0 million in April 2020. In addition, in March 2020, we entered into two unsecured credit facilities with two Turkish financial institutions resulting in aggregate net proceeds of $16.6 million and availability of $5.5 million.

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, working capital, ~~and~~ debt service costs and warranty costs. Our capital expenditures have been primarily related to machinery and equipment for new facilities or facility expansions. Historically, we have funded our working capital needs through cash flows from operations, the proceeds received from our credit facilities and from proceeds received from the issuance of stock. We had net borrowings on financing arrangements of ~~$5.3~~$64.9 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 as compared to net ~~repayments~~borrowings on financing arrangements of ~~$14.2~~$17.1 million in the comparable period of ~~2016.~~2019. As of ~~September 30, 2017,~~March 31, 2020 and December 31, 2019, we had ~~$135.5~~$207.0 million and $142.1 million in outstanding indebtedness, excluding debt issuance ~~costs.~~costs, respectively. As of ~~September 30, 2017,~~March 31, 2020, we had an aggregate of ~~$74.8~~$158.4 million of remaining capacity and ~~$39.7~~$67.9 million of remaining availability under our various credit facilities. Working capital requirements have increased as a result of our overall growth and the need to fund higher accounts receivable and inventory levels as our business volumes have ~~increased.~~increased as well as the increased level of transitions. Based upon current and anticipated levels of operations, we believe that cash on hand, available credit facilities and cash flow from operations will be adequate to fund our working capital and capital expenditure requirements and to make required payments of principal and interest on our indebtedness over the next twelve months.

We anticipate that any new facilities and future facility expansions will be funded through cash flows from operations, the ~~proceeds of our IPO in July 2016, the~~ incurrence of other indebtedness and other potential sources of liquidity.

At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, we had unrestricted cash, cash equivalents and short-term investments totaling ~~$139.1~~$109.5 million and ~~$119.1~~$70.3 million, respectively. The ~~September 30, 2017~~March 31, 2020 balance includes ~~$33.5~~$37.9 million of cash located outside of the United States, including ~~$31.5~~$21.1 million in Turkey, $11.5 million in China, ~~$1.2~~$3.5 million in ~~Turkey and $0.8~~India, $1.6 million in ~~Mexico.~~Mexico and $0.2 million in other countries. In February 2020, we entered into an Incremental Facility Agreement with the current lenders to our Credit Agreement and an additional lender, pursuant to which the aggregate principal amount of our revolving credit facility under the Credit Agreement was increased from $150.0 million to $205.0 million. Our ability to repatriate funds from China to the United States is subject to a number of restrictions imposed by the Chinese government. We repatriate funds through several technology license and corporate/administrative service agreements. We are compensated quarterly based on agreed upon royalty rates for such intellectual property licenses and quarterly fees for those services. Certain of our subsidiaries are limited in their ability to declare dividends without first meeting statutory restrictions of the People’s Republic of China, including retained earnings as determined under Chinese-statutory accounting requirements. Until 50% ($~~5.2 million)~~26.5 million as of December 31, 2019) of registered capital is contributed to a surplus reserve, our Chinese 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 Chinese operations can pay dividends equal to 100% of after-tax profit assuming other conditions are met. At December 31, ~~2016,~~2019, the amount of the surplus reserve fund was ~~$4.4~~$6.6 million.

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2020			2019
	(in thousands)						(in thousands)
Net income	$	37,801		$	16,098
Net loss							$	(492	)	$	(12,104	)
Depreciation and amortization		13,622			9,703			11,028			10,659
Realized loss on sale of assets and asset impairments								1,918			2,235
Restructuring charges								117			—
Share-based compensation expense		4,794			8,117			2,942			985
Other non-cash items		430			4,291			56			51
Changes in assets and liabilities		(5,124	)		(10,233	)		(13,001	)		(13,917	)
Net cash provided by operating activities	$	51,523		$	27,976
Net cash provided by (used in) operating activities							$	2,568		$	(12,091	)

Net cash provided by operating activities totaled ~~$51.5~~$2.6 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and was primarily the result of ~~net income for the period of $37.8~~a $13.0 million ~~depreciation and amortization of $13.6 million, share-based compensation costs of $4.8 million and~~in net changes in working ~~capital.~~capital and a $0.5 million net loss, mostly offset by $11.0 million of depreciation and amortization, $2.9 million of share-based compensation expense and a $1.9 million realized loss on sale of assets and asset impairments. The key components of the ~~$5.1 million increase~~net changes in working capital include a ~~$66.4~~$32.6 million increase in contract assets and liabilities, a $17.6 million decrease in accounts ~~receivable~~payable and accrued expenses, a ~~$25.0~~$17.4 million increase in ~~inventory. This~~other noncurrent assets, a $4.6 million increase in prepaid expenses and a $3.5 million increase in inventories. These decreases were mostly offset by a $50.3 million decrease in accounts receivable, a $4.6 million decrease in other current assets, a $3.9 million increase in accrued warranty, a $2.0 million decrease in operating lease right of use assets and operating lease liabilities and a $1.9 million increase in other noncurrent liabilities. The changes in contract assets and liabilities, accounts receivable, accounts payable and accrued expenses and accrued warranty are primarily the result of the timing of production in the period.

Net cash used in operating activities totaled $12.1 million for the three months ended March 31, 2019 and was primarily the result of a $13.9 million net decrease in assets and liabilities and a $12.1 million net loss, partially offset by ~~$47.5~~$10.7 million of depreciation and amortization, $2.2 million loss on sale of assets and $1.0 million of share-based compensation expense. The key components of the net decrease in assets and liabilities include a $17.2 million increase in prepaid expenses and other current assets, a $15.9 million increase in contract assets and liabilities and a $14.1 million increase in other noncurrent assets. These decreases were partially offset by a $17.8 million increase in accounts payable and accrued expenses, an $8.5 million decrease in accounts receivable, a ~~$17.7~~$4.2 million ~~increase~~decrease in ~~deferred revenue,~~operating lease right of use assets and operating lease liabilities and a ~~$9.0 million increase in customer deposits, an $8.2~~$2.8 million increase in accrued ~~warranty, a $3.1 million decrease~~warranty. The changes in ~~other noncurrent~~contract assets and ~~a $0.9 million decrease in prepaid expenses and other current assets. The working capital changes in~~liabilities, accounts receivable, ~~inventory,~~ accounts payable and accrued expenses and ~~deferred revenue~~accrued warranty are primarily the result of the ~~material increase in and the~~ timing of ~~sales~~production in the ~~nine months ended September 30, 2017.~~

Net cash provided by operating activities totaled $28.0 million for the nine months ended September 30, 2016 and was primarily the result of net income for the period of $16.1 million, depreciation and amortization of $9.7 million, share-based compensation costs of

$8.1 million and other non-cash items of $4.3 million, partially offset by net changes in working capital. The key components of the $10.2 million increase in working capital include an increase in accounts receivable of $27.2 million, a $6.9 million increase in other noncurrent assets, a $6.6 million increase in inventory and a $3.6 million decrease in deferred revenue. This was partially offset by a $17.5 million increase in accrued warranty, a $6.3 million increase in accounts payable and accrued expenses, a $4.9 million decrease in prepaid expenses and other current assets and a $4.9 million increase in customer deposits. The working capital changes in accounts receivable, inventory, accounts payable and accrued expenses and deferred revenue are primarily the result of the material increase in and the timing of sales in the nine months ended September 30, 2016.period.

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2020			2019
	(in thousands)						(in thousands)
Purchase of property and equipment	$	(35,312	)	$	(18,917	)
Purchases of property, plant and equipment							$	(26,983	)	$	(18,709	)
Net cash used in investing activities	$	(35,312	)	$	(18,917	)	$	(26,983	)	$	(18,709	)

Net cash used in investing activities totaled ~~$35.3~~$27.0 million and ~~$18.9~~$18.7 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, driven primarily by capital expenditures for new facilities and expansion or improvements at existing ~~facilities and costs at our corporate office to enhance our information technology systems.~~facilities. The capital expenditures for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 primarily related to our new manufacturing facilities in Chennai, India and Yangzhou, China, our second manufacturing facility in Turkey and ~~third wind blade plants~~continued investments in ~~Mexico and Turkey.~~our other existing facilities. The capital expenditures for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2019 primarily related to our new manufacturing facility in Yangzhou, China, our second ~~wind blade plants~~manufacturing facility in ~~Mexico~~Turkey, our new tooling facility and ~~Turkey as well as~~ the expansion of one of our ~~original wind~~ blade ~~facility~~manufacturing facilities in ~~Mexico.~~Juárez, Mexico and continued investments in our other existing facilites.

We anticipate fiscal year ~~2017~~2020 capital expenditures of between ~~$70~~$80 million to ~~$75 million. We~~$90 million and we estimate that the cost that we will incur after ~~September 30, 2017~~March 31, 2020 to complete our current projects in process iswill be approximately ~~$5.7~~$16.4 million. We are deferring non-critical capital expenditures in light of the COVID-19 uncertainty. We have used, and will continue to use, cash ~~flow~~flows from operations, the proceeds received from our credit facilities and ~~debt~~the proceeds received from the issuance of stock for major projects currently being

undertaken, which include ~~the~~ new manufacturing facilities in ~~Mexico and Turkey discussed above, our new manufacturing facility in Matamoros, Mexico as well as our~~Chennai, India, the continued investment in our existing ~~wind blade facilities.~~Tukey, Mexico and China facilities as well as in our pilot line in Warren, Rhode Island.

Nine Months Ended

September 30,

2017

2016

(in thousands)

Net proceeds from issuance of common stock in initial
public offering

$
—

$
67,199

Repayments of term loan

(2,812
)

(617
)
Net proceeds from (repayments of) accounts receivable financing

8,196

(6,050
)
Net repayments of working capital loans

(4,638
)

(4,097
)
Net proceeds from (repayments of) other debt

4,556

(3,415
)
Proceeds from exercise of stock options

988

—

Repurchase of common stock including shares withheld in lieu of income taxes

(1,264
)

—

Restricted cash

(1,543
)

(649
)
Net cash provided by financing activities

$
3,483

$
52,371

	Three Months Ended
	March 31,
	2020			2019
	(in thousands)
Proceeds from revolving loans	$	50,000		$	6,000
Net proceeds (repayments) of accounts receivable financing		(101	)		13,208
Proceeds from working capital loans		—			2,228
Principal repayments of finance leases		(1,492	)		(2,929	)
Net proceeds (repayments) of other debt		16,505			(1,445	)
Debt issuance costs		(183	)		—
Proceeds from exercise of stock options		812			4,572
Repurchase of common stock including shares withheld in lieu of income taxes		(459	)		(559	)
Net cash provided by financing activities	$	65,082		$	21,075

The net cash provided by financing activities totaled ~~$3.5~~$65.1 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to $21.1 million of net cash provided by financing activities ~~of $52.4 million~~ in the comparable period of ~~2016.~~2019. Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 primarily reflects the net proceeds from revolving loans and other growth-related debt, partially offset by principal repayments of finance leases. Net cash provided by financing activities for the three months ended March 31, 2019 primarily reflects the net proceeds from accounts receivable financing and ~~other growth-related debt,~~revolving loans, proceeds from the exercise of stock options and proceeds from working capital loans, partially offset by ~~net~~principal repayments of working capital and term loans. The 2016 period reflects the Company’s net proceeds from the IPO of $67.2 million, partially offset by the net repayments of accounts receivable financing, working capital loans, the term loanfinance leases and other ~~debt, all of which were repaid with cash flows from operations.~~debt.

During the three months ended ~~September 30, 2017,~~March 31, 2020, we repurchased ~~68,815~~26,099 shares of our common stock for ~~$1.3~~$0.5 million related to tax withholding requirements on restricted stock units which vested during the period.

In ~~December 2016,~~April 2018, we ~~amended and restated our previous~~entered into a new credit ~~facility~~agreement (the ~~Restated~~ Credit ~~Facility). The previous $100.0 million~~Agreement) with four lenders consisting of ~~available principal was replaced with~~ a ~~$75.0 million term loan and a $25.0 million~~multi-currency, revolving credit facility ~~which originally included~~in an aggregate principal amount of $150.0 million, including a ~~$15.0~~$25.0 million letter of credit ~~sub-facility, which was increased~~sub-facility. On the closing date we drew down $75.4 million on the revolving credit facility in connection with the closing of the transactions contemplated by the Credit Agreement and used the proceeds to ~~$20.0 million~~pay all outstanding amounts due and payable under our previous credit agreement, various fees and expenses and accrued interest. All borrowings and amounts outstanding under the Credit Agreement are scheduled to mature in April ~~2017. The borrowings under~~2023. In May 2019, the ~~Restated~~ Credit ~~Facility bear~~Agreement was further amended to revise the definition of Consolidated EBITDA as utilized in certain of the financial covenants of the Credit Agreement.

In connection with the Credit Agreement, in the second quarter of 2018 we expensed $2.0 million of deferred financing costs associated with the previous credit agreement and a $1.4 million prepayment penalty within the caption “Loss on extinguishment of debt” in the condensed consolidated statement of operations. In addition, we incurred debt issuance costs related to the Credit Agreement totaling $1.0 million which will be amortized to interest expense over the five-year term of the Credit Agreement using the effective interest method.

Interest accrues at a variable rate ~~through maturity at~~equal to LIBOR ~~with~~plus a ~~1.0% floor, plus 5.75% (currently 7.09%). The Restated~~margin of 1.50% (2.4% as of March 31, 2020), which may vary based on our total net leverage ratio as defined in the Credit ~~Facility requires us~~Agreement. Interest is paid monthly and we are not obligated to make ~~quarterly~~any principal ~~payments~~repayments prior to the maturity date provided we are not in default under the Credit Agreement. We may prepay the borrowings under the Credit Agreement without penalty.

In April 2018, we also entered into an interest rate swap arrangement to fix a notional amount of ~~$0.9~~$75.0 million of the ~~outstanding principal loan balance commencing in March 2017,~~Credit Agreement at an effective interest rate of 4.2% for a period of five years. See Note 1, Summary of Operations and Significant Accounting Policies - Financial Instruments, for more details on this interest rate swap arrangement.

In February 2020, we entered into an Incremental Facility Agreement with the ~~remaining outstanding balance~~current lenders to ~~be repaid on or before December 30, 2020. The Restated~~our Credit ~~Facility contains customary affirmative covenants, negative covenants~~Agreement and ~~events~~an additional lender, pursuant to which the aggregate principal amount of ~~default, including covenants~~our revolving credit facility under the Credit Agreement was increased from $150.0 million to $205.0 million. All other material terms and restrictions that, among other things, require us and our subsidiaries to satisfy certain capital expenditure and other financial covenants, and restricts the ability of us and our subsidiaries to incur liens, incur additional indebtedness, enter into joint ventures or partnerships, engage in mergers and acquisitions, engage in asset sales and declare dividends on its capital stock without the prior written consentconditions of the ~~lenders. The obligations under~~Credit Agreement remained the ~~Restated Credit~~same. In connection with this Incremental Facility ~~are secured by a lien on substantially all tangible and intangible property of us and our domestic subsidiaries and by a pledge by us and our domestic subsidiaries of 65%~~Agreement, we incurred additional debt issuance costs totaling $0.2 million which will be amortized to interest expense over the remaining term of the ~~equity of their direct foreign subsidiaries, subject to customary exceptions and exclusions from collateral.~~Credit Agreement using the effective interest method.

If we prepay any of the outstanding principal loan balance prior to December 30, 2017, we are required to pay the lenders a premium in an amount equal to the amount of interest that otherwise would have been payable from the date of prepayment until December 30, 2017 plus 3.0% of the amount of the principal loan balance that was prepaid. If we prepay any of the outstanding principal loan balance after December 30, 2017 through December 30, 2018, we are required to pay the lenders 2.0% of the principal loan balance that was prepaid, and if we prepay any of the outstanding loan balance after December 30, 2018 through December 30, 2019, we are required to pay a premium of 1.5% of the amount of the principal loan balance that was prepaid.

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016, the aggregate~~2019, there was $162.4 million and $112.4 million outstanding ~~balance~~ under the ~~Restated~~ Credit ~~Facility was $75.0~~Agreement, respectively.

Due to the revolving credit facility’s variable interest rate of LIBOR plus a competitive spread, we estimate that fair-value approximates the face value of these notes.

As a result of the uncertainty relating to: (i) the rapidly evolving nature, magnitude and duration of the COVID-19 pandemic, (ii) the variety of measures implemented by governments around the world to address its effects and (iii) the impact on our manufacturing operations, we are managing our liquidity to ensure our long-term viability until the COVID-19 pandemic abates. During the three months ended March 31, 2020, we drew down $50.0 million under our Credit Agreement and ~~$77.8~~an additional $30.0 million ~~respectively. We cannot assure you that we will be able to maintain appropriate minimum leverage or fixed-charge coverage ratio requirements~~ in ~~the future.~~April 2020.

~~EMEA~~EMEAI: During 2014, we renewed a general credit agreement, as amended, with a financial institution in Turkey to provide up to ~~$20.0 million (later updated to~~ 21.0 million Euro ~~or approximately $24.8 million as of September 30, 2017)~~ of short-term collateralized financing on invoiced accounts receivable of one of ~~Turkey’s customers.~~our customers in Turkey. Interest ~~accrues~~originally accrued annually at a ~~variable~~fixed rate ~~(currently 5.75%)~~of 9.1% and iswas paid quarterly. In December 2014, and later amended, we obtained an additional ~~$7.0~~$8.0 million ~~(later decreased to $5.0 million)~~ of unsecured financing in Turkey under the credit agreement, ~~increasing~~with interest accruing annually at a fixed rate of 5.0% and payable at the ~~total facility.~~end of the term when the loan is repaid. All other credit agreement terms remained the same. The credit agreement does not have a maturity date, however the limits are reviewed in September of each year. ~~Amounts outstanding under this~~During the fourth quarter of 2018, we replaced the accounts receivable financing facility with the accounts receivable assignment agreement asdiscussed below. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016 include $13.9 million and $15.1 million of accounts receivable financing and none and $4.6 million of~~2019, there were no amounts outstanding under the unsecured financing ~~respectively.~~facility.

In ~~December~~ 2014, we entered into a credit agreement with a Turkish financial institution to provide up to $16.0 million of short-term financing of which $10.0 million is collateralized financing on invoiced accounts receivable of one of our customers in Turkey, $5.0 million is unsecured financing and $1.0 million is related to letters of guarantee. Interest accrues at a variable rate ~~(currently~~of the three month Euro Interbank Offered Rate (EURIBOR) plus 6.5%). ~~The credit agreement does not have a maturity date, however~~During the ~~limits are reviewed in September~~first quarter of ~~each year.~~2018, the collateralized financing on invoiced accounts receivables and unsecured financing facilities were retired and the letters of guarantee limit was adjusted, later amended to 1.4 million Euro (approximately $1.5 million as of March 31, 2020). No amounts were outstanding under this letter of guarantee agreement as of ~~September 30, 2017 or~~March 31, 2020 and December 31, ~~2016.~~2019.

In ~~March~~ 2016, we entered into a general credit agreement, as amended, with a Turkish financial institution to provide up to ~~35.0~~39.0 million Euro (approximately ~~$41.3~~$43.1 million as of ~~September 30, 2017)~~March 31, 2020) of short-term financing of which ~~20.0~~28.0 million Euro (approximately ~~$23.6~~$31.0 million as of ~~September 30, 2017)~~March 31, 2020) is collateralized financing based on invoiced accounts ~~receivable~~receivables of one of ~~the EMEA segment’s~~our customers ~~and 12.5~~in Turkey, 10.0 million Euro ~~(later increased to 15.0 million Euro, or approximately $17.7~~(approximately $11.0 million as of ~~September 30, 2017)~~March 31, 2020) for the collateralized financing of capital ~~expenditures. An additional~~expenditures and 1.0 million Euro (approximately $1.1 million as of March 31, 2020) related to letters of ~~guarantee matured in March 2017.~~guarantee. Interest on the collateralized financing based on invoiced accounts ~~receivable~~receivables of one of our customers in Turkey accrues at ~~the three month EURIBOR plus 5.75% (currently 5.75%)~~a fixed rate of 2.0% as of March 31, 2020 and is paid quarterly with a maturity date equal to four months from the applicable invoice date. Interest on the collateralized capital expenditures financing accrues at the one month EURIBOR plus 6.75% ~~(currently 6.75%)~~(6.75% as of March 31, 2020) with monthly principal repayments beginning in October 2017 with a final maturity date of December 2021. Interest on the letters of guarantee ~~accrued~~accrues at 2.00% ~~annually.~~annually with an amended final maturity date of July 2020. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, there was ~~$17.7~~$6.8 million and ~~$15.8~~$7.9 million outstanding under the collateralized financing of capital expenditures line, respectively. Additionally, as of

~~September 30, 2017,~~ March 31, 2020 and December 31, 2019, there was ~~$9.4~~$3.7 million and $3.8 million, respectively, outstanding under the collateralized financing based on invoiced accounts ~~receivables,~~receivables.

In the fourth quarter of 2018, we entered into a credit agreement, as amended, with ~~no corresponding amounts outstanding~~a Turkish financial institution to provide up to 118.6 million Turkish Lira (approximately $18.2 million as of ~~December~~March 31, ~~2016.~~2020) of collateralized financing on invoiced accounts receivable of one of our customers in Turkey. Interest accrued at a fixed rate of 3.9% and was to be paid quarterly. The credit agreement did not have a maturity date, however the limit would be reviewed in October of each year. In September 2019 this credit agreement was cancelled. Subsequently, in the first quarter of 2020, as a replacement to the original credit agreement, we entered into an unsecured financing facility with the same Turkish financial institution to provide up to 64.0 million Turkish Lira (approximately $9.8 million as of March 31, 2020). Interest accrues at a fixed rate of 2.5% and is to be paid quarterly. The credit agreement does not have a maturity date, however the limit would be reviewed in October of each year. All of the other terms of the original credit agreement remained the same.

~~Asia~~: In ~~January 2016,~~the fourth quarter of 2019, we entered into a credit agreement with a ~~Chinese~~Turkish financial institution to provide up to ~~95.0~~10.0 million ~~Renminbi~~Euro (approximately ~~$13.6~~$11.0 million as of March 31, 2020) of unsecured financing. Interest accrues at a fixed rate of 3.75% and is payable at the end of the term when the loan is repaid. As of March 31, 2020, there was $1.1 million outstanding under this credit agreement. No amounts were outstanding under this agreement as of December 31, ~~2016)~~2019.

In the first quarter of 2020, we entered into a credit agreement with a Turkish financial institution to provide up to 5.0 million Euro (approximately $5.5 million as of March 31, 2020) of unsecured financing. Interest accrues at a fixed rate of 3.5% and is payable at the end of the term when the loan is repaid. As of March 31, 2020, there were no amounts outstanding under this credit agreement.

Due to the short-term ~~financing~~nature of ~~which 85.0~~the unsecured financings in the EMEAI segment, we estimate that fair-value approximates the face value of the notes.

Asia: In February 2017, we entered into a credit agreement, as amended, with a Chinese financial institution to provide an unsecured credit line of up to 210.0 million Renminbi (approximately ~~$12.2~~$30.5 million as of ~~December 31, 2016) is collateralized financing based on invoiced accounts receivables~~June 30, 2019) which can be used for the purpose of ~~one~~domestic and foreign currency loans, issuing customs letters of ~~our Asia segment’s customers and 10.0 million Renminbi (approximately $1.4 million as of December 31, 2016) of working capital loans collateralized~~guarantee or other transactions approved by ~~one of our Asia segment location’s machinery and equipment.~~the lender. Interest on the ~~collateralized financing and the collateralized working capital loan~~credit line accrues at ~~a specified LIBOR~~the Chinese central bank interest rate plus an applicable margin (4.8% as of June 30, 2019) and can be paid monthly, quarterly or at the time of the debt’s ~~final~~ maturity ~~(January 12, 2017)~~(extended to January 2020). ~~As of December 31, 2016, there were no amounts outstanding under these accounts receivable financing and~~In August 2019, except as noted below, we replaced this credit agreement with the credit agreement discussed below. In connection with the August 2019 transaction, the financial institution agreed to allow the working capital ~~loans. This credit agreement matured in January 2017.~~loans which were then outstanding, totaling 5.0 million Renminbi (or approximately $0.7 million as of September 30, 2019) to be repaid on their due date of October 1, 2019.

In ~~February 2017,~~August 2019, we entered into a credit agreement with a Chinese financial institution to provide an unsecured credit line of up to ~~150.0~~315.0 million Renminbi (approximately ~~$22.5~~$44.5 million as of ~~September 30, 2017)~~March 31, 2020) related to two of our China facilities which can be used for the purpose of ~~domestic and foreign currency loans,~~ issuing customs letters of guarantee orand covering the related deposits on such letters of guarantee, project financing and certain other transactions approved by the lender. Interest on the credit line accrues at the ~~LIBOR~~Chinese central bank interest rate plus an applicable margin (4.8% as of March 31, 2020) and can be paid monthly, quarterly or at the time of the debt’s maturity (August 2021). As of March 31, 2020, there were 10.1 million Renminbi (approximately $1.4 million) of letters of guarantee and related deposits used for customs clearance outstanding. As of December 31, 2019, there were 25.7 million Renminbi (approximately $3.7 million) of letters of guarantee and related deposits used for customs clearance outstanding.

In March 2018, we entered into a credit agreement, as amended, with a Chinese financial institution to provide an unsecured credit line of up to 100.0 million Renminbi (approximately $14.1 million as of March 31, 2020) which can be used as customs letters of guarantee. Interest on the credit line accrues at the Chinese central bank interest rate plus an applicable margin (4.8% at March 31, 2020) and can be paid monthly, quarterly or at the time of the debt’s maturity (in ~~February 2018)~~March 2023). ~~No amounts~~As of March 31, 2020, there were ~~outstanding under this agreement as~~71.9 million Renminbi (approximately $10.1 million) of ~~September 30, 2017.~~ letters of guarantee used for customs clearance outstanding. As of December 31, 2019, there were 71.9 million Renminbi (approximately $10.3 million) of letters of guarantee used for customs clearance outstanding.

Equipment ~~Lease~~Leases and Other Arrangements: We have entered into certain ~~capital~~finance lease, sale-leaseback and ~~construction loan~~equipment financing arrangements in the ~~United States,~~U.S., Mexico and ~~EMEA~~EMEAI for equipment used in our operations as well as for office use. These leases bear interest at rates ranging from 3.0% to 9.0% annually, and principal and interest are payable monthly. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, there was ~~$19.5~~an aggregate total of $16.3 million and ~~$12.1~~$17.9 million outstanding under these arrangements, respectively.

Operating Leases: We lease various facilities and equipment under non-cancelable operating lease agreements. As of ~~September 30, 2017,~~March 31, 2020, we leased a total of approximately ~~4.8~~6.8 million square feet in Dafeng, China; Yangzhou, China; Chennai, India; Izmir, Turkey; Kolding, Denmark; Berlin, Germany, Newton, Iowa; Juárez, Mexico; Matamoros, Mexico; Santa Teresa, New Mexico; ~~Taicang City, China; Taicang Port, China; Matamoros, Mexico;~~ Warren, Rhode ~~Island; and Fall River, Massachusetts,~~Island, as well as our corporate office in Scottsdale, Arizona. The terms of these leases range from 12 months to ~~120~~180 months with annual payments approximating ~~$16~~$30 million for the full year ~~2017.~~ 2020.

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 ~~the~~our accounts receivable assignment ~~agreement~~agreements described ~~below and the operating lease arrangements presented in our Annual Report on Form 10-K.~~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 ~~condensed~~ consolidated financial statements and related notes.

~~In July 2014, our~~Our Mexico segment ~~entered into~~has an existing accounts receivable assignment agreement with a financial ~~institution. Under this agreement,~~institution under which the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to one of our Mexico segment’s customers at a discount calculated based on an effective annual rate of LIBOR plus 2.75%.

In September 2018, our U.S. and Mexico segments entered into an accounts receivable assignment agreement, as amended, with a financial institution. Under this agreement, the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to one of our U.S. (Iowa location) and Mexico segment’s customers at a discount calculated based on LIBOR plus 1.25%.

In the fourth quarter of 2018, our EMEAI segment entered into an accounts receivable assignment agreement with a financial institution. Under this agreement, the financial institution may buy, on a non-recourse revolving basis, up to 15.0 million Euro (approximately $16.6 million as of March 31, 2020) of the accounts receivable amounts related to one of our EMEAI segment’s customers at a discount calculated based on EURIBOR plus 2.65%. During the first quarter of 2020, this program was discontinued by the financial institution.

In the fourth quarter of 2018, our EMEAI segment entered into an accounts receivable assignment agreement with a financial institution. Under this agreement, the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to one of our EMEAI segment’s customers at a discount calculated based on EURIBOR plus 0.75%.

In the first quarter of 2019, our Asia and Mexico segments entered into separate accounts receivable purchase agreements, as amended, with a financial institution. Under these agreements, the financial institution may buy, on a non-recourse basis, and hold outstanding at any time up to $60.0 million of a customer’s accounts receivable amounts in our Asia segment and up to $50.0 million of a customer’s accounts receivable amounts in our Mexico segment at a discount calculated based on the three month LIBOR plus 1.0% and the number of days from the date of purchase to maturity.

In the second quarter of 2019, our Asia segment entered into an accounts receivable purchase agreement, as amended, with a financial institution. Under this agreement, the financial institution may buy, on a non-recourse basis, and hold outstanding at any time up to $45.0 million of a customer’s accounts receivable amounts in our Asia segment at a discount calculated based on the three month LIBOR plus 1.0% and the number of days from the date of purchase to maturity.

In the fourth quarter of 2019, our Asia segment entered into an accounts receivable purchase agreement, as amended, with a financial institution. Under this agreement, the financial institution may buy, on a non-recourse basis, and hold outstanding at any time an unlimited amount of a customer’s accounts receivable amounts in our Asia segment at a discount calculated based on a fixed rate of 4.05% and the number of days from the date of purchase to maturity.

As ~~these~~the receivables are purchased by the financial ~~institution, they are~~institutions under the agreements as described in the preceding paragraphs, the receivables were removed from ~~the Mexico segment’s~~our balance sheet. During the three ~~and nine~~ months ended ~~September 30, 2017, $17.3 million and $60.0~~March 31, 2020, $224.2 million of receivables were sold tounder the ~~financial institution, respectively.~~accounts receivable assignment agreements described above.

There have been no other significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K.

For a discussion of recent accounting pronouncements, see Note 1, Recently Issued Accounting Pronouncementsto our condensed consolidated financial statements.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, 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 ~~Qualitati~~veQualitative 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. We currently do not hedge our exposure to these risks.

Foreign Currency Risk. We conduct international operations in China, Mexico, Turkey and ~~Turkey.~~India. 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 local 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 domestic currency and then translated into U.S. dollars for inclusion in our ~~historical~~condensed consolidated financial statements. In recent years, exchange rates between these foreign currencies and the U.S. ~~dollars~~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 ~~$6.0 million and $5.7~~$4.9 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2020.

Commodity Price Risk. We are subject to commodity price risk under agreements for the supply of our raw materials. We have not hedged ~~nor do we intend to hedge,~~ our commodity price exposure. We generally lock in pricing for our key raw materials for 12 months which protects us from price increases within that period. ~~Additionally, the arrangements we have with our customers limit the impact of any price or cost increases.~~

~~Finally, since~~As many of our raw material supply agreements have meet or release clauses, if raw materials prices go down, we ~~can also~~are able to benefit from the reductions in price. We believe that this adequately protects us from increases in raw material prices ~~but~~and also enables us to take full advantage of decreases.

Resin and resin systems are the primary commodities for which we do not have fixed pricing. Approximately 40% of the resin and resin systems we use are purchased under contracts controlled by two of our customers and therefore they receive/bear 100% of any increase or decrease in resin costs further limiting our exposure to price fluctuations. We believe that a 10% change in the price of resin and resin systems for the ~~commodities for~~customers in which we ~~do not have fixed pricing,~~are exposed to fluctuating prices would have had an impact to income from operations of approximately ~~$9.9 million and $12.0~~$2.7 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2020. Furthermore, this amount does not include the portion of any increase or decrease that would be shared with our customers under our long-term supply agreements, which is generally 70%.

Interest Rate Risk. As of ~~September 30, 2017, we have an aggregate of $75.0 million outstanding under the Restated Credit Facility that is tied to LIBOR and an aggregate of $27.1 million outstanding under a~~March 31, 2020, our EMEAI segment has one general credit agreement with a Turkish financial institution ~~that~~which is tied to EURIBOR. This agreement had collateralized financing of capital expenditures outstanding as of March 31, 2020 of $6.8 million. In addition, as of March 31, 2020, our Credit Agreement includes interest on the unhedged principal amount of $87.4 million which is tied to LIBOR. The ~~Restated~~EMEAI and our Credit ~~Facility and the Turkish general credit agreement~~Agreement noted above are the only variable rate debt ~~instruments~~that we had outstanding as of ~~September 30, 2017 and December~~March 31, ~~2016~~2020 as all remaining ~~unsecured~~working capital loans, accounts receivable financing, ~~accounts receivable~~unsecured financing and capital 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, 2017,~~March 31, 2020, 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.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and operating effectiveness as of ~~September 30, 2017~~March 31, 2020 of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2017.~~March 31, 2020.

There ~~have not been any~~were no changes in our internal control over financial reporting during the three months ended ~~September 30, 2017,~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we ~~may be involved in disputes or litigation relating~~are party to various lawsuits, claims, ~~arising out of our operations.~~

~~As previously disclosed in our Annual Report on Form 10-K, in March 2015, a complaint was filed against the Company~~and other legal proceedings that arise in the ~~Superior Court~~ordinary course of ~~the State~~business, some of ~~Arizona (Maricopa County)~~which are covered by ~~a former employee~~insurance. Upon resolution of ~~the Company, alleging~~any pending legal matters, we may incur charges in excess of presently established reserves or our insurance policy limits. Our management does not believe that ~~the Company had agreed to make certain cash payments to~~any such employee upon any future sale of the Company. We filed a motion to dismiss the complaint in April 2015, which was denied. We subsequently filed an answer to the complaint in July 2015 denying the substantive allegations of the complaint. The parties completed court-ordered mediation in December 2015 but were not able to reach a settlement. We filed a motion for summary judgment to dismiss the complaint in April 2016 and the court denied our motion in August 2016. The court set a trial date for September 2017. In May 2017, we filed a motion for continuance to change the trial date and the court granted our motion. The court has set a trial date in August 2018. We continue to deny the substantive allegations of the complaint and we intend to vigorously defend this lawsuit; however, we are currently unable to determine the ultimate outcome of this case.

As previously disclosed in our Annual Report on Form 10-K, in August 2015, we entered into a transition agreement with our former Senior Vice President – Asia (SVP–Asia), pursuant to which he transitioned out of this role at the end of 2015 and was to serve in a consulting capacity in 2016 and 2017. In January 2016, following our discovery that he had materially violated the terms of his transition agreement, we terminated his consultancy for cause. In April 2016, he filed an arbitration claim in China with the Taicang Labor and Personnel Dispute Arbitration Committee alleging that we improperly terminated his transition agreement. He is demanding that we continue to honor the terms of the transition agreement and pay him compensation and fees owed to him under the transition agreement, whichcharges would, individually or in the aggregate, total approximately $2.6 million. In addition, he is also challenging the validity of our termination of his option to purchase 164,880 shares of our common stock and 77,760 restricted stock units under the 2015 Plan, which were canceled in January 2016 when we terminated his consultancy. In May 2017, the arbitration committee awarded our former SVP–Asia approximately fifty percent of the amounts demanded under the transition agreement but denied his claims regarding the improper termination of his stock option and restricted stock units. We have appealed the arbitration committee’s award of damages in favor of our former SVP–Asia and the appeal remains pending. We previously established a reserve for this matter and we do not believe the award, if upheld on appeal, will have a material ~~impact~~adverse effect on our ~~operating~~financial condition, results of operations or ~~financial condition.~~cash flows.

~~Other than the supplemental risk factor set forth~~Except as noted below, there have been no material changes to the Risk Factors (Part I, Item 1A) in our Annual Report on Form 10-K, which could materially affect ~~the Company’s~~our business, financial condition, and/or future results.

Our business, operations and financial condition have been adversely affected by the COVID-19 pandemic and we cannot estimate the duration and magnitude of the COVID-19 pandemic on our business, operations and financial condition at this time.

The ~~proposed tax reform bill introduced~~COVID-19 pandemic has adversely affected our business and operations for the quarter ended March 31, 2020 due primarily to reduced production levels at our China manufacturing facilities. Although our manufacturing facilities in China, Turkey and Rhode Island have now returned to normal production levels, several of our other manufacturing facilities have been required to temporarily suspend production or operate at reduced production levels due primarily to certain applicable government-mandated stay at home orders in response to the COVID-19 pandemic, demands from certain of our labor unions to suspend or reduce production and general safety concerns of our associates. Our manufacturing facilities in India and Matamoros, Mexico are operating at limited production levels, our manufacturing facilities in Juárez, Mexico are temporarily shutdown and our manufacturing facility in Iowa restarted production at a limited production level on May 6, 2020 after a temporarily shutdown. In addition, although we currently have not experienced any significant disruptions in our global supply chain due to the COVID-19 pandemic, our global supply chain may in the ~~U.S. House~~future be adversely affected if the COVID-19 pandemic persists. As a result of ~~Representatives in early November contains provisions which, if enacted, would likely have a material adverse effect~~the uncertainty relating to: (i) the rapidly evolving nature, magnitude and duration of the COVID-19 pandemic, (ii) the variety of measures implemented by governments around the world to address its effects and (iii) the impact on our manufacturing operations, we cannot predict how long we will be required to continue to operate at reduced production levels across many of our manufacturing facilities. We also cannot quantify the ~~U.S. wind energy sector and may materially harm~~total impact of the COVID-19 pandemic on our business, results of operations and financial condition ~~and results of operations.~~

The proposed tax reform bill introduced in the U.S. House of Representatives in early November contains provisions that would limit the value and potential use of the Production Tax Credit for Renewable Energy (PTC) to finance the development of wind energy projects in the United States. Under current law, a taxpayer may claim a PTC for the ~~production~~balance of ~~electricity from qualified wind energy projects at a qualifying facility during the 10-year period beginning on the date the facility was originally placed~~2020 in ~~service. In addition, current law provides that the base amount~~light of the PTC is 1.5 cents (indexed annually for inflation) per kilowatt-hour of electricity produced. For 2016, the amount of the PTC is generally 2.3 cents per kilowatt-hour. Under the proposed tax reform bill, the inflation adjustment would be repealed, effective for electricity produced at a wind energy facility, the construction of which begins after November 2, 2017, and taxpayers’ credit amount would revert back to 1.5 cents per kilowatt- hour for the remaining portion of the 10-year period. The proposed tax reform legislation also would require a “continuous program of construction” from the date a wind energy facility begins construction to the date it is placed in service to qualify for the PTC. The “continuous program of construction” requirement exists under current law and has been interpreted by the Department of the Treasury to permit several “safe harbor” time periods. At present, it is unclear whether the proposed tax reform bill, if enacted, would effectively eliminate those safe harbors or whether the U.S. Department of Treasury may issue them unchanged or substantially unchanged. If the proposed changes to the PTC are enacted, it would likely have a material adverse effect on the U.S. wind energy sector and reduce the demand for our wind turbine blades. Any reduction in the demand for our wind turbine blades may materially harm our business, financial condition and results of operations.such uncertainty.

The following table summarizes the total number of shares of our common stock that we repurchased during the three months ended ~~September 30, 2017~~March 31, 2020 from certain employees who surrendered common stock to pay the taxes in connection with the vesting of restricted stock units.

Period

Total Number
of Shares Purchased

Average Price
Paid per Share

Total Number
of Shares Purchased as Part of Publicly Announced Program

Maximum Number of Shares That May
Yet Be Purchased Under the Program

July (July 1, 2017 - July 31, 2017)

68,815

$
18.37

—

—

August (August 1, 2017 - August 31, 2017)

—

—

—

—

September (September 1, 2017 - September 30, 2017)

—

—

—

—

Total

68,815

$
18.37

—

—

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Under the Program
January (January 1 - January 31)		—	$	—		—		—
February (February 1 - February 29)		—		—		—		—
March (March 1 - March 31)		26,099		17.61		—		—
Total		26,099	$	17.61		—		—

On July 21, 2016, our Registration Statement on Form S-1 (File No. 333-212093) was declared effective by the SEC for our IPO whereby we registered an aggregate of 7,187,500 shares of our common stock, including 937,500 shares of our common stock registered for sale by us upon the full exercise of the underwriters’ option to purchase additional shares. On July 27, 2016, we completed our IPO and sold 7,187,500 shares of our common stock at a price to the public of $11.00 per share. J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC acted as the managing underwriters. The total gross proceeds from the offering to us were $79.1 million. After deducting underwriting discounts and commissions of $4.6 million and offering expenses of $7.3 million, we received $67.2 million in net proceeds. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on July 22, 2016 pursuant to Rule 424(b) of the Securities Act. We continue to invest the remaining funds received in registered money market funds.Not applicable.

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.

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

Large accelerated filer	☐☒	Accelerated filer	☐

Non-accelerated filer	☒ ~~(Do not check if a smaller reporting company)~~☐	Smaller reporting company	☐
Emerging growth company☒	☐

		Page

PART I. FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	5

	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019	15

	Condensed Consolidated ~~Income~~ Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	26

	Condensed Consolidated Statements of Comprehensive ~~Income~~Loss for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	37

	Condensed Consolidated Statements of ~~Cash Flows~~Changes in Stockholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30, 2017 and 2016~~March 31, 2020	48

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	9

	Notes to Unaudited Condensed Consolidated Financial Statements	510

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1627

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3240

ITEM 4.	Controls and Procedures	3241

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	3342

ITEM 1A.	Risk Factors	3342

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3442

ITEM 3.	Defaults Upon Senior Securities	3442

ITEM 4.	Mine Safety Disclosures	3443

ITEM 5.	Other Information	3443

ITEM 6.	Exhibits	3544

SIGNATURES		3645

	2020
	(in thousands)
Warranty accrual at beginning of year	$	47,639
Accrual during the period		3,865
Cost of warranty services provided during the period		(3,215	)
Changes in estimate for pre-existing warranties, including expirations		3,239
Warranty accrual at end of period	$	51,528


	2017
Warranty accrual at beginning of year	$	19,912
Accrual during the period		10,696
Cost of warranty services provided during the period		(372	)
Reversal of reserves upon warranty expiration		(2,086	)
Warranty accrual at end of period	$	28,150

	Three Months Ended March 31, 2020
	U.S.		Asia		Mexico		EMEAI		Total
	(in thousands)
Wind blade sales	$	35,933	$	85,876	$	115,186	$	99,342	$	336,337
Precision molding and assembly systems sales		—		5,061		1,702		—		6,763
Transportation sales		6,679		—		210		—		6,889
Other sales		4,819		200		1,152		476		6,647
Total net sales	$	47,431	$	91,137	$	118,250	$	99,818	$	356,636

	Three Months Ended March 31, 2019
	U.S.		Asia		Mexico		EMEAI		Total
	(in thousands)
Wind blade sales	$	31,891	$	62,128	$	79,038	$	103,893	$	276,950
Precision molding and assembly systems sales		144		6,215		4,849		—		11,208
Transportation sales		6,216		—		—		—		6,216
Other sales		3,377		375		778		876		5,406
Total net sales	$	41,628	$	68,718	$	84,665	$	104,769	$	299,780

	Operating			Finance
	Leases			Leases
	(in thousands)
Year Ending December 31,
2020	$	23,363		$	4,914
2021		29,830			6,395
2022		29,120			5,633
2023		28,742			817
2024		25,651			200
Thereafter		118,995			—
Total future minimum lease payments		255,701			17,959
Less: interest		(75,141	)		(1,613	)
Total lease liabilities	$	180,560		$	16,346

Exhibit Number		Exhibit Description

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~~		~~XBRL Instance Document~~

101.SCH		Inline XBRL Taxonomy Extension Schema Document (filed herewith)

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)

104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) (filed herewith)

Date: ~~November 8, 2017~~May 7, 2020	By:	/s/ ~~William E. Siwek~~Bryan Schumaker
		~~William E. Siwek~~Bryan Schumaker
		Chief Financial Officer
		(Principal Financial and Accounting Officer)