TPI Composites (TPIC) 10-Q 2024 Q2 Quarterly report

06

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2024

OR

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

Commission File Number 001-37839

 

TPI Composites, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-1590775
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

9200 E. Pima Center Parkway, Suite 250

Scottsdale, AZ 85258

(480) 305-8910

(Address, including zip code, and telephone number,

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2024, there were 47,553,773 shares of common stock outstanding.

TPI COMPOSITES, INC. AND SUBSIDIARIES

INDEX

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023	6
	Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Deficit for the Three and Six Months Ended June 30, 2024 and 2023	7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	11
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35
ITEM 4.	Controls and Procedures	36
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 1A.	Risk Factors	37
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
ITEM 3.	Defaults Upon Senior Securities	37
ITEM 4.	Mine Safety Disclosures	37
ITEM 5.	Other Information	37
ITEM 6.	Exhibits	38
SIGNATURES		39

1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

competition from other wind blade and wind turbine manufacturers;

•

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

•

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

•

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

•

our projected sales and costs, including materials costs and capital expenditures, during the current fiscal year;

•

our projected business model during the current fiscal year, including with respect to the number of wind blade manufacturing lines we anticipate;

•

our ability to service our current debt and comply with any covenants related to such debt;

•

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

•

our ability to absorb or mitigate the impact of price increases in resin, carbon reinforcements (or fiber), other raw materials and related logistics costs that we use to produce our products;

•

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

•

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

•

the potential impact of the increasing prevalence of auction-based tenders in the wind energy market and increased competition from solar energy on our gross margins and overall financial performance;

•

our future financial performance, including our net sales, cost of goods sold, gross profit or gross margin, operating expenses, ability to generate positive cash flow and ability to achieve or maintain profitability;

•

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

•

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

•

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

•

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

•

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

•

our ability to successfully expand in our existing wind energy markets and into new international wind energy markets, including our ability to expand our field service inspection and repair services business;

•

our ability to keep up with market changes and innovations;

•

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

•

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

•

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

•

our ability to comply with existing, modified or new laws and regulations applying to our business, including the imposition of new taxes, duties or similar assessments on our products;

2

•

the attraction and retention of qualified associates and key personnel;

•

our ability to maintain good working relationships with our associates, and avoid labor disruptions, strikes and other disputes with labor unions that represent certain of our associates; and

•

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

These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We have described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the United States Securities and Exchange Commission (SEC) on February 22, 2024 the principal risks and uncertainties that we believe could cause actual results to differ from these forward-looking statements. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as guarantees of future events.

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

3

PART I. FINANCIAL INFORMATION

ITEM l. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
	2024			2023
	(in thousands, except par value data)
Assets
Current assets:
Cash and cash equivalents	$	101,861		$	161,059
Restricted cash		8,451			10,838
Accounts receivable		145,907			138,029
Contract assets		111,228			112,237
Prepaid expenses		19,380			17,621
Other current assets		29,278			34,564
Inventories		5,454			9,420
Current assets of discontinued operations		867			19,307
Total current assets		422,426			503,075
Property, plant and equipment, net		120,787			128,808
Operating lease right of use assets		133,745			136,124
Other noncurrent assets		38,464			36,073
Total assets	$	715,422		$	804,080
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses	$	250,602		$	227,723
Accrued warranty		34,000			37,483
Current maturities of long-term debt		106,163			70,465
Current operating lease liabilities		24,815			22,017
Contract liabilities		4,408			24,021
Current liabilities of discontinued operations		1,777			4,712
Total current liabilities		421,765			386,421
Long-term debt, net of current maturities		448,283			414,728
Noncurrent operating lease liabilities		112,420			117,133
Other noncurrent liabilities		7,213			8,102
Total liabilities		989,681			926,384
Commitments and contingencies (Note 12)
Stockholders’ deficit:
Common shares, $0.01 par value, 100,000 shares authorized, 48,601     shares issued and 47,554 shares outstanding at June 30, 2024    and 100,000 shares authorized, 46,990 shares issued and 46,471 shares    outstanding at December 31, 2023		486			470
Paid-in capital		434,975			431,335
Accumulated other comprehensive loss		(9,032	)		(7,627	)
Accumulated deficit		(688,905	)		(536,348	)
Treasury stock, at cost, 1,047 shares at June 30, 2024 and 519 shares at    December 31, 2023		(11,783	)		(10,134	)
Total stockholders’ deficit		(274,259	)		(122,304	)
Total liabilities and stockholders’ deficit	$	715,422		$	804,080

See accompanying notes to our unaudited condensed consolidated financial statements.

4

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	(in thousands, except per share data)
Net sales	$	309,817		$	374,021		$	603,863		$	767,826
Cost of sales		313,562			411,461			613,057			795,512
Startup and transition costs		20,678			3,377			42,907			5,357
Total cost of goods sold		334,240			414,838			655,964			800,869
Gross loss		(24,423	)		(40,817	)		(52,101	)		(33,043	)
General and administrative expenses		9,211			6,767			17,614			13,801
Loss on sale of assets and asset impairments		3,083			5,819			4,918			9,412
Restructuring charges, net		298			2,248			480			2,224
Loss from continuing operations		(37,015	)		(55,651	)		(75,113	)		(58,480	)
Other income (expense):
Interest expense, net		(22,428	)		(1,876	)		(43,811	)		(4,401	)
Foreign currency income (loss)		132			(1,564	)		(499	)		(2,746	)
Miscellaneous income		227			682			2,702			1,115
Total other expense		(22,069	)		(2,758	)		(41,608	)		(6,032	)
Loss from continuing operations before income taxes		(59,084	)		(58,409	)		(116,721	)		(64,512	)
Income tax provision		(2,412	)		(287	)		(5,654	)		(4,116	)
Net loss from continuing operations		(61,496	)		(58,696	)		(122,375	)		(68,628	)
Preferred stock dividends and accretion		—			(15,598	)		—			(30,771	)
Net loss from continuing operations attributable to common stockholders		(61,496	)		(74,294	)		(122,375	)		(99,399	)
Net loss from discontinued operations		(29,593	)		(6,541	)		(30,182	)		(18,736	)
Net loss attributable to common stockholders	$	(91,089	)	$	(80,835	)	$	(152,557	)	$	(118,135	)
Weighted-average shares of common stock outstanding:
Basic		47,504			42,517			47,354			42,386
Diluted		47,504			42,517			47,354			42,386
Net loss from continuing operations per common share:
Basic	$	(1.30	)	$	(1.75	)	$	(2.58	)	$	(2.35	)
Diluted	$	(1.30	)	$	(1.75	)	$	(2.58	)	$	(2.35	)
Net loss from discontinued operations per common share:
Basic	$	(0.62	)	$	(0.15	)	$	(0.64	)	$	(0.44	)
Diluted	$	(0.62	)	$	(0.15	)	$	(0.64	)	$	(0.44	)
Net loss per common share:
Basic	$	(1.92	)	$	(1.90	)	$	(3.22	)	$	(2.79	)
Diluted	$	(1.92	)	$	(1.90	)	$	(3.22	)	$	(2.79	)

See accompanying notes to our unaudited condensed consolidated financial statements.

5

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	(in thousands)
Net loss from continuing operations attributable to common stockholders	$	(61,496	)	$	(74,294	)	$	(122,375	)	$	(99,399	)
Net loss from discontinued operations		(29,593	)		(6,541	)		(30,182	)		(18,736	)
Net loss attributable to common stockholders		(91,089	)		(80,835	)		(152,557	)		(118,135	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(147	)		(816	)		(1,405	)		1,194
Unrealized gain on hedging derivatives, net of taxes of   $0 for each of the presented periods		—			1,885			—			1,885
Comprehensive loss	$	(91,236	)	$	(79,766	)	$	(153,962	)	$	(115,056	)

See accompanying notes to our unaudited condensed consolidated financial statements.

6

TPI COMPOSITES, INC. AND SUBSIDIARIES

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

(Unaudited)

	Six Months Ended June 30, 2024
											Accumulated
	Series A Preferred Stock				Common				Paid-in		other comprehensive			Accumulated			Treasury stock,			Total stockholders'
	Shares		Amount		Shares		Amount		capital		loss			deficit			at cost			deficit
					(in thousands)
Balance at December 31, 2023		—	$	—		46,990	$	470	$	431,335	$	(7,627	)	$	(536,348	)	$	(10,134	)	$	(122,304	)
Net loss		—		—		—		—		—		—			(61,468	)		—			(61,468	)
Other comprehensive (loss)		—		—		—		—		—		(1,258	)		—			—			(1,258	)
Common stock repurchased for treasury		—		—		—		—		—		—			—			(1,641	)		(1,641	)
Issuances under share- based compensation plan		—		—		1,524		15		—		—			—			—			15
Share-based compensation expense		—		—		—		—		2,589		—			—			—			2,589
Balance at    March 31, 2024		—		—		48,514		485		433,924		(8,885	)		(597,816	)		(11,775	)		(184,067	)
Net loss		—		—		—		—		—		—			(91,089	)		—			(91,089	)
Other comprehensive (loss)		—		—		—		—		—		(147	)		—			—			(147	)
Common stock repurchased for treasury		—		—		—		—		—		—			—			(8	)		(8	)
Issuances under share- based compensation plan		—		—		87		1		—		—			—			—			1
Share-based compensation expense		—		—		—		—		1,051		—			—			—			1,051
Balance at    June 30, 2024		—	$	—		48,601	$	486	$	434,975	$	(9,032	)	$	(688,905	)	$	(11,783	)	$	(274,259	)

7

	Six Months Ended June 30, 2023
												Accumulated
	Series A Preferred Stock				Common				Paid-in			other comprehensive			Accumulated			Treasury stock,			Total stockholders'
	Shares		Amount		Shares		Amount		capital			loss			deficit			at cost			deficit
					(in thousands)
Balance at December 31, 2022		350	$	309,877		42,369	$	424	$	407,570		$	(15,387	)	$	(334,569	)	$	(7,551	)	$	50,487
Net loss		—		—		—		—		—			—			(22,127	)		—			(22,127	)
Preferred stock dividends		—		10,706		—		—		(10,706	)		—			—			—			(10,706	)
Other comprehensive income		—		—		—		—		—			2,010			—			—			2,010
Common stock repurchased for treasury		—		—		—		—		—			—			—			(2,549	)		(2,549	)
Issuances under share- based compensation plan		—		—		627		6		—			—			—			—			6
Share-based compensation expense		—		—		—		—		2,720			—			—			—			2,720
Accretion of Series A Preferred Stock		—		4,467		—		—		(4,467	)		—			—			—			(4,467	)
Capped call transactions		—		—		—		—		(18,590	)		—			—			—			(18,590	)
Balance at    March 31, 2023		350		325,050		42,996		430		376,527			(13,377	)		(356,696	)		(10,100	)		(3,216	)
Net loss		—		—		—		—		—			—			(65,237	)		—			(65,237	)
Preferred stock dividends		—		11,118		—		—		(11,118	)		—			—			—			(11,118	)
Other comprehensive income		—		—		—		—		—			1,069			—			—			1,069
Common stock repurchased for treasury		—		—		—		—		—			—			—			(34	)		(34	)
Issuances under share- based compensation plan		—		—		93		1		—			—			—			—			1
Share-based compensation expense		—		—		—		—		3,926			—			—			—			3,926
Accretion of Series A Preferred Stock		—		4,480		—		—		(4,480	)		—			—			—			(4,480	)
Balance at    June 30, 2023		350	$	340,648		43,089	$	431	$	364,855		$	(12,308	)	$	(421,933	)	$	(10,134	)	$	(79,089	)

See accompanying notes to our unaudited condensed consolidated financial statements.

8

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30,
	2024			2023
	(in thousands)
Cash flows from operating activities:
Net loss	$	(152,557	)	$	(87,364	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		15,829			20,216
Loss on sale of discontinued operations		5,560			—
Loss on sale of assets and asset impairments		24,287			11,333
Share-based compensation expense		3,640			6,703
Amortization of debt issuance costs		15,654			315
Paid-in-kind interest		22,308			—
Deferred income taxes		(2,414	)		(3,827	)
Changes in assets and liabilities:
Accounts receivable		(16,747	)		18,361
Contract assets and liabilities		(19,018	)		(19,946	)
Operating lease right of use assets and operating lease liabilities		464			(7,622	)
Inventories		331			5,038
Prepaid expenses		(1,599	)		1,735
Other current assets		4,905			(10,121	)
Other noncurrent assets		(857	)		4,599
Accounts payable and accrued expenses		28,678			(42,370	)
Accrued warranty		(3,483	)		26,941
Other noncurrent liabilities		(889	)		1,755
Net cash used in operating activities		(75,908	)		(74,254	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(15,405	)		(6,694	)
Net cash used in investing activities		(15,405	)		(6,694	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes		—			132,500
Purchase of capped calls		—			(18,590	)
Payments of debt issuance costs		—			(4,810	)
Proceeds from working capital loans		112,621			72,736
Repayments of working capital loans		(80,102	)		(71,180	)
Principal repayments of finance leases		(610	)		(1,014	)
Net proceeds from (repayments of) other debt		(853	)		1,050
Repurchase of common stock including shares withheld in lieu of income taxes		(1,649	)		(2,583	)
Net cash provided by financing activities		29,407			108,109
Impact of foreign exchange rates on cash, cash equivalents and restricted cash		131			914
Net change in cash, cash equivalents and restricted cash		(61,775	)		28,075
Cash, cash equivalents and restricted cash, beginning of year		172,813			153,069
Cash, cash equivalents and restricted cash, end of period	$	111,038		$	181,144

See accompanying notes to our unaudited condensed consolidated financial statements.

9

TPI COMPOSITES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(Unaudited)

	Six Months Ended
	June 30,
	2024		2023
	(in thousands)
Supplemental cash flow information:
Cash paid for interest	$	6,665	$	3,178
Cash paid for income taxes, net of refunds		15,283		6,110
Noncash investing and financing activities:
Right of use assets obtained in exchange for new operating lease liabilities		11,376		893
Property, plant, and equipment obtained in exchange for new finance lease liabilities		235		197
Accrued capital expenditures in accounts payable		3,630		2,973
Paid-in-kind preferred stock dividends and accretion		—		30,771

Reconciliation of Cash, Cash Equivalents and Restricted Cash:	June 30,		December 31,		June 30,		December 31,
	2024		2023		2023		2022
	(in thousands)
Cash and cash equivalents	$	101,861	$	161,059	$	170,096	$	133,546
Restricted cash		8,451		10,838		9,239		9,854
Cash and cash equivalents of discontinued operations		726		916		1,809		9,669
Total cash, cash equivalents and restricted cash shown in   the condensed consolidated statements of cash flows	$	111,038	$	172,813	$	181,144	$	153,069

See accompanying notes to our unaudited condensed consolidated financial statements.

10

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by us without audit, pursuant to the rules and regulations of the SEC and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K. Although we believe the disclosures that are made are adequate to make the information presented herein not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted, as permitted by the SEC. The accompanying condensed consolidated financial statements reflect, in the opinion of our management, all normal recurring adjustments necessary to present fairly our financial position at June 30, 2024, and the results of our operations, comprehensive income (loss) and cash flows for the periods presented. Interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation.

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

The accompanying condensed consolidated financial statements include the accounts of TPI Composites, Inc. and all of our majority owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

References to TPI Composites, Inc, the “Company,” “we,” “us” or “our” in these notes refer to TPI Composites, Inc. and its consolidated subsidiaries.

Recently Issued Accounting Pronouncements - Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments are intended to increase reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the standard for full fiscal years on January 1, 2024, and plans to adopt the standard for interim periods beginning January 1, 2025, with early adoption permitted. The Company is evaluating the potential impact of its adoption on the Company’s audited Consolidated Financial Statements but does not anticipate that such adoption will have a material impact.

Recently Issued Accounting Pronouncements - Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU also includes certain other amendments intended to improve the effectiveness of income tax disclosures. This ASU is effective for the Company’s fiscal year beginning January 1, 2025 and allows the use of a prospective or retrospective approach. The Company plans to adopt the standard on January 1, 2025 and has not yet determined the potential impact of its adoption on the Company’s audited Consolidated Financial Statements.

Note 2. Discontinued Operations

On June 30, 2024, we completed the divestiture of our wholly-owned subsidiary, TPI, Inc. (the “Automotive” subsidiary) for cash proceeds of one US Dollar. The Automotive subsidiary was engaged in the development, commercialization and implementation of the Company’s automotive industry related products. The Automotive subsidiary was classified as held for sale in the Company’s Consolidated Balance Sheets as of December 31, 2023 and March 31, 2024. As a result of the divestiture, the Company recorded an $19.7 million non-cash impairment charge related to property, plant and equipment, and a $5.6 million loss on sale of the discontinued operations. The divestiture constituted a strategic shift as the Company will focus entirely on executing on its core business in the wind industry going forward, and accordingly, the historical results of our Automotive subsidiary have been reclassified as

11

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

discontinued operations for all periods presented in the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.

In December 2022, we committed to a restructuring plan to rebalance our organization and optimize our global manufacturing footprint. Changing economic and geopolitical factors, including increased logistics costs and tariffs imposed on components of wind turbines from China, including wind blades, had an adverse impact on demand and profitability for our wind blades manufactured in our Chinese facilities. In connection with our restructuring plan, we ceased production at our Yangzhou, China manufacturing facility as of December 31, 2022 and are in the final stages of shutting down our business operations in China. Our business operations in China comprised the entirety of our "Asia" reporting segment. The shut down had a meaningful effect on our global manufacturing footprint and consolidated financial results. Accordingly, the historical results of our Asia reporting segment have been presented as discontinued operations in our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.

The following tables present the carrying amounts of major classes of assets and liabilities that were included in discontinued operations:

	June 30, 2024
	(in thousands)
	Automotive		Asia		Total
Cash and cash equivalents	$	—	$	726	$	726
Other classes of assets		—		141		141
Total assets of discontinued operations	$	—	$	867	$	867
Accounts payable and accrued expenses	$	—	$	1,021	$	1,021
Accrued restructuring		—		756		756
Total liabilities of discontinued operations	$	—	$	1,777	$	1,777

	December 31, 2023
	(in thousands)
	Automotive		Asia		Total
Cash and cash equivalents	$	—	$	916	$	916
Property, plant and equipment, net		14,204		—		14,204
Other classes of assets that are not major		3,583		604		4,187
Total assets of discontinued operations	$	17,787	$	1,520	$	19,307
Accounts payable and accrued expenses	$	1,897	$	1,632	$	3,529
Accrued restructuring		—		1,183		1,183
Total liabilities of discontinued operations	$	1,897	$	2,815	$	4,712

A summary of the results from discontinued operations included in the Condensed Consolidated Statements of Operations are as follows:

	Three Months Ended June 30, 2024
	Automotive			Asia			Total
	(in thousands)
Net sales	$	7,270		$	—		$	7,270
Cost of sales		11,305			17			11,322
Gross loss		(4,035	)		(17	)		(4,052	)
Loss on sale of assets and asset impairments		19,712			—			19,712
Loss on sale of discontinued operations		5,560			—			5,560
Restructuring charges, net		465			—			465
Loss from discontinued operations		(29,772	)		(17	)		(29,789	)
Total other income		187			54			241
Income (loss) before income taxes		(29,585	)		37			(29,548	)
Income tax provision		(45	)		—			(45	)
Net income (loss) from discontinued operations	$	(29,630	)	$	37		$	(29,593	)

12

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Three Months Ended June 30, 2023
	Automotive			Asia			Total
	(in thousands)
Net sales	$	7,250		$	34		$	7,284
Cost of sales		13,806			1,667			15,473
Gross loss		(6,556	)		(1,633	)		(8,189	)
Loss on sale of assets and asset impairments		—			(256	)		(256	)
Restructuring charges, net		—			2			2
Loss from discontinued operations		(6,556	)		(1,379	)		(7,935	)
Total other income		95			1,317			1,412
Loss before income taxes		(6,461	)		(62	)		(6,523	)
Income tax provision		(18	)		—			(18	)
Net loss from discontinued operations	$	(6,479	)	$	(62	)	$	(6,541	)

	Six Months Ended June 30, 2024
	Automotive			Asia			Total
	(in thousands)
Net sales	$	12,286		$	—		$	12,286
Cost of sales		18,894			71			18,965
Gross loss		(6,608	)		(71	)		(6,679	)
General and administrative expenses		(1,704	)		—			(1,704	)
(Gain) loss on sale of assets and asset impairments		19,707			(338	)		19,369
Loss on sale of discontinued operations		5,560			—			5,560
Restructuring charges, net		465			—			465
Income (loss) from discontinued operations		(30,636	)		267			(30,369	)
Total other income		180			99			279
Income (loss) before income taxes		(30,456	)		366			(30,090	)
Income tax provision		(92	)		—			(92	)
Net income (loss) from discontinued operations	$	(30,548	)	$	366		$	(30,182	)

	Six Months Ended June 30, 2023
	Automotive			Asia			Total
	(in thousands)
Net sales	$	17,511		$	2,201		$	19,712
Cost of sales		29,136			7,403			36,539
Gross loss		(11,625	)		(5,202	)		(16,827	)
Loss on sale of assets and asset impairments		—			1,921			1,921
Restructuring charges, net		99			1,460			1,559
Loss from discontinued operations		(11,724	)		(8,583	)		(20,307	)
Total other income		80			1,540			1,620
Loss before income taxes		(11,644	)		(7,043	)		(18,687	)
Income tax provision		(49	)		—			(49	)
Loss from discontinued operations	$	(11,693	)	$	(7,043	)	$	(18,736	)

13

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents summarized cash flows from discontinued operations that are included in the Condensed Consolidated Statements of Cash Flows:

	Six Months Ended
	June 30,
	2024			2023
	(in thousands)
Net cash used in operating activities from discontinued operations	$	2,625		$	(7,852	)
Net cash used in investing activities from discontinued operations		(3,387	)		(364	)
Additional non-cash items related to operating activities from discontinued operations:
Share-based compensation expense		(74	)		177
Depreciation and amortization		457			1,657

Note 3. Revenue From Contracts with Customers

For a detailed discussion of our revenue recognition policy, refer to the discussion in Note 1, Summary of Operations and Summary of Significant Accounting Policies – (c) Revenue Recognition, to the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2023.

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

	Three Months Ended June 30, 2024
	U.S.		Mexico		EMEA		India		Total
	(in thousands)
Wind blade, tooling and other wind    related sales	$	—	$	158,844	$	102,375	$	43,071	$	304,290
Field service, inspection and    repair services sales		2,558		467		2,502		—		5,527
Total net sales	$	2,558	$	159,311	$	104,877	$	43,071	$	309,817

	Three Months Ended June 30, 2023
	U.S.		Mexico		EMEA		India		Total
	(in thousands)
Wind blade, tooling and other wind    related sales	$	—	$	166,767	$	132,614	$	63,353	$	362,734
Field service, inspection and    repair services sales		9,110		211		1,966		—		11,287
Total net sales	$	9,110	$	166,978	$	134,580	$	63,353	$	374,021

	Six Months Ended June 30, 2024
	U.S.		Mexico		EMEA		India		Total
	(in thousands)
Wind blade, tooling and other wind    related sales	$	—	$	311,205	$	198,161	$	83,829	$	593,195
Field service, inspection and    repair services sales		6,760		564		3,344		—		10,668
Total net sales	$	6,760	$	311,769	$	201,505	$	83,829	$	603,863

	Six Months Ended June 30, 2023
	U.S.		Mexico		EMEA		India		Total
	(in thousands)
Wind blade, tooling and other wind    related sales	$	—	$	321,229	$	299,451	$	129,646	$	750,326
Field service, inspection and    repair services sales		14,469		389		2,642		—		17,500
Total net sales	$	14,469	$	321,618	$	302,093	$	129,646	$	767,826

14

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For a further discussion regarding our operating segments, see Note 14, Segment Reporting.

Contract Assets and Liabilities

Contract assets consist of the amount of revenue recognized over time for performance obligations in production where control has transferred to the customer but the contract does not yet allow for the customer to be billed. Typically, customers are billed when the product finishes production and meets the technical specifications contained in the contract. The majority of the contract asset balance relates to materials procured based on customer specifications. The contract assets are recorded as current assets in the condensed consolidated balance sheets. Contract liabilities consist of advance payments in excess of revenue earned. The contract liabilities are recorded as current liabilities in the condensed consolidated balance sheets and are reduced as we record revenue over time.

These contract assets and liabilities are reported on the condensed consolidated balance sheets net on a contract-by-contract basis at the end of each reporting period.

Contract assets and contract liabilities consisted of the following:

	June 30,			December 31,
	2024			2023			$ Change
	(in thousands)
Gross contract assets	$	146,301		$	121,483		$	24,818
Less: reclassification from contract liabilities		(35,073	)		(9,246	)		(25,827	)
Contract assets	$	111,228		$	112,237		$	(1,009	)

	June 30,			December 31,
	2024			2023			$ Change
	(in thousands)
Gross contract liabilities	$	39,481		$	33,267		$	6,214
Less: reclassification to contract assets		(35,073	)		(9,246	)		(25,827	)
Contract liabilities	$	4,408		$	24,021		$	(19,613	)

Gross contract assets increased by $24.8 million from December 31, 2023 to June 30, 2024, primarily due to an increase in customer specific material purchases and incremental unbilled production related to startups and transitions during the six months ended June 30, 2024. Gross contract liabilities increased by $6.2 million from December 31, 2023 to June 30, 2024, primarily due to an increase in customer advances during the six months ended June 30, 2024.

For the six months ended June 30, 2024, we recognized $19.6 million of revenue related to customer advances, which was included in the corresponding contract liability balance at the beginning of the period.

Performance Obligations

Remaining performance obligations represent the transaction price for which work has not been performed and excludes any unexercised contract options. The transaction price includes estimated variable consideration as determined based on the estimated production output within the range of the contractual guaranteed minimum volume obligations and production capacity.

As of June 30, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations to be satisfied in future periods was approximately $1.0 billion. We estimate that we will recognize the remaining performance obligations as revenue as follows:

	$		% of Total
	(in thousands)
Year Ending December 31,
Remainder of 2024	$	633,957		61.3	%
2025		400,094		38.7
Total remaining performance obligations	$	1,034,051		100.0	%

15

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the three and six months ended June 30, 2024, net revenue recognized from our performance obligations satisfied in previous periods decreased by $14.6 million and $20.0 million, respectively. For the three and six months ended June 30, 2023, net revenue recognized from our performance obligations satisfied in previous periods decreased by $11.2 million and $15.5 million, respectively. The decrease for the three and six months ended June 30, 2024 primarily relate to changes in certain of our estimated total contract values and related direct costs to complete the performance obligations.

Note 4. Significant Risks and Uncertainties

Our revenues and receivables are earned from a small number of customers. As such, our production levels are dependent on these customers’ orders. See Note 13, Concentration of Customers.

We maintain our U.S. cash in bank deposit and money market mutual fund accounts that, at times, exceed U.S. federally insured limits. U.S. bank accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) in an amount up to $250,000 during 2024 and 2023. U.S. money market mutual fund accounts are not guaranteed by the FDIC. At June 30, 2024 and December 31, 2023, we had $87.1 million and $116.0 million, respectively, of cash in bank deposit and money market mutual fund accounts in U.S. banks, which were in excess of FDIC limits. We have not experienced losses to date in any such accounts.

We also maintain cash in bank deposit accounts outside the U.S. that are not subject to FDIC limits. At June 30, 2024, this included $5.0 million in Türkiye, $5.7 million in India, $2.5 million in Mexico and $1.6 million in other countries. As of December 31, 2023, this included $40.6 million in Türkiye, $1.9 million in India, $1.2 million in Mexico and $1.3 million in other countries. We have not experienced losses to date in these accounts. In addition, at June 30, 2024 and December 31, 2023, we had short-term deposits in interest bearing accounts in the U.S. of $8.5 million and $10.8 million, respectively, which are reported as restricted cash in our condensed consolidated balance sheets. In addition, at June 30, 2024 and December 31, 2023, we had unrestricted cash and cash equivalents related to our discontinued operations of $0.7 million and $0.9 million, respectively.

Note 5. Accrued Warranty

The warranty accrual activity for the periods noted consisted of the following:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	(in thousands)
Warranty accrual at beginning of period	$	37,500		$	22,973		$	37,483		$	22,347
Accrual during the period		2,895			3,225			5,486			6,078
Cost of warranty services provided during the period		(6,262	)		(9,570	)		(16,867	)		(13,834	)
Changes in estimate for pre-existing warranties,     including expirations during the period     and foreign exchange impact		(133	)		32,660			7,898			34,697
Warranty accrual at end of period	$	34,000		$	49,288		$	34,000		$	49,288

16

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6. Debt

Long-term debt, net of current maturities, consisted of the following:

	June 30,			December 31,
	2024			2023
	(in thousands)
11% Senior secured term loan—U.S. (1)	$	417,349		$	395,041
5.25% Convertible senior unsecured notes—U.S. (2)		132,500			132,500
Unsecured financing—EMEA		95,049			62,891
Secured and unsecured working capital—India		13,460			13,902
Equipment finance leases—Mexico		729			1,098
Equipment finance leases—EMEA		533			623
Other equipment finance leases		118			85
Total debt—principal		659,738			606,140
Less: Debt issuance costs		(3,550	)		(4,023	)
Less: Debt discount (3)		(101,742	)		(116,924	)
Total debt, net of debt issuance costs and debt discount		554,446			485,193
Less: Current maturities of long-term debt (4)		(106,163	)		(70,465	)
Long-term debt, net of current maturities	$	448,283		$	414,728

(1) As of June 30, 2024, includes principal balance of $393.0 million and $24.3 million of paid in kind interest.

(2) The conversion requirements were not satisfied as of June 30, 2024 and as a result, the 5.25% Convertible senior unsecured notes (the “Convertible Notes”) will not be eligible for optional conversion during the third quarter of 2024.

(3) Unamortized debt discount is related to our 11% senior secured term loan. The fair value of the senior secured term loan at issuance was $274.7 million, representing an initial $118.3 million discount. The debt discount is amortized to interest expense using the effective interest method over the term of the debt.

(4) Current maturities of long-term debt are primarily related to outstanding working capital facilities of $91.7 million and $13.5 million in Türkiye and India, respectively.

Note 7. Share-Based Compensation Plans

During the six months ended June 30, 2024, we granted to certain employees an aggregate of 722,534 timed-based restricted stock units (RSUs), 151,795 performance-based restricted stock units (PSUs) that vest upon achievement of annual, adjusted Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) targets measured from January 1, 2024 through December 31, 2026, 181,371 PSUs that vest upon achievement of certain cumulative total shareholder return (TSR) targets measured from January 1, 2024 through December 31, 2026 and 66,261 stock options. The RSUs that were granted during the period vest over a three-year period with 25% of the RSUs vesting on the first and second anniversary of the grant date, and 50% vesting on the third anniversary of the grant date. Each of the time-based and performance-based RSU awards are subject to the recipient’s continued service with us, the terms and conditions of our stock option and incentive plan and the applicable award agreement. Additionally, during the six months ended June 30, 2024, we issued 1,022,318 shares related to previous RSU awards with a guaranteed value. These additional shares were issued on the second anniversary of the grant date to maintain the original guaranteed award value.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
	(in thousands)
Cost of goods sold	$	197	$	1,074	$	890	$	1,151
General and administrative expenses		965		2,894		2,798		5,374
Total share-based compensation expense	$	1,162	$	3,968	$	3,688	$	6,525

17

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The share-based compensation expense recognized by award type was as follows:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2024			2023		2024		2023
	(in thousands)
RSUs	$	991		$	3,051	$	2,905	$	5,111
Stock options		172			297		414		451
PSUs		(1	)		620		369		963
Total share-based compensation expense	$	1,162		$	3,968	$	3,688	$	6,525

Note 8. Leases

We have operating and finance leases for our manufacturing facilities, warehouses, offices, automobiles and certain of our machinery and equipment. Our leases have remaining lease terms of between one and ten years, some of which may include options to extend the leases up to ten years.

The components of lease cost were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
	(in thousands)
Total operating lease cost	$	12,170	$	10,122	$	19,423	$	20,147
Finance lease cost
Amortization of assets under finance leases	$	905	$	1,039	$	1,994	$	2,048
Interest on finance leases		72		32		148		65
Total finance lease cost	$	977	$	1,071	$	2,142	$	2,113

Total lease assets and liabilities were as follows:

	June 30,			December 31,
	2024			2023
	(in thousands)
Operating Leases
Operating lease right of use assets	$	133,745		$	136,124
Current operating lease liabilities	$	24,815		$	22,017
Noncurrent operating lease liabilities		112,420			117,133
Total operating lease liabilities	$	137,235		$	139,150
Finance Leases
Property, plant and equipment, gross	$	36,694		$	37,044
Less: accumulated depreciation		(30,564	)		(29,316	)
Total property, plant and equipment, net	$	6,130		$	7,728
Current maturities of long-term debt	$	992		$	1,035
Long-term debt, net of current maturities		388			771
Total finance lease liabilities	$	1,380		$	1,806

18

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Supplemental cash flow information related to leases was as follows:

	Six Months Ended
	June 30,
	2024		2023
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	19,044	$	18,784
Operating cash flows from finance leases		148		65
Financing cash flows from finance leases		610		1,014

Note 9. Income Taxes

For the three and six months ended June 30, 2024, we reported an income tax provision of $2.4 million and $5.7 million, respectively, as compared to an income tax provision of $0.3 million and $4.1 million, respectively, in the comparative prior year periods. The increased income tax provision during the three and six months ended June 30, 2024, resulted primarily from the change in the mix of earnings of foreign jurisdictions.

No changes in tax law occurred during the three and six months ended June 30, 2024, which had a material impact on our income tax provision. We do not record a deferred tax liability related to unremitted earnings as we maintain our assertion to indefinitely reinvest our unremitted foreign earnings.

19

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 10. Net Loss Per Common Share

The following table sets forth the computation of basic and diluted net loss per common share:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	(in thousands, except per share data)
Numerator:
Net loss from continuing operations	$	(61,496	)	$	(58,696	)	$	(122,375	)	$	(68,628	)
Preferred stock dividends and accretion		—			(15,598	)		—			(30,771	)
Net loss from continuing operations attributable to common stockholders		(61,496	)		(74,294	)		(122,375	)		(99,399	)
Net loss from discontinued operations		(29,593	)		(6,541	)		(30,182	)		(18,736	)
Net loss attributable to common stockholders	$	(91,089	)	$	(80,835	)	$	(152,557	)	$	(118,135	)
Denominator:
Basic weighted-average shares outstanding		47,504			42,517			47,354			42,386
Effect of dilutive awards		—			—			—			—
Diluted weighted-average shares outstanding		47,504			42,517			47,354			42,386
Loss from continuing operations per common share:
Basic	$	(1.30	)	$	(1.75	)	$	(2.58	)	$	(2.35	)
Diluted	$	(1.30	)	$	(1.75	)	$	(2.58	)	$	(2.35	)
Loss from discontinued operations per common share:
Basic	$	(0.62	)	$	(0.15	)	$	(0.64	)	$	(0.44	)
Diluted	$	(0.62	)	$	(0.15	)	$	(0.64	)	$	(0.44	)
Loss per common share:
Basic	$	(1.92	)	$	(1.90	)	$	(3.22	)	$	(2.79	)
Diluted	$	(1.92	)	$	(1.90	)	$	(3.22	)	$	(2.79	)
Dilutive shares excluded from the calculation    due to net losses in the period		577			292			346			485
Anti-dilutive share-based compensation awards    that would be excluded from the calculation    if income was reported in the period		487			76			790			75

We use the if-converted method for calculating any potential dilutive effect of the Convertible Notes on diluted net loss per common share. The Convertible Notes would have a diluted impact on net income per share when the average price of our Common Stock for a given period exceeds the respective conversion price of the Convertible Notes. During the six months ended June 30, 2024 and 2023, we had 8,816,881 potentially issuable shares of Common Stock related to our Convertible Notes that were not included in the computation of diluted net loss per common share as the effect of including these shares in the calculation would have been anti-dilutive.

20

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 11. Stockholders’ Deficit

Accumulated Other Comprehensive Loss

The following tables presents the changes in accumulated other comprehensive loss (AOCL) by component:

	Six Months Ended June 30, 2024
	Foreign			Foreign
	currency			exchange
	translation			forward		Total
	adjustments			contracts		AOCL
	(in thousands)
Balance at December 31, 2023	$	(7,627	)	$	—	$	(7,627	)
Other comprehensive income before reclassifications		(1,258	)		—		(1,258	)
Amounts reclassified from AOCL		—			—		—
Net tax effect		—			—		—
Net current period other comprehensive income		(1,258	)		—		(1,258	)
Balance at March 31, 2024		(8,885	)		—		(8,885	)
Other comprehensive income before reclassifications		(147	)		—		(147	)
Amounts reclassified from AOCL		—			—		—
Net tax effect		—			—		—
Net current period other comprehensive income		(147	)		—		(147	)
Balance at June 30, 2024	$	(9,032	)	$	—	$	(9,032	)

	Six Months Ended June 30, 2023
	Foreign			Foreign
	currency			exchange
	translation			forward			Total
	adjustments			contracts			AOCL
	(in thousands)
Balance at December 31, 2022	$	(10,845	)	$	(4,542	)	$	(15,387	)
Other comprehensive income before reclassifications		2,010			—			2,010
Amounts reclassified from AOCL		—			—			—
Net tax effect		—			—			—
Net current period other comprehensive income		2,010			—			2,010
Balance at March 31, 2023		(8,835	)		(4,542	)		(13,377	)
Other comprehensive income before reclassifications		(816	)		1,943			1,127
Amounts reclassified from AOCL		—			(58	)		(58	)
Net tax effect		—			—			—
Net current period other comprehensive income		(816	)		1,885			1,069
Balance at June 30, 2023	$	(9,651	)	$	(2,657	)	$	(12,308	)

Note 12. Commitments and Contingencies

Legal Proceedings

From time to time, we are party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which may not be covered by insurance. Upon resolution of any pending legal matters, we may incur charges in excess of presently established reserves. Our management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.

In January 2021, we received a complaint that was filed by the administrator for the Senvion GmbH (Senvion) insolvency estate in the Hamburg District court. The complaint asserts voidance claims against us in the aggregate amount of $13.3 million. The alleged voidance claims relate to payments that Senvion made to us for wind blades that we produced prior to Senvion filing for insolvency protection. We filed a response to these alleged voidance claims in August 2021 and filed a supplemental response in April 2022. In November 2022, the court appointed an independent expert to assess whether Senvion was solvent at the time of the relevant payments. The independent expert has not yet submitted its assessment to the court. We believe we have meritorious defenses to the

21

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

alleged voidance claims. Due to the current procedural posture of this claim, we have determined that the ultimate outcome cannot be reasonably estimated at this time.

Note 13. Concentration of Customers

Net sales from certain customers (in thousands) in excess of 10 percent of our total consolidated net sales are as follows:

	Three Months Ended										Six Months Ended
	June 30,										June 30,
	2024					2023					2024					2023
Customer	Net sales		% of Total			Net sales		% of Total			Net sales		% of Total			Net sales		% of Total
Nordex	$	108,658		35.1	%	$	114,641		30.7	%	$	215,353		35.7	%	$	253,650		33.0	%
GE		94,722		30.6			98,923		26.4			194,788		32.3			180,179		23.5
Vestas		86,634		28.0			133,725		35.8			150,334		24.9			277,387		36.1

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

	June 30,			December 31,
	2024			2023
Customer	% of Total			% of Total
Nordex		62.4	%		61.5	%
Enercon		15.6			17.6
GE		11.2			11.5

Note 14. Segment Reporting

Our operating segments are defined geographically into four geographic operating segments—(1) the U.S., (2) Mexico, (3) Europe, the Middle East and Africa (EMEA) and (4) India. For a detailed discussion of our operating segments, refer to the discussion in Note 22, Segment Reporting, to the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2023.

Our U.S. and India segments operate in the U.S. dollar. Our Mexico segment operates in its local currency and includes a U.S. parent company that operates in the U.S. dollar. Our EMEA segment operates in the Euro.

22

TPI COMPOSITES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables set forth certain information regarding each of our segments:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	(in thousands)
Net sales by segment:
U.S.	$	2,558		$	9,110		$	6,760		$	14,469
Mexico		159,311			166,978			311,769			321,618
EMEA		104,877			134,580			201,505			302,093
India		43,071			63,353			83,829			129,646
Total net sales	$	309,817		$	374,021		$	603,863		$	767,826
Net sales by geographic location:
United States	$	2,558		$	9,110		$	6,760		$	14,469
Mexico		159,311			166,978			311,769			321,618
Türkiye		104,828			133,194			199,675			300,312
Spain		49			1,386			1,830			1,781
India		43,071			63,353			83,829			129,646
Total net sales	$	309,817		$	374,021		$	603,863		$	767,826
Income (loss) from continuing operations:
U.S. (1)	$	(8,884	)	$	(3,446	)	$	(15,661	)	$	(7,418	)
Mexico		(24,513	)		(63,942	)		(51,958	)		(81,961	)
EMEA		(5,817	)		5,537			(10,129	)		20,934
India		2,199			6,200			2,635			9,965
Total loss from continuing operations	$	(37,015	)	$	(55,651	)	$	(75,113	)	$	(58,480	)

	June 30,		December 31,
	2024		2023
	(in thousands)
Property, plant and equipment, net:
U.S.	$	9,573	$	10,660
Mexico		46,227		49,921
EMEA		39,481		40,435
India		25,506		27,792
Total property, plant and equipment, net	$	120,787	$	128,808

(1) The losses from operations in our U.S. segment includes corporate general and administrative costs of $9.2 million and $17.6 million, respectively, for the three and six months ended June 30, 2024, and $6.8 million and $13.8 million, respectively, in the comparative prior year periods.

23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q or in our previously filed Annual Report on Form 10-K for the year ended December 31, 2023, particularly those under the heading “Risk Factors.”

OVERVIEW

Our Company

We are the only independent manufacturer of composite wind blades for the wind energy market with a global manufacturing footprint. We deliver high-quality, cost-effective composite solutions through long-term relationships with leading original equipment manufacturers (OEM) in the wind market. We also provide field service inspection and repair services to our OEM customers and wind farm owners and operators. We are headquartered in Scottsdale, Arizona and operate factories in the U.S., Mexico, Türkiye, and India. We operate additional engineering development centers in Denmark and Germany and a services facility in Spain.

Our business operations are defined geographically into four geographic operating segments—(1) the United States (U.S.), (2) Mexico, (3) Europe, the Middle East and Africa (EMEA) and (4) India. See Note 14, Segment Reporting, to our condensed consolidated financial statements for more details about our operating segments.

Discontinued Operations

In June 2024, we completed the divestiture of our wholly-owned subsidiary, TPI, Inc. (the “Automotive” subsidiary) for cash proceeds of one US Dollar. The Automotive subsidiary was engaged in the development, commercialization and implementation of the Company’s automotive industry related products. The Automotive subsidiary was classified as held for sale in the Company’s Consolidated Balance Sheets as of December 31, 2023 and March 31, 2024. As a result of the divestiture, the Company recorded an $19.7 million non-cash impairment charge related to property, plant and equipment, and a $5.6 million loss on sale of the discontinued operations. The divestiture constituted a strategic shift as the Company will focus entirely on executing on its core business in the wind industry going forward, and accordingly, the historical results of our Automotive subsidiary have been reclassified as discontinued operations for all periods presented in the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.

KEY TRENDS AND RECENT DEVELOPMENTS AFFECTING OUR BUSINESS

Geopolitical events around the world have accelerated regional needs for energy independence and security. Climate change also continues to drive the need for renewable energy solutions and net-zero carbon emissions. The global demand for clean energy continues to rise, driven by factors such as the growing need for data centers, semiconductor chip manufacturers, the adoption of electric vehicles, and the electrification of buildings. Over the course of the past few years, we have seen numerous government policy initiatives aimed at expanding the use of renewable energy, including the passing of the IRA in the U.S. and several policy initiatives in the EU that are expected to simplify regulations, speed up permitting and promote cross-border projects to accelerate climate neutrality. We expect these recent trends in governmental policy will enable long-term revenue growth in the wind industry. As the majority of our wind blades are installed in the U.S. and Europe, these policy trends are expected to have a material impact on our business and the pace of long-term growth.

Despite these favorable long-term policy trends, we expect reduced demand in the near term while the wind industry still awaits clarity on critical details on implementing key components of the IRA, the potential impact on provisions of the IRA depending on the outcome of the U.S. elections in November and more robust policies in the EU. In addition, permitting, transmission, transmission queues, the ability of the broader wind industry supply chain to ramp volume, elevated interest rates and inflation, and the cost and availability of capital are further factors limiting the timing of the wind market recovery. We expect sales in 2024 to be down slightly from 2023 due to these factors and lower utilization for our manufacturing lines that are in startup or transition. However, we expect sales in the second half of 2024 to be higher than the first half of the year as we expect the lines that are in startup and transition will achieve serial production resulting in at least mid-single digit adjusted EBITDA margins and positive free cash flow. We also expect sales of our wind blades to increase moderately in 2025 due to increased forecasted demand from our customers primarily for wind blades in the US market but partially offset by lower forecasted demand for wind blades in the European market.

24

Effective June 30, 2024, we shut down the Matamoros, Mexico manufacturing facility for Nordex that we took over from them in July 2021. Our results of operations were adversely impacted by the performance of this facility due to higher than anticipated losses driven by cancelled orders and production inefficiencies resulting from Nordex’s request for us to shut down the plant at the conclusion of the contract on June 30, 2024, including releasing all associates working in the factory. While Nordex funded all of our severance costs for the headcount reduction, our results of operations for the three and six months ended June 30, 2024 were negatively impacted by significantly less demand from Nordex than expected and production inefficiencies relating to the closure of the facility. We experienced a loss from operations of $21.9 million and $31.4 million at this facility for the three and six months ended June 30, 2024, respectively, and a loss from operations of $13.1 million and $19.8 million at this facility for the three and six months ended June 30, 2023, respectively. The increase in this loss from operations compared to the prior year was primarily due to a 66% and 44% decrease for the three and six month periods, respectively, in the volume of wind blades produced, due to environmental conditions at this facility affecting production in early 2024 and cancelled orders along with inefficiencies resulting from the closure of the facility in the second quarter of 2024. The loss from operations for the three and six months ended June 30, 2024, was reduced by the impact of $5.0 million in additional fees received from Nordex related to the cancelled orders and production inefficiencies during the closure of the facility.

Ongoing inflationary pressures have caused and may continue to cause many of our production expenses to increase, which adversely impacts our results of operations. The government of Mexico increased minimum wages 20% effective January 1, 2024. The government of Türkiye increased minimum wages 49% effective January 1, 2024. While our customer contracts allow us to pass a portion of these increases to our customers, we will not be able to recover 100% of the increased labor costs caused by this wage inflation. If our manufacturing facilities in these countries continue to experience wage inflation at these levels and the increased costs in local currency are not offset with favorable foreign currency fluctuations or productivity improvements, such elevated wages will have a material impact on our results of operations.

KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE

In addition to measures of financial performance presented in our condensed consolidated financial statements in accordance with GAAP, we use certain other financial measures and operating metrics to analyze our performance. These “non-GAAP” financial measures consist of EBITDA, adjusted EBITDA, free cash flow and net cash (debt), which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance. The key operating metrics consist of wind blade sets produced, estimated megawatts of energy capacity to be generated by wind blade sets produced, utilization, dedicated manufacturing lines, manufacturing lines installed, and weighted-average sales price (ASP) per wind blade, all of which help us evaluate our operational performance. We believe that these measures are useful to investors in evaluating our performance. For a detailed discussion of our key financial measures and our key operating metrics, refer to the discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Metrics Used By Management To Measure Performance” included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

KEY FINANCIAL MEASURES

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	(in thousands)
Net sales	$	309,817		$	374,021		$	603,863		$	767,826
Net loss from continuing operations		(61,496	)		(58,696	)		(122,375	)		(68,628	)
EBITDA (1)		(29,322	)		(46,890	)		(57,538	)		(41,552	)
Adjusted EBITDA (1)		(24,911	)		(33,291	)		(47,953	)		(20,645	)
Capital expenditures (2)								15,405			6,694
Free cash flow (1)(2)								(91,313	)		(80,948	)

	June 30,			December 31,
	2024			2023
	(in thousands)
Total debt, net of debt issuance costs and debt discount	$	554,446		$	485,193
Net debt (1)		(451,859	)		(323,218	)

(1)

See below for more information and a reconciliation of EBITDA, adjusted EBITDA, free cash flow and net cash (debt) to net loss from continuing operations attributable to common stockholders, net cash provided by (used in) operating activities and

25

total debt, net of debt issuance costs, respectively, the most directly comparable financial measures calculated and presented in accordance with GAAP.

(2)

Capital expenditures and free cash flow include amounts from discontinued operations. Refer to Condensed Consolidated Statements of Cash Flows for more information.

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

EBITDA and adjusted EBITDA are reconciled as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	(in thousands)
Net loss attributable to common stockholders	$	(91,089	)	$	(80,835	)	$	(152,557	)	$	(118,135	)
Net loss from discontinued operations		29,593			6,541			30,182			18,736
Net loss from continuing operations attributable    to common stockholders		(61,496	)		(74,294	)		(122,375	)		(99,399	)
Preferred stock dividends and accretion		—			15,598			—			30,771
Net loss from continuing operations		(61,496	)		(58,696	)		(122,375	)		(68,628	)
Adjustments:
Depreciation and amortization		7,334			9,643			15,372			18,559
Interest expense, net		22,428			1,876			43,811			4,401
Income tax provision		2,412			287			5,654			4,116
EBITDA		(29,322	)		(46,890	)		(57,538	)		(41,552	)
Share-based compensation expense		1,162			3,968			3,688			6,525
Foreign currency (income) loss		(132	)		1,564			499			2,746
Loss on sale of assets and asset impairments		3,083			5,819			4,918			9,412
Restructuring charges, net		298			2,248			480			2,224
Adjusted EBITDA	$	(24,911	)	$	(33,291	)	$	(47,953	)	$	(20,645	)

Free cash flow is reconciled as follows:

	Six Months Ended
	June 30,
	2024			2023
	(in thousands)
Net cash used in operating activities	$	(75,908	)	$	(74,254	)
Capital expenditures		(15,405	)		(6,694	)
Free cash flow	$	(91,313	)	$	(80,948	)

Net cash (debt) is reconciled as follows:

	June 30,			December 31,
	2024			2023
	(in thousands)
Cash and cash equivalents	$	101,861		$	161,059
Cash and cash equivalents of discontinued operations		726			916
Total debt, net of debt issuance costs and debt discount		(554,446	)		(485,193	)
Net debt	$	(451,859	)	$	(323,218	)

26

KEY OPERATING METRICS

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Sets		473			661			961			1,316
Estimated megawatts		2,024			2,910			4,074			5,858
Utilization		63	%		85	%		65	%		84	%
Dedicated manufacturing lines		38			37			38			37
Manufacturing lines installed		38			37			38			37
Wind blade ASP (in $ thousands)	$	208		$	179		$	197		$	187

RESULTS OF OPERATIONS

The following table summarizes our operating results as a percentage of net sales for the three and six months ended June 30, 2024 and 2023 that have been derived from our condensed consolidated statements of operations:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		101.2			110.0			101.5			103.6
Startup and transition costs		6.7			0.9			7.1			0.7
Total cost of goods sold		107.9			110.9			108.6			104.3
Gross loss		(7.9	)		(10.9	)		(8.6	)		(4.3	)
General and administrative expenses		2.9			1.8			2.9			1.8
Loss on sale of assets and asset impairments		1.0			1.6			0.8			1.2
Restructuring charges, net		0.1			0.6			0.1			0.3
Loss from continuing operations		(11.9	)		(14.9	)		(12.4	)		(7.6	)
Total other expense		(7.2	)		(0.7	)		(6.9	)		(0.8	)
Loss before income taxes		(19.1	)		(15.6	)		(19.3	)		(8.4	)
Income tax provision		(0.7	)		(0.1	)		(1.0	)		(0.5	)
Net loss from continuing operations		(19.8	)		(15.7	)		(20.3	)		(8.9	)
Preferred stock dividends and accretion		—			(4.2	)		—			(4.0	)
Net loss attributable to common stockholders from continuing operations		(19.8	)		(19.9	)		(20.3	)		(12.9	)
Net loss from discontinued operations		(9.6	)		(1.7	)		(5.0	)		(2.5	)
Net loss attributable to common stockholders		(29.4	)%		(21.6	)%		(25.3	)%		(15.4	)%

Net sales

Consolidated discussion

The following table summarizes our net sales by product/service for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended										Six Months Ended
	June 30,				Change						June 30,				Change
	2024		2023		$			%			2024		2023		$			%
	(in thousands)										(in thousands)
Wind blade, tooling    and other wind    related sales	$	304,290	$	362,734	$	(58,444	)		(16.1	)%	$	593,195	$	750,326	$	(157,131	)		(20.9	)%
Field service,    inspection and    repair services sales		5,527		11,287		(5,760	)		(51.0	)		10,668		17,500		(6,832	)		(39.0	)
Total net sales	$	309,817	$	374,021	$	(64,204	)		(17.2	)%	$	603,863	$	767,826	$	(163,963	)		(21.4	)%

The decrease in net sales of wind blades, tooling and other wind related sales (collectively, Wind) for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a 28% and 27% decrease for the three and six month

27

periods, respectively, in the number of wind blades produced due primarily to the number and pace of startups and transitions, expected volume declines based on market activity levels, cancelled orders for the Nordex Matamoros facility, and unfavorable foreign currency fluctuations. This decrease was partially offset by higher average sales prices of wind blades due to changes in the mix of wind blade models produced, in particular the startup of production at one of our previously idled facilities in Juarez, Mexico, and an increase in tooling sales in preparation for manufacturing line startups and transitions. The decrease in field service, inspection and repair services (collectively, Field Services) sales for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a reduction in technicians deployed to revenue generating projects due to an increase in time spent on non-revenue generating inspection and repair activities. The fluctuating U.S. dollar relative to the Euro had an unfavorable impact of 1.1% and a favorable impact of 0.1% on the EMEA segment's net sales, respectively, during the three and six months ended June 30, 2024 as compared to the same periods in 2023.

Segment discussion

The following table summarizes our net sales by our four geographic operating segments for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended										Six Months Ended
	June 30,				Change						June 30,				Change
	2024		2023		$			%			2024		2023		$			%
	(in thousands)										(in thousands)
U.S.	$	2,558	$	9,110	$	(6,552	)		(71.9	)%	$	6,760	$	14,469	$	(7,709	)		(53.3	)%
Mexico		159,311		166,978		(7,667	)		(4.6	)		311,769		321,618		(9,849	)		(3.1	)
EMEA		104,877		134,580		(29,703	)		(22.1	)		201,505		302,093		(100,588	)		(33.3	)
India		43,071		63,353		(20,282	)		(32.0	)		83,829		129,646		(45,817	)		(35.3	)
Total net sales	$	309,817	$	374,021	$	(64,204	)		(17.2	)%	$	603,863	$	767,826	$	(163,963	)		(21.4	)%

U.S. Segment

The following table summarizes our net sales by product/service for the U.S. segment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended										Six Months Ended
	June 30,				Change						June 30,				Change
	2024		2023		$			%			2024		2023		$			%
	(in thousands)										(in thousands)
Field service,    inspection and    repair services sales	$	2,558	$	9,110	$	(6,552	)		(71.9	)%	$	6,760	$	14,469	$	(7,709	)		(53.3	)%
Total net sales	$	2,558	$	9,110	$	(6,552	)		(71.9	)%	$	6,760	$	14,469	$	(7,709	)		(53.3	)%

The decrease in Field Services for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a reduction in technicians deployed to revenue generating projects due to an increase in time spent on non-revenue generating inspection and repair activities.

Mexico Segment

The following table summarizes our net sales by product/service for the Mexico segment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended										Six Months Ended
	June 30,				Change						June 30,				Change
	2024		2023		$			%			2024		2023		$			%
	(in thousands)										(in thousands)
Wind blade, tooling    and other wind    related sales	$	158,844	$	166,767	$	(7,923	)		(4.8	)%	$	311,205	$	321,229	$	(10,024	)		(3.1	)%
Field service,    inspection and    repair services sales		467		211		256			121.3			564		389		175			45.0
Total net sales	$	159,311	$	166,978	$	(7,667	)		(4.6	)%	$	311,769	$	321,618	$	(9,849	)		(3.1	)%

28

The decrease in the Mexico segment’s net sales of Wind for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a 27% and 19% net decrease, for the three and six month periods respectively, in the number of wind blades produced across our Mexico manufacturing facilities, partially offset by higher average sales prices of wind blades in Mexico due to changes in the mix of wind blade models produced and the impact of inflation on wind blade prices. The change in volume was primarily associated with decreased production at one of our Matamoros, Mexico manufacturing facilities due to the transition of several of the manufacturing lines at this facility to larger wind blade models that have not yet achieved serial production levels. The change in volume was also due to a decrease in the number of wind blades produced at the Nordex Matamoros, Mexico facility, primarily due to cancelled orders and production inefficiencies resulting from Nordex’s request for us to shut down the plant at the conclusion of the contract on June 30, 2024. These decreases were partially offset by a combined increase in volume across our facilities in Juarez, Mexico, including the restart of production at one of our previously idled facilities, and a $6.1 million increase in tooling sales in preparation for manufacturing line startups and transitions.

EMEA Segment

The following table summarizes our net sales by product/service for the EMEA segment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended										Six Months Ended
	June 30,				Change						June 30,				Change
	2024		2023		$			%			2024		2023		$			%
	(in thousands)										(in thousands)
Wind blade, tooling    and other wind    related sales	$	102,375	$	132,614	$	(30,239	)		(22.8	)%	$	198,161	$	299,451	$	(101,290	)		(33.8	)%
Field service,    inspection and    repair services sales		2,502		1,966		536			27.3			3,344		2,642		702			26.6
Total net sales	$	104,877	$	134,580	$	(29,703	)		(22.1	)%	$	201,505	$	302,093	$	(100,588	)		(33.3	)%

The decrease in the EMEA segment’s net sales of Wind for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a 31% and 37% decrease, for the three and six month periods respectively, in the number of wind blades produced due to reduced market demand for one of our customers' wind blade models at one of our Türkiye manufacturing facilities and the transition of certain manufacturing lines to a different customers' wind blade model at our other Türkiye facility, as well as unfavorable foreign currency fluctuations. These decreases were partially offset by higher average sales prices of wind blades in Türkiye due to such changes in the mix of wind blade models produced. The fluctuating U.S. dollar relative to the Euro had an unfavorable impact of 1.1% and a favorable impact of 0.1% on the EMEA segment's net sales, respectively, during the three and six months ended June 30, 2024, as compared to the same periods in 2023.

India Segment

The following table summarizes our net sales by product/service for the India segment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended										Six Months Ended
	June 30,				Change						June 30,				Change
	2024		2023		$			%			2024		2023		$			%
	(in thousands)										(in thousands)
Wind blade, tooling    and other wind    related sales	$	43,071	$	63,353	$	(20,282	)		(32.0	)%	$	83,829	$	129,646	$	(45,817	)		(35.3	)%
Total net sales	$	43,071	$	63,353	$	(20,282	)		(32.0	)%	$	83,829	$	129,646	$	(45,817	)		(35.3	)%

The decrease in the India segment’s net sales of Wind for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a 27% and 25% decrease, for the three and six month periods respectively, in the number of wind blades produced due to a decrease in market demand for one of our customers' wind blades models produced at this facility, and lower average sales prices due to the impact of raw material and logistic cost reductions on wind blade prices.

29

Total cost of goods sold

The following table summarizes our total cost of goods sold for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2024			2023			$			%			2024			2023			$			%
	(in thousands)												(in thousands)
Cost of sales	$	313,562		$	411,461		$	(97,899	)		(23.8	)%	$	613,057		$	795,512		$	(182,455	)		(22.9	)%
Startup costs		7,319			—			7,319		NM				13,682			—			13,682		NM
Transition costs		13,359			3,377			9,982		NM				29,225			5,357			23,868		NM
Total startup and    transition costs		20,678			3,377			17,301		NM				42,907			5,357			37,550		NM
Total cost of    goods sold	$	334,240		$	414,838		$	(80,598	)		(19.4	)%	$	655,964		$	800,869		$	(144,905	)		(18.1	)%
% of net sales		107.9	%		110.9	%					(3.0	)%		108.6	%		104.3	%					4.3	%

NM – not meaningful

Total cost of goods sold as a percentage of net sales decreased by approximately 3.0% for the three months ended June 30, 2024, as compared to the same period in 2023, primarily related to the $32.7 million warranty charge recorded in the second quarter of the prior year. Total cost of goods sold as a percentage of net sales increased by approximately 4.3% for the six months ended June 30, 2024, as compared to the same period in 2023, primarily driven by an increase in startup and transition costs associated with four manufacturing lines in startup in Juarez, Mexico at a previously idle manufacturing facility, two manufacturing lines in transition at one of our Türkiye facilities where two longer blade models are replacing three blade models due to space considerations, and four manufacturing lines in transition at one of our Matamoros, Mexico manufacturing facilities. The increase in cost of goods sold as a percentage of net sales was also due to increased labor costs in Türkiye and Mexico as a result of wage increases, and continued cost challenges at facilities in Matamoros, Mexico, including a $31.4 million loss from operations for the six months ended June 30, 2024 at our facility that we operated for Nordex. These increases were partially offset for the six months ended June 30, 2024 compared to the same period in 2023 due to the $32.7 million warranty charge recorded in the second quarter of the prior year. The fluctuating U.S. dollar against the Euro, Turkish Lira, Mexican Peso and Indian Rupee had a combined favorable impact of 5.0% and 4.7%, respectively, on consolidated cost of goods sold for the three and six months ended June 30, 2024, as compared to the same periods in 2023.

General and administrative expenses

The following table summarizes our general and administrative expenses for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended											Six Months Ended
	June 30,						Change					June 30,						Change
	2024			2023			$		%			2024			2023			$		%
	(in thousands)											(in thousands)
General and    administrative    expenses	$	9,211		$	6,767		$	2,444		36.1	%	$	17,614		$	13,801		$	3,813		27.6	%
% of net sales		2.9	%		1.8	%				1.1	%		2.9	%		1.8	%				1.1	%

General and administrative expenses as a percentage of net sales increased by approximately 1.1% for both the three and six months ended June 30, 2024, as compared to the same periods in 2023, and was primarily driven by an increase in accrued bonus compensation, and professional service and consulting fees, partially offset by reduced share-based compensation and depreciation expenses.

Loss on sale of assets and asset impairments

The following table summarizes our loss on sale of assets and asset impairments for the three and six months ended June 30, 2024 and 2023:

30

	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2024			2023			$			%			2024			2023			$			%
	(in thousands)												(in thousands)
Loss on sale    of receivables	$	2,540		$	5,825		$	(3,285	)		(56.4	)%	$	3,927		$	9,389		$	(5,462	)		(58.2	)%
Loss on sale    of other assets		543			(6	)		549		NM				991			23			968		NM
Total loss on sale of    assets and asset    impairments	$	3,083		$	5,819		$	(2,736	)		(47.0	)	$	4,918		$	9,412		$	(4,494	)		(47.7	)
% of net sales		1.0	%		1.6	%					(0.6	)%		0.8	%		1.2	%					(0.4	)%

The decrease in loss on sale of assets and asset impairments for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a decrease in the volume of receivables sold through our accounts receivable financing arrangements with certain of our customers.

Income (loss) from operations

Segment discussion

The following table summarizes our income (loss) from operations by our four geographic operating segments for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2024			2023			$			%			2024			2023			$			%
	(in thousands)												(in thousands)
U.S.	$	(8,884	)	$	(3,446	)	$	(5,438	)		(157.8	)%	$	(15,661	)	$	(7,418	)	$	(8,243	)		(111.1	)%
Mexico		(24,513	)		(63,942	)		39,429			61.7			(51,958	)		(81,961	)		30,003			36.6
EMEA		(5,817	)		5,537			(11,354	)	NM				(10,129	)		20,934			(31,063	)		(148.4	)
India		2,199			6,200			(4,001	)		(64.5	)		2,635			9,965			(7,330	)		(73.6	)
Total income (loss)    from continuing    operations	$	(37,015	)	$	(55,651	)	$	18,636		NM			$	(75,113	)	$	(58,480	)	$	(16,633	)		(28.4	)%
% of net sales		(11.9	)%		(14.9	)%					3.0	%		(12.4	)%		(7.6	)%					(4.8	)%

U.S. Segment

The increase in the loss from operations in the U.S. segment for the three and six months ended June 30, 2024, as compared to the same periods in 2023 was primarily due to a reduction in field services sales as technicians spent time on non-revenue generating inspection and repair activities. The increase in the loss was also impacted by an increase in accrued bonus compensation expense, an increase in professional service and consulting fees, and recoveries of COVID-19-related relief for payroll tax credits in the prior comparative period that were not in the current period, partially offset by reduced share-based compensation and depreciation expenses.

Mexico Segment

The decrease in loss from operations in the Mexico segment for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to lower warranty costs as compared to the prior comparative period at one of our Juarez, Mexico facilities, and higher average sales prices in the current period due to a change in the mix of wind blades. This was offset by a 27% and 19% net decrease, for the three and six month periods respectively, in the volume of wind blades produced, increased startup and transition costs, increased labor costs, continued cost challenges at our facilities in Matamoros, Mexico, and unfavorable foreign currency fluctuations. The fluctuating U.S. dollar relative to the Mexican Peso had an unfavorable impact of 0.4% and 1.2%, respectively, on the Mexico segment’s cost of goods sold for the three and six months ended June 30, 2024, as compared to the same periods in 2023.

EMEA Segment

The increase in loss from operations in the EMEA segment for the three and six months ended June 30, 2024, as compared to the same periods in 2023 was primarily due to a 31% and 37% decrease, for the three and six month periods respectively, in the volume of wind

31

blades produced, increased startup and transition costs, inflation impacting operating costs that we were not able to pass on to our customers, and increased labor costs as a result of wage increases in Türkiye. These decreases were partially offset by an increase in wind blade prices, cost savings initiatives, and favorable foreign currency fluctuations. The fluctuating U.S. dollar relative to the Turkish Lira and Euro had a favorable impact of 17.7% and 18.3%, respectively, on the EMEA segment's cost of goods sold, for the three and six months ended June 30, 2024, as compared to the same periods in 2023.

India Segment

The decrease in income from operations in the India segment for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to a 27% and 25% decrease, for the three and six month periods respectively, in the volume of wind blades produced and lower average sales prices.

Other income (expense)

The following table summarizes our total other income (expense) for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2024			2023			$			%			2024			2023			$			%
	(in thousands)												(in thousands)
Interest expense, net	$	(22,428	)	$	(1,876	)	$	(20,552	)	NM			$	(43,811	)	$	(4,401	)	$	(39,410	)	NM
Foreign currency loss		132			(1,564	)		1,696			108.4			(499	)		(2,746	)		2,247			81.8
Miscellaneous income		227			682			(455	)		(66.7	)		2,702			1,115			1,587			142.3
Total other expense	$	(22,069	)	$	(2,758	)	$	(19,311	)	NM			$	(41,608	)	$	(6,032	)	$	(35,576	)	NM
% of net sales		-7.2	%		-0.7	%					(6.5	)%		-6.9	%		-0.8	%					(6.1	)%

Total other expense as a percentage of net sales increased by 6.5% and 6.1%, respectively, for the three and six months ended June 30, 2024, as compared to the same periods in 2023, primarily due to an increase in interest expense and non-cash amortization of debt discount related to the refinancing and issuance of our 11% senior secured term loan in the fourth quarter of 2023.

Income taxes

The following table summarizes our income taxes for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2024			2023			$			%			2024			2023			$			%
	(in thousands)												(in thousands)
Income tax provision	$	(2,412	)	$	(287	)	$	(2,125	)	NM			$	(5,654	)	$	(4,116	)	$	(1,538	)		(37.4	)%
Effective tax rate		(0.7	)%		(0.1	)%					(0.6	)%		(1.0	)%		(0.5	)%					(0.5	)%

See Note 9, Income Taxes, to our condensed consolidated financial statements for more details about our income taxes for the three and six months ended June 30, 2024 and 2023.

Net loss from continuing operations

The following table summarizes our net loss from continuing operations for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended												Six Months Ended
	June 30,						Change						June 30,						Change
	2024			2023			$			%			2024			2023			$			%
	(in thousands)												(in thousands)
Net loss from    continuing    operations	$	(61,496	)	$	(58,696	)	$	(2,800	)		(4.8	)%	$	(122,375	)	$	(68,628	)	$	(53,747	)		(78.3	)%

The increase in the net loss from continuing operations for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to the reasons set forth above.

Net loss from discontinued operations

32

The following table summarizes our net income (loss) from discontinued operations for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended										Six Months Ended
	June 30,						Change				June 30,						Change
	2024			2023			$			%	2024			2023			$			%
	(in thousands)										(in thousands)
Net loss from    discontinued    operations	$	(29,593	)	$	(6,541	)	$	(23,052	)	NM	$	(30,182	)	$	(18,736	)	$	(11,446	)		(61.1	)%

The increase in net loss from discontinued operations for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to divestiture of our Automotive subsidiary in June 2024, which resulted in approximately $19.7 million of asset impairment charges related to property, plant and equipment, and $5.6 million of loss on the sale of discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

Our primary needs for liquidity have been, and in the future will continue to be, capital expenditures, purchases of raw materials, new facility startup costs, the impact of line startups and transitions, working capital, debt service costs, warranty costs and restructuring costs associated with the optimization of our global footprint. Our capital expenditures have been primarily related to machinery and equipment for new facilities or facility expansions. Historically, we have funded our working capital needs through cash flows from operations, the proceeds received from our credit facilities and term debt, and proceeds received from the issuance of stock.

We had net proceeds under all of our various financing arrangements of $31.1 million for the six months ended June 30, 2024 as compared to net proceeds under our financing arrangements of $110.7 million in the comparable period of 2023, primarily due to the issuance of the Convertible Notes in the prior comparative period. As of June 30, 2024 and December 31, 2023, we had $554.4 million and $485.2 million in outstanding indebtedness, net of issuance costs and debt discount, respectively. As of June 30, 2024, $106.2 million of outstanding indebtedness, consisting primarily of our working capital facilities in Türkiye and India, matures within the next twelve months. As of June 30, 2024, we had an aggregate of $57.8 million of remaining capacity for cash and non-cash financing, including $51.8 million of remaining availability for cash borrowing under our various credit facilities. Based upon current and anticipated levels of operations, we believe that cash on hand, available credit facilities, and cash flow from operations will be adequate to fund our working capital and capital expenditure requirements and to make required payments of principal and interest on our indebtedness over the next twelve months.

We anticipate that any new facilities and future facility expansions will be funded through cash flows from operations, the incurrence of other indebtedness and other potential sources of liquidity. The 11% senior secured term loan contains certain covenants and rights including, but not limited to, amount of indebtedness, capital expenditure limitations, a U.S. cash on hand balance requirement of $40.0 million through September 30, 2024 and $50.0 million thereafter.

At June 30, 2024 and December 31, 2023, we had unrestricted cash, cash equivalents and short-term investments totaling $101.9 million and $161.1 million, respectively. The June 30, 2024 balance includes $14.8 million of cash located outside of the United States, including $5.0 million in Türkiye, $5.7 million in India, $2.5 million in Mexico and $1.6 million in other countries. The December 31, 2023 balance included $45.0 million of cash located outside of the U.S., $40.6 million in Türkiye, $1.9 million in India, $1.2 million in Mexico and $1.3 million in other countries. In addition to these amounts, at June 30, 2024 and December 31, 2023 we had $0.7 million and $0.9 million, respectively, of unrestricted cash and cash equivalents related to our discontinued operations which is held outside of the U.S.

33

Financing Facilities

Our total principal amount of debt outstanding as of June 30, 2024 was $659.7 million, including our convertible senior notes, secured and unsecured financing, working capital and term loan agreements and equipment finance leases. See Note 6, Debt, to our condensed consolidated financial statements for more details on our debt balances.

Cash Flow Discussion

The following table summarizes our key cash flow activities for the six months ended June 30, 2024 and 2023:

	Six Months Ended
	June 30,
	2024			2023			$ Change
	(in thousands)
Net cash used in operating activities	$	(75,908	)	$	(74,254	)	$	(1,654	)
Net cash used in investing activities		(15,405	)		(6,694	)		(8,711	)
Net cash provided by financing activities		29,407			108,109			(78,702	)
Impact of foreign exchange rates on cash, cash equivalents    and restricted cash		131			914			(783	)
Net change in cash, cash equivalents and restricted cash	$	(61,775	)	$	28,075		$	(89,850	)

Operating Cash Flows

Net cash used in operating activities increased by $1.7 million for the six months ended June 30, 2024, as compared to the same period in 2023, primarily due to an increase in net losses during the current period, an increase in cash paid for income taxes, and working capital changes, offset by higher payments in the prior comparative period related to restructuring activities associated with the shutdown of our China operations at the end of 2022.

Investing Cash Flows

Net cash used in investing activities increased by $8.7 million for the six months ended June 30, 2024, as compared to the same period in 2023, primarily due to capital expenditures for the startup and transition of our manufacturing lines at our facilities in Mexico and Türkiye.

Financing Cash Flows

Net cash provided by financing activities decreased by $78.7 million for the six months ended June 30, 2024, as compared to the same period in 2023, primarily due to the proceeds from the Convertible Notes in the prior comparative period.

We are not presently involved in any off-balance sheet arrangements, including transactions with unconsolidated special-purpose or other entities that would materially affect our financial position, results of operations, liquidity or capital resources, other than our accounts receivable assignment agreements described below. Furthermore, we do not have any relationships with special-purpose or other entities that provide off-balance sheet financing; liquidity, market risk or credit risk support; or engage in leasing or other services that may expose us to liability or risks of loss that are not reflected in the condensed consolidated financial statements and related notes.

Our segments enter into accounts receivable assignment agreements with various financial institutions. Under these agreements, the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to our segments' customers at an agreed-upon discount rate.

34

The following table summarizes certain key details of each of the accounts receivable assignment agreements in place as of June 30, 2024:

Year Of Initial Agreement	Segment(s) Related To	Current Annual Interest Rate
2019	Asia and Mexico	LIBOR plus 1.00%
2020	EMEA	EURIBOR plus 1.95%
2020	India	LIBOR plus 1.00%
2020	U.S.	SOFR plus 0.29%
2021	Mexico	SOFR plus 0.29%
2022	EMEA	EURIBOR plus 1.97%

As the receivables are purchased by the financial institutions under the agreements noted above, the receivables are removed from our condensed consolidated balance sheet. During the three and six months ended June 30, 2024, $124.1 million and $219.1 million, respectively, of receivables were sold under the accounts receivable assignment agreements described above as compared to $283.3 million and $507.7 million, respectively, in the comparative prior year period.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in the ordinary course of our business. These market risks are principally limited to changes in foreign currency exchange rates and commodity prices.

Foreign Currency Exchange Rate Risk. We conduct international operations in Mexico, Türkiye, India and Europe. Our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the functional currency of the transacting entity. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant functional currency and then translated into U.S. dollars for inclusion in our condensed consolidated financial statements. In recent years, exchange rates between these foreign currencies and the U.S. dollar have fluctuated significantly and may do so in the future. A hypothetical change of 10% in the exchange rates for the countries above would have resulted in a change to income from operations of approximately $8.1 million for the six months ended June 30, 2024.

Commodity Price Risk. We are subject to commodity price risk under agreements for the supply of our raw materials. We have not hedged our commodity price exposure. We generally lock in pricing for most of our key raw materials for 12 months which protects us from price increases within that period, which we believe helps to mitigate the impact of raw material price increases. As many of our raw material supply agreements have meet or release clauses, if raw materials prices decrease, we are able to benefit from the reductions in price.

Resin, resin systems, and carbon fiber are the primary commodities for which we do not have fixed pricing. Approximately 52% of the resin and resin systems, and approximately 71% of the carbon fiber, we use is purchased under contracts either controlled or borne by two of our customers and therefore they receive/bear 100% of any decrease or increase in resin and carbon fiber costs further limiting our exposure to price fluctuations.

Taking into account the contractual obligations of our customers to share with us the cost savings or increases resulting from a change in the current forecasted price of resin, resin systems, and carbon fiber, we believe that a 10% change in the current forecasted price of resin, resin systems and carbon fiber for the customers in which we are exposed to fluctuating prices would have an impact to income from operations of approximately $5.7 million for the six months ended June 30, 2024. With respect to our other customer supply agreements, our customers typically receive approximately 70% of the cost savings or increases resulting from a change in the price of resin, resin systems and carbon fiber.

Interest Rate Risk. As of June 30, 2024, all remaining secured and unsecured financing and finance lease obligations are fixed rate instruments and are not subject to fluctuations in interest rates.

35

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and operating effectiveness as of June 30, 2024 of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2024.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

36

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

See Note 12, Commitments and Contingencies, under the heading “Legal Proceedings” to our condensed consolidated financial statements for a discussion of legal proceedings and other related matters.

Item 1A. RISK FACTORS

There have been no material changes to the Risk Factors (Part I, Item 1A) in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition, and/or future results.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

Not applicable.

Issuer Purchases of Equity Securities

Not applicable.

Use of Proceeds

Not applicable.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

37

Item 6. EXHIBITS

Exhibit Number	Exhibit Description
2.1*	Stock Purchase Agreement, among TPI Composites, Inc., Composite Solutions, Inc., TPI, Inc., and CCI Global Water Fund LP, dated June 17, 2024
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

* Filed herewith.

** The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TPI COMPOSITES, INC.
Date: August 8, 2024	By:	/s/ Ryan Miller
		Ryan Miller
		Chief Financial Officer
		(Principal Financial Officer)

39