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 March 31, 2018
OR
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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 |
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20-1590775 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification Number) |
8501 N. Scottsdale Rd.
Gainey Center II, Suite 100
Scottsdale, AZ 85253
(480) 305-8910
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. 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 |
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Accelerated filer |
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Non-accelerated filer |
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☐ (Do not check if a smaller reporting company) |
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Smaller reporting company |
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Emerging growth company ☒ |
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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 April 30, 2018, there were 34,097,048 shares of common stock outstanding.
TPI COMPOSITES, INC. AND SUBSIDIARIES
INDEX
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ITEM 1. |
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Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 |
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1 |
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Condensed Consolidated Income Statements for the Three Months Ended March 31, 2018 and 2017 |
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2 |
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3 |
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Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 201 7 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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5 |
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ITEM 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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25 |
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ITEM 3. |
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38 |
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ITEM 4. |
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39 |
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ITEM 1. |
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40 |
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ITEM 1A. |
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40 |
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ITEM 2. |
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40 |
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ITEM 3. |
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41 |
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ITEM 4. |
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41 |
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ITEM 5. |
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41 |
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ITEM 6. |
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42 |
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43 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities law. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
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growth of the wind energy market and our addressable market; |
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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; |
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our ability to successfully expand our transportation business and execute upon our strategy of entering new markets outside of wind energy; |
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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; |
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the potential impact of General Electric’s acquisition of LM Wind Power upon our business; |
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the sufficiency of our cash and cash equivalents to meet our liquidity needs; |
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our ability to attract and retain customers for our products, and to optimize product pricing; |
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our ability to effectively manage our growth strategy and future expenses, including startup and transition costs; |
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competition from other wind blade and wind blade turbine manufacturers; |
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the discovery of defects in our products; |
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our ability to successfully expand in our existing wind energy markets and into new international wind energy markets; |
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worldwide economic conditions and their impact on customer demand; |
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our ability to maintain, protect and enhance our intellectual property; |
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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; |
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the attraction and retention of qualified employees and key personnel; and |
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changes in domestic or international government or regulatory policy, including without limitation, changes in trade policy. |
These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We have described in the “Risk Factors” section of our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (SEC) on March 8, 2018 (the Annual Report on Form 10-K) 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. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to update any forward-looking statement to reflect events or developments after the date on which the statement is made or to reflect the occurrence of unanticipated events except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this Quarterly Report. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
ITEM l. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TPI COMPOSITES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except par value data)
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March 31, |
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December 31, |
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2018 |
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2017 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
138,841 |
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$ |
148,113 |
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Restricted cash |
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3,251 |
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3,849 |
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Accounts receivable |
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117,950 |
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121,576 |
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Contract assets |
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130,015 |
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105,619 |
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Prepaid expenses and other current assets |
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35,718 |
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27,507 |
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Inventories |
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4,205 |
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4,112 |
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Total current assets |
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429,980 |
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410,776 |
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Property, plant, and equipment, net |
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126,860 |
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123,480 |
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Other noncurrent assets |
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23,024 |
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22,306 |
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Total assets |
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$ |
579,864 |
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$ |
556,562 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
169,179 |
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$ |
167,175 |
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Accrued warranty |
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32,670 |
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30,419 |
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Current maturities of long-term debt |
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43,085 |
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35,506 |
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Contract liabilities |
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4,449 |
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2,763 |
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Total current liabilities |
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249,383 |
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235,863 |
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Long-term debt, net of debt issuance costs and current maturities |
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82,658 |
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85,879 |
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Other noncurrent liabilities |
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4,791 |
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4,938 |
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Total liabilities |
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336,832 |
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326,680 |
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Commitments and contingencies (Note 10) |
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Stockholders’ equity: (Note 4) |
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Common shares, $0.01 par value, 100,000 shares authorized and 34,128 shares issued and 34,097 shares outstanding at March 31, 2018 and 100,000 shares authorized and 34,049 shares issued and 34,021 shares outstanding at December 31, 2017 |
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341 |
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340 |
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Paid-in capital |
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304,230 |
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301,543 |
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Accumulated other comprehensive income |
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1,332 |
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(558 |
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Accumulated deficit |
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(62,284 |
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(70,932 |
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Treasury stock, at cost, 31 shares at March 31, 2018 and 28 shares at December 31, 2017 |
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(587 |
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(511 |
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Total stockholders’ equity |
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243,032 |
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229,882 |
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Total liabilities and stockholders’ equity |
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$ |
579,864 |
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$ |
556,562 |
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See accompanying notes to unaudited condensed consolidated financial statements.
1
TPI COMPOSITES, INC. AND SUBSIDIARIES
Condensed Consolidated Income Statements
(In thousands, except per share data)
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Three Months Ended |
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March 31, |
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2018 |
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2017 |
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(Unaudited) |
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Net sales (Note 4) |
$ |
253,981 |
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$ |
208,615 |
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Cost of sales |
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210,988 |
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182,538 |
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Startup and transition costs |
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14,735 |
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6,159 |
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Total cost of goods sold |
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225,723 |
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188,697 |
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Gross profit |
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28,258 |
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19,918 |
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General and administrative expenses |
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11,163 |
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8,306 |
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Income from operations |
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17,095 |
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11,612 |
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Other income (expense): |
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Interest income |
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41 |
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19 |
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Interest expense |
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(3,338 |
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(3,026 |
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Realized loss on foreign currency remeasurement |
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(4,011 |
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(1,381 |
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Miscellaneous income |
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818 |
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320 |
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Total other expense |
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(6,490 |
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(4,068 |
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Income before income taxes |
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10,605 |
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7,544 |
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Income tax provision |
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(1,957 |
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(2,331 |
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Net income |
$ |
8,648 |
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$ |
5,213 |
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Weighted-average common shares outstanding: |
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Basic |
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34,049 |
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33,737 |
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Diluted |
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35,479 |
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33,827 |
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Net income per common share: |
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Basic |
$ |
0.25 |
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$ |
0.15 |
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Diluted |
$ |
0.24 |
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$ |
0.15 |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
TPI COMPOSITES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
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Three Months Ended |
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March 31, |
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2018 |
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2017 |
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(Unaudited) |
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Net income |
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$ |
8,648 |
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$ |
5,213 |
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Other comprehensive income: |
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Foreign currency translation adjustments |
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1,890 |
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277 |
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Comprehensive income |
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$ |
10,538 |
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$ |
5,490 |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
TPI COMPOSITES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
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Three Months Ended |
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March 31, |
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2018 |
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2017 |
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(Unaudited) |
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Cash flows from operating activities: |
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Net income |
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$ |
8,648 |
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$ |
5,213 |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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7,072 |
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3,952 |
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Share-based compensation expense |
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2,388 |
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1,707 |
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Amortization of debt issuance costs |
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181 |
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143 |
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Changes in assets and liabilities: |
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Accounts receivable |
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3,626 |
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(28,722 |
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Contract assets and liabilities |
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(22,710 |
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6,848 |
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Inventories |
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(93 |
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(68 |
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Prepaid expenses and other current assets |
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(8,211 |
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6,816 |
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Other noncurrent assets |
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734 |
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(156 |
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Accounts payable and accrued expenses |
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3,241 |
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11,928 |
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Accrued warranty |
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2,250 |
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2,080 |
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Other noncurrent liabilities |
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(158 |
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197 |
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Net cash provided by (used in) operating activities |
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(3,032 |
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9,938 |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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(11,714 |
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(16,922 |
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Net cash used in investing activities |
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(11,714 |
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(16,922 |
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Cash flows from financing activities: |
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Repayments of term loan |
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(938 |
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(938 |
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Net proceeds from (repayments of) accounts receivable financing |
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8,093 |
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(1,233 |
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Net proceeds from working capital loans |
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— |
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517 |
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Net repayments of other debt |
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(2,978 |
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(1,155 |
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Proceeds from exercise of stock options |
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585 |
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— |
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Repurchase of common stock including shares withheld in lieu of income taxes |
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(272 |
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— |
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Net cash provided by (used in) financing activities |
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4,490 |
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(2,809 |
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Impact of foreign exchange rates on cash, cash equivalents and restricted cash |
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386 |
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(63 |
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Net change in cash, cash equivalents and restricted cash |
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(9,870 |
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(9,856 |
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Cash, cash equivalents and restricted cash, beginning of year |
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152,437 |
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129,863 |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
142,567 |
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$ |
120,007 |
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Supplemental disclosures of cash flow information: |
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Cash paid for interest |
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$ |
3,127 |
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$ |
2,899 |
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Cash paid for income taxes, net |
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1,434 |
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4,146 |
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Supplemental disclosures of noncash investing and financing activities: |
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Accrued capital expenditures in accounts payable |
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4,425 |
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2,569 |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1. Summary of Operations and Significant Accounting Policies
Description of Business
TPI Composites, Inc. is the holding company that conducts substantially all of its business operations through its direct and indirect subsidiaries (collectively, the Company). The Company was founded in 1968 and has been producing composite wind blades since 2001. The Company’s knowledge and experience of composite materials and manufacturing originates with its predecessor company, Tillotson Pearson Inc., a leading manufacturer of high-performance sail and powerboats along with a wide range of composite structures used in other industrial applications. Following the separation from the boat building business in 2004, the Company reorganized in Delaware as LCSI Holding, Inc. and then changed its corporate name to TPI Composites, Inc. in 2008. Today, the Company is headquartered in Scottsdale, Arizona and has expanded its global footprint to include domestic facilities in Newton, Iowa; Fall River, Massachusetts; Warren, Rhode Island and Santa Teresa, New Mexico and international facilities in Dafeng, China; Taicang Port, China; Taicang City, China; Yangzhou, China; Juárez, Mexico; Matamoros, Mexico; Izmir, Turkey and Kolding, Denmark.
Public Offerings and Stock Split
In July 2016, the Company completed an initial public offering (IPO) of 7,187,500 shares of the its common stock at a price of $11.00 per share, which included 937,500 shares issued pursuant to the underwriters’ over-allotment option. Certain of the Company’s existing shareholders, a non-employee director and executive officers purchased an aggregate of 1,250,000 shares of common stock in the IPO included in the total issuance above. The net proceeds from the IPO were $67.2 million after deducting underwriting discounts and offering expenses. Immediately prior to the closing of the IPO, all shares of the then-outstanding redeemable preferred shares converted into an aggregate of 21,110,204 shares of common stock and the redeemable preferred share warrants converted on a net issuance basis into 120,923 shares of common stock. In addition, concurrent with the closing of the IPO, certain subordinated convertible promissory notes in the aggregate principal and interest amount of $11.9 million were converted into 1,079,749 shares of common stock at the public offering price of $11.00 per share.
Prior to the IPO, in July 2016 the Company amended its amended and restated certificate of incorporation to effect a 360-for-1 forward stock split of its common stock. As a result of the stock split, the Company has adjusted the share amounts authorized and issuable under the share-based compensation plans. All share and per share common stock information (including the share-based compensation plans) referenced throughout the unaudited condensed consolidated financial statements and notes thereto have been retroactively adjusted to reflect this stock split. The stock split did not cause an adjustment to the par value of the authorized shares of common stock.
In May 2017, the Company completed a secondary public offering of 5,075,000 shares of its common stock at a price of $16.35 per share, which included 575,000 shares issued pursuant to the underwriters’ option to purchase additional shares. All of the shares were sold by existing shareholders and certain of the Company’s executive officers. The selling shareholders received all of the net proceeds of $78.8 million from the secondary public offering. The Company did not sell any shares and did not receive any of the proceeds from the offering and the costs paid by the Company in connection with the offering of $0.8 million were recorded in general and administrative costs in the accompanying condensed consolidated income statement.
Basis of Presentation
The Company divides its business operations into four geographic operating segments—the United States, Asia, Mexico and Europe, the Middle East and Africa (EMEA) as follows:
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The U.S. segment includes (1) the manufacturing of wind blades at the Newton, Iowa plant, (2) the manufacturing of precision molding and assembly systems used for the manufacture of wind blades at the Warren, Rhode Island facility, (3) the manufacturing of composite solutions for the transportation industry, which the Company also conducts at its existing Rhode Island and Massachusetts facilities, (4) wind blade inspection and repair services, (5) our advanced engineering center in Kolding, Denmark, which provides technical and engineering resources to our manufacturing facilities and (6) our corporate headquarters, the costs of which are included in general and administrative expenses. In January 2018, the Company entered into a new lease agreement with a third party for a new manufacturing facility in Newton, Iowa and expects to commence operations at this facility in the second quarter of 2018. |
5
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
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agreement with a third party related to the lease of a new manufacturing facility in the Yangzhou Economic & Technical Development Zone in Yangzhou, China and we expect to commence operations at this facility in early 2019 . |
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• |
The Mexico segment manufactures wind blades from its three facilities in Juárez, Mexico, the most recent of which commenced operations in January 2017. In April 2017, the Company entered into a new lease agreement with a third party for a new manufacturing facility in Matamoros, Mexico and the Company expects to commence operations at this facility in the third quarter of 2018. |
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• |
The EMEA segment manufactures wind blades from its two facilities in Izmir, Turkey, the most recent of which commenced operations in 2016. These two facilities also perform wind blade inspection and repair services. |
The accompanying condensed consolidated financial statements include the accounts of TPI Composites, Inc. and all majority owned subsidiaries. All significant intercompany transactions and balances have been eliminated.
The condensed consolidated financial statements included herein have been prepared by the Company 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, 2017 included in the Company’s Annual Report on Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted, as permitted by the SEC, although the Company believes the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly the Company’s financial position at March 31, 2018, and the results of the Company’s operations, comprehensive income and cash flows for the periods presented. The Company restated the December 31, 2017 condensed consolidated balance sheet and the March 31, 2017 condensed consolidated statements of income and cash flow data for the effect of the adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers , (Topic 606), see Note 13, Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement, but does not include all disclosures required under GAAP. Interim results for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year.
As previously announced, effective January 1, 2018, the Company adopted the requirements of Topic 606 using the full retrospective method as further described in Recently Issued Accounting Pronouncements - Revenue from Contracts with Customers and Note 2, Revenue from Contracts with Customers . All amounts and disclosures set forth in this Quarterly Report on Form 10-Q reflect the adoption of Topic 606 and differ from amounts previously reported for prior periods. See Note 13, Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement , for further discussion of the adoption of Topic 606, including the impact on our previously reported financial statements.
Revenue Recognition
The majority of our revenues are generated from long-term contracts associated with manufacturing of wind blades and related services. The Company accounts for a long-term contract when it has the approval from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and the collectability of consideration is probable.
To determine the proper revenue recognition method for each long-term contract, the Company evaluates whether the original contract should be accounted for as one or more performance obligations. This evaluation requires judgment and the decisions reached could change the amount of revenue and gross profit recorded in a given period. As most of the Company’s contracts contain multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company’s manufacturing services are customer specific and involve production of items that cannot be sold to other customers due to the customers’ protected intellectual property; therefore, the Company allocates the total transaction price under contracts with multiple performance obligations using the contractually stated prices, as these prices represent the relative standalone selling price based on an expected cost plus margin model.
Revenue is primarily recognized over time as the Company has an enforceable right to payment upon termination and the Company may not use or sell the product to fulfill other customers’ contracts. In addition, the customer does not have return or refund rights for items produced that conform to the specifications included in the contract. Because control transfers over time, revenue is recognized based on the extent of progress towards the completion of the performance obligation. The Company uses the cost-to-cost input measure of progress for its contracts as this method provides the best representation of the production progress towards satisfaction of the performance obligation as the materials are distinct to the product being manufactured because of customer specifications provided
6
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
for in the contract, the cost s incurred are proportional to the progress to wards completion of the product, and the products do not involve significant pre-fabricated component parts. Under the cost-to-cost method, progress and the related revenue recognition is determined by a ratio of direct costs incurred to date in fulfillment of the contract to the total estimated direct costs required to complete the performance obligation.
Determining the revenue to be recognized for services performed under the Company’s manufacturing contracts involves significant judgments and estimates relating to the total consideration to be received and the expected total costs to complete the performance obligation. The judgments and estimates relating to the total consideration to be received include the amount of variable consideration as the Company’s contracts typically provide the customer with a range of production output options from guaranteed minimum volume obligations to the production capacity of the facility, and customers will provide periodic non-cancellable commitments for the number of wind blades to be produced over the term of the agreement. The Company uses historical experience, customer commitments and forecasted future production based on the capacity of the plant to estimate the total revenue to be received to complete the performance obligation. In addition, the amount of revenue per unit produced may vary based on the costs of production of the wind blades as the Company may be able to change the price per unit based on changes in the cost of production. Further, some contracts provide opportunities for the Company to share in labor and material cost savings as well as absorb some additional costs as an incentive for more efficient production, both of which impact the margin realized on the contract and ultimately the total amount of revenue to be recognized. Additionally, certain customer contracts provide for concessions by the Company for missed production deadlines.
The Company estimates variable consideration at the most likely amount to which it expects to be entitled. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information available to the Company at the time of the estimate and may materially change as additional information becomes known.
Contracts may be modified to account for changes in specifications of products and changing requirements. If the contract modifications are for goods or services that are not distinct from the existing contract, they are accounted for as if they were part of the original contract. The effect of a contract modification on the transaction price and the measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue on a cumulative catch-up basis. If contract modifications are for goods and services that are distinct from the existing contract and increases the amount of consideration reflecting the standalone sale price of the additional goods or services, then the contract modification is accounted for as a separate contract and is evaluated for one or more performance obligations.
Each reporting period, the Company evaluates the progress towards satisfaction of each performance obligation based on any contract modifications that have occurred, cost incurred to date, and an estimate of the expected future revenue and costs to be incurred to complete the performance obligation. Based on this analysis, any changes in estimates of revenue, cost of sales, contract assets and liabilities and the related impact to operating income are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation's percentage of completion.
Wind blade pricing is based on annual commitments of volume as established in the customer’s contract and orders less than committed volume may result in a higher price per wind blade to customers. Orders in excess of annual commitments may result in discounts to customers from the contracted price for the committed volume. Customers typically provide periodic purchase orders with the price per wind blade given the current cost of the bill of materials, labor requirements and volume desired. The Company records an allowance for expected utilization of early payment discounts which are reported as a reduction of the related revenue.
Precision molding and assembly systems included in a customer’s contract are based upon the specific engineering requirements and design determined by the customer and are specific to the wind blade design and function desired. From the customer’s engineering specifications, a job cost estimate is developed along with a production plan, and the desired margin is applied based on the location the work is to be performed and complexity of the customer’s design. Precision molding and assembly systems are generally built to produce wind blades which may be manufactured by the Company in production runs specified in the customer contract.
Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date on manufacturing services contracts. The contract assets are transferred to accounts receivable when the rights become unconditional, which generally occurs when customers are invoiced upon the determination that a product conforms to the contract specifications and invoices are due based on each customers negotiated payment terms, which range from 30 to 65 days. The Company applies the
7
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
practical expedient that allows it to exclude payment terms under one year from the transfer of a promised good or service from consideration of a significant financing component in its contracts. With regards to the production of precision molding and assembly systems , the Company’s contracts generally call for pr ogress payments to be made in advance of production. Generally, payment is made at certain percentage of completion milestones with the final payment due upon delivery to the manufacturing facility. These progress payments are recorded wi thin contract liab ilities as current liabilities in the condensed consolidated balance sheets and are reduced as the Company records revenue over time.
The Company’s customers may request, in situations where they do not have space available to receive products or do not want to take possession of products immediately for other reasons, that their finished products be stored by the Company in one of its facilities. Most contracts provide for a limited number of wind blades to be stored during the period of the contract with any additional wind blades stored subject to additional storage fees, which are included in the wind blade performance obligation revenue.
Revenue related to non-recurring engineering and freight services provided under customer contracts is recognized at a point in time following the transfer of control of the promised services to the customer. Customers usually pay the carrier directly for the cost of shipping associated with items produced. When the Company pays the shipping costs, the Company applies the practical expedient that allows it to account for shipping and handling as a fulfillment costs and include the revenue in the associated performance obligation and the costs are included in cost of goods sold.
Taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions, that are collected by the Company from a customer, are excluded from revenue.
Warranty Expense
The Company provides a limited warranty for its mold and wind blade products, including parts and labor, with terms and conditions that vary depending on the product sold, generally for periods that range from two to five years. Warranty expense is recorded based upon estimates of future repairs using a probability-based methodology that considers previous warranty claims, identified quality issues and industry practices. Once the warranty period has expired, any remaining unused warranty accrual for the specific products is reversed against the current year warranty expense amount.
Warranty accrual at March 31 consisted of the following:
|
|
2018 |
|
|
|
|
(in thousands) |
|
|
Warranty accrual at beginning of year |
|
$ |
30,419 |
|
Accrual during the period |
|
|
3,621 |
|
Cost of warranty services provided during the period |
|
|
(306 |
) |
Reversal of reserves upon warranty expiration |
|
|
(1,064 |
) |
Warranty accrual at end of period |
|
$ |
32,670 |
|
Treasury Stock
Common stock purchased for treasury is recorded at historical cost. Transactions in treasury shares relate to share-based compensation plans and are recorded at weighted-average cost.
8
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Net Income Per Common Share Calculation
The basic net income per common share is computed by dividing the net income by the weighted-average number of common shares outstanding during a period. Diluted net income per common share is computed by dividing the net income by the weighted-average number of common shares outstanding plus potentially dilutive securities using the treasury stock method. The table below reflects the calculation of the weighted-average number of common shares outstanding, using the treasury stock method, used in computing basic and diluted earnings per common share:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2018 |
|
|
2017 |
|
||
|
|
(in thousands) |
|
|||||
Basic weighted-average shares outstanding |
|
|
34,049 |
|
|
|
33,737 |
|
Effect of dilutive stock options and warrants |
|
|
1,430 |
|
|
|
90 |
|
Diluted weighted-average shares outstanding |
|
|
35,479 |
|
|
|
33,827 |
|
Share-based compensation awards of 175,000 shares were excluded from the computation of diluted net income per share for the three months ended March 31, 2018 because the effect would be anti-dilutive. In addition, PSUs have been excluded from the computation of diluted net income per share for the three months ended March 31, 2018 as the performance conditions have not yet been met. The Company did not have any potential dilutive securities which were excluded from the computation of diluted net income per share for the three months ended March 31, 2017.
Use of Estimates
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.
Recently Issued Accounting Pronouncements
Accounting Pronouncements Adopted in 2018
Revenue from Contracts with Customers
In May 2014, the Financial Accounting Standards Board (FASB) issued Topic 606, which provides new recognition and disclosure requirements for revenue from contracts with customers that supersedes the existing revenue recognition guidance. The new recognition requirements focus on when the customer obtains control of the goods or services, rather than the current risks and rewards model of recognition. The core principle of the new standard is that an entity will recognize revenue when it transfers goods or services to its customers in an amount that reflects the consideration an entity expects to be entitled to for those goods or services. The new disclosure requirements included in these financial statements contain information intended to communicate the nature, amount, timing and any uncertainty of revenue and cash flows from the applicable contracts, including any significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract.
The Company adopted Topic 606 as of January 1, 2018 with retrospective application to January 1, 2016 through December 31, 2017. See Note 2, Revenue from Contracts with Customers and Note 13, Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement, for further discussion of the adoption of this standard, including the impact on our previously reported financial statements.
Cash Flow Presentation
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments , that clarifies how certain cash receipts and cash payments are presented and classified in the condensed consolidated statements of cash flows. In addition, in November 2016, the FASB issued ASU 2016-18, Restricted Cash , that requires restricted cash and cash equivalents to be included with the amount of cash and cash equivalents that are reconciled on the condensed consolidated statements of cash flows. The Company adopted these ASUs as of January 1, 2018 with retrospective application to each period presented.
9
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
The following table provides a reconcili ation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets which total the same such amounts in the condensed consolidated statements of cash flows:
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
December 31, |
|
||||
|
|
2018 |
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Cash and cash equivalents |
|
$ |
138,841 |
|
|
$ |
148,113 |
|
|
$ |
115,541 |
|
|
$ |
119,066 |
|
Restricted cash |
|
|
3,251 |
|
|
|
3,849 |
|
|
|
1,928 |
|
|
|
2,259 |
|
Restricted cash included within other noncurrent assets |
|
|
475 |
|
|
|
475 |
|
|
|
2,538 |
|
|
|
8,538 |
|
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows |
|
$ |
142,567 |
|
|
$ |
152,437 |
|
|
$ |
120,007 |
|
|
$ |
129,863 |
|
See Note 13, Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement, for further discussion of the adoption of these standards, including the impact on our previously reported financial statements.
Income Taxes
In December 2017, the SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides relief for companies that have not completed their accounting for the effects of The Tax Cuts and Jobs Act (Tax Reform Act) but can determine a reasonable estimate of those effects to allow them to include a provisional amount based on their reasonable estimate in their financial statements. The guidance in SAB 118 also allows companies to adjust the provisional amounts during a one-year “measurement period” which is similar to the measurement period used when accounting for business combinations. In the accompanying consolidated financial statements, the Company has not completed its accounting for all the tax effects associated with the enactment of the Tax Reform Act. However, the Company has, in certain cases made a reasonable estimate of the effects on its existing deferred tax balances and the one-time transition tax. See Note 9, Income Taxes, for further discussion.
Accounting Pronouncements Not Yet Adopted
Leases
In February 2016, the FASB issued ASU 2016-02, Leases . ASU 2016-02 is a comprehensive new recognition model for leases requiring a lessee to recognize the asset and liability that arise from leases. For public companies, the amendment is effective for financial statements issued for annual periods beginning after December 16, 2018. Entities may elect to early adopt the lease standard in 2016. In adopting ASU 2016-02, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. Management is evaluating the provisions of ASU 2016-02 and has not yet selected a transition method nor determined what impact the adoption of ASU 2016-02 will have on the Company’s financial position or results of operations.
Note 2. Revenue From Contracts with Customers
The following tables represents the disaggregation of revenue by contract type for each of our reportable segments:
|
|
Three Months Ended March 31, 2018 |
|
|||||||||||||||||
|
|
U.S. |
|
|
Asia |
|
|
Mexico |
|
|
EMEA |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Wind blade sales |
|
$ |
38,945 |
|
|
$ |
68,171 |
|
|
$ |
56,043 |
|
|
$ |
71,021 |
|
|
$ |
234,180 |
|
Precision molding and assembly systems sales |
|
|
1,863 |
|
|
|
8,179 |
|
|
|
764 |
|
|
|
— |
|
|
|
10,806 |
|
Transportation sales |
|
|
4,053 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,053 |
|
Other sales |
|
|
1,263 |
|
|
|
1,320 |
|
|
|
1,157 |
|
|
|
1,202 |
|
|
|
4,942 |
|
Total net sales: |
|
$ |
46,124 |
|
|
$ |
77,670 |
|
|
$ |
57,964 |
|
|
$ |
72,223 |
|
|
$ |
253,981 |
|
10
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
|
Three Months Ended March 31, 2017 |
|
||||||||||||||||||
|
|
U.S. |
|
|
Asia |
|
|
Mexico |
|
|
EMEA |
|
|
Total |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Wind blade sales |
|
$ |
41,970 |
|
|
$ |
65,266 |
|
|
$ |
45,199 |
|
|
$ |
43,270 |
|
|
$ |
195,705 |
|
Precision molding and assembly systems sales |
|
|
3,336 |
|
|
|
3,664 |
|
|
|
655 |
|
|
|
— |
|
|
|
7,655 |
|
Transportation sales |
|
|
2,578 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,578 |
|
Other sales |
|
|
83 |
|
|
|
567 |
|
|
|
1,094 |
|
|
|
933 |
|
|
|
2,677 |
|
Total net sales: |
|
$ |
47,967 |
|
|
$ |
69,497 |
|
|
$ |
46,948 |
|
|
$ |
44,203 |
|
|
$ |
208,615 |
|
In addition, all of the Company’s net sales are made directly to the consumer, primarily wind turbine manufacturers, under long-term contracts which are typically five years in length.
Contract Assets and Liabilities:
Contract assets consist of unbilled amounts typically resulting from revenue recognized over time for products in production and the revenue recognized exceeds the amount billed to the customer. The contract assets are recorded as current assets in the condensed consolidated balance sheets. Contract liabilities consist of advance payments in excess of costs incurred. These amounts were historically recorded as customer deposits which primarily related to progress payments received as precision molding and assembly systems were being manufactured. The contract liabilities are recorded as current liabilities in the condensed consolidated balance sheets and are reduced as the Company records revenue over time.
These contract assets and liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.
The following table reflects the changes in the Company’s contract assets and contract liabilities for the three months ended March 31, 2018:
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
||
|
|
2018 |
|
|
2017 |
|
|
$ Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Contract assets |
|
$ |
130,015 |
|
|
$ |
105,619 |
|
|
$ |
24,396 |
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
||
|
|
2018 |
|
|
2017 |
|
|
$ Change |
|
|||
|
|
(in thousands) |
|
|||||||||
Contract liabilities |
|
$ |
4,449 |
|
|
$ |
2,763 |
|
|
$ |
1,686 |
|
For the three months ended March 31, 2018, contracts assets increased by $24.4 million primarily due to $28.2 million of incremental unbilled production. For the three months ended March 31, 2018, contracts liabilities increased by $1.7 million primarily due to progress billings being received as precision molding and assembly systems are being manufactured.
The time it takes to produce a single blade is typically between 24 to 36 hours. The time it takes to produce a mold is typically between 3 to 6 months.
For the three months ended March 31, 2018, the Company recognized revenue of $2.7 million that was included in the corresponding contract liability balance at the beginning of the period.
Performance Obligations:
Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes any unexercised contract options.
11
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
For the three months ended March 31, 2018, net revenue recognized from our performance o bligations satisfied in previous periods decreased by $4.9 million. This primarily relates to changes in certain of the Company’s estimated total contract values and related percentage of completion estimates.
As of March 31, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately $4.3 billion. The Company expects to recognize the remaining performance obligations as revenue as follows: 16 percent in the remainder of 2018, 24 percent in 2019, 26 percent in 2020, 17 percent in 2021, 12 percent in 2022 and the remaining 5 percent in 2023.
Pre-Production Investments:
The Company recognizes an asset from the costs incurred to fulfill a contract when those costs meet all of the following criteria: (a) the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify; (b) the costs generate or enhance resources of the Company that will be used in satisfying performance obligations in the future; and, (c) the costs are expected to be recovered. The Company capitalizes the costs related to training its workforce to execute the manufacturing services and other facility set-up costs related to preparing for production. The Company factors these costs into its estimated cost analysis for the overall contract. Costs capitalized are amortized over the number of units produced during the contract term. As of March 31, 2018, the cost and accumulated amortization of such assets totaled $2.8 million and $1.6 million, respectively. As of December 31, 2017, the cost and accumulated amortization of such assets totaled $2.4 million and $1.4 million, respectively.
Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. These costs are included in cost of goods sold.
Note 3. Significant Risks and Uncertainties
The Company’s revenues and receivables are from a small number of customers. As such, the Company’s production levels are dependent on these customers’ orders. See Note 11, Concentration of Customers.
The Company maintains its U.S. cash in bank deposit accounts that, at times, exceed U.S. federally insured limits. U.S. bank accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) in an amount up to $250,000 during 2018 and 2017. At March 31, 2018 and December 31, 2017, the Company had $103.4 million and $98.9 million, respectively, of cash in deposit accounts in high quality U.S. banks, which was in excess of FDIC limits. The Company has not experienced losses in any such accounts.
The Company also maintains cash in bank deposit accounts outside the U.S. with no insurance. At March 31, 2018, this includes $29.2 million in China, $1.1 million in Turkey and $5.1 million in Mexico. The Company has not experienced losses in these accounts. In addition, at March 31, 2018, the Company has short-term deposits in interest bearing accounts of $3.3 million in China, which are reported as restricted cash in the Company’s condensed consolidated balance sheets. The Company also has long-term deposits in interest bearing accounts of $0.5 million in Iowa which are reported as restricted cash within the caption other noncurrent assets in the Company’s condensed consolidated balance sheets.
Note 4. Related-Party Transactions
Related party transactions include transactions between the Company and certain of its affiliates. The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.
The Company has entered into several agreements with subsidiaries of General Electric Company and its consolidated affiliates (GE) relating to the operation of its business. As a result of these agreements, GE has been a debtor, creditor and holder of both preferred and common shares. During the second quarter of 2017, GE reduced its holdings of the Company’s common shares to less than five percent of the total shares outstanding and then completely divested of the Company’s common shares during the third quarter of 2017.
The Company has entered into five separate supply agreements with GE to manufacture wind blades in Newton, Iowa; Taicang Port, China; Juárez, Mexico (2) and Izmir, Turkey. The supply agreements in Taicang Port, China and Izmir, Turkey expired on December
12
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
31, 2017 and GE decided not to ren ew or extend these two contracts. As a result of the supply agreements, GE is the Company’s largest customer. For the six months ended June 30, 2017, the Company recorded related-party sales with GE of $187.3 million. As disclosed in Note 1 1 , Concentration of Customers , for the three months ended March 31, 2018 and 2017 , the Company recorded sales with GE of $ 87.8 million and $ 91.5 million, respectively . As of March 31 , 20 18 and December 31, 2017 , the Company had accounts receivables related to sales to GE of $ 21.6 million and $ 22 . 2 million, respectively.
Certain of the Company’s existing stockholders, consisting of entities associated with Element Partners, Angeleno Group and Landmark Partners, each of which is an affiliate of a member of the board of directors, as well as certain executive officers and a director, purchased an aggregate of 1,250,000 shares of common stock in the IPO. In addition, all outstanding obligations and accrued interest under the Company’s subordinated convertible promissory notes held by certain existing stockholders, including Element Partners, Angeleno Group and Landmark Partners, were converted into an aggregate of 1,079,749 shares of common stock concurrent with the closing of the IPO at the public offering price of $11.00 per share.
In connection with the Company’s secondary offering in May 2017, certain entities associated with Element Partners, Angeleno Group, Landmark Partners and NGP Energy Technology Partners, L.P, as well as certain executive officers of the Company sold an aggregate of 5,075,000 shares of common stock at the public offering price of $16.35 per share.
Note 5. Accounts Receivable
Accounts receivable consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2018 |
|
|
2017 |
|
||
|
|
(in thousands) |
|
|||||
Trade accounts receivable |
|
$ |
114,411 |
|
|
$ |
117,794 |
|
Other accounts receivable |
|
|
3,539 |
|
|
|
3,782 |
|
Total accounts receivable |
|
$ |
117,950 |
|
|
$ |
121,576 |
|
Note 6. Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2018 |
|
|
2017 |
|
||
|
|
(in thousands) |
|
|||||
Machinery and equipment |
|
$ |
100,974 |
|
|
$ |
100,681 |
|
Buildings |
|
|
14,385 |
|
|
|
14,711 |
|
Leasehold improvements |
|
|
22,135 |
|
|
|
21,853 |
|
Office equipment and software |
|
|
20,665 |
|
|
|
18,664 |
|
Furniture |
|
|
19,831 |
|
|
|
19,017 |
|
Vehicles |
|
|
277 |
|
|
|
294 |
|
Construction in progress |
|
|
14,521 |
|
|
|
10,687 |
|
Total |
|
|
192,788 |
|
|
|
185,907 |
|
Accumulated depreciation |
|
|
(65,928 |
) |
|
|
(62,427 |
) |
Property, plant and equipment, net |
|
$ |
126,860 |
|
|
$ |
123,480 |
|
Total depreciation expense for the three months ended March 31, 2018 and 2017 was $6.8 million and $3.8 million, respectively.
13
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 7 . Long-Term Debt, Net of Debt Issuance Costs and Current Maturities
Long-term debt, net of debt issuance costs and current maturities, consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2018 |
|
|
2017 |
|
||
|
|
(in thousands) |
|
|||||
Senior term loan—U.S. |
|
$ |
70,313 |
|
|
$ |
71,250 |
|
Senior revolving loan—U.S. |
|
|
2,820 |
|
|
|
2,820 |
|
Accounts receivable financing—EMEA |
|
|
22,192 |
|
|
|
14,100 |
|
Equipment financing—EMEA |
|
|
16,313 |
|
|
|
16,901 |
|
Equipment capital lease—U.S. |
|
|
188 |
|
|
|
536 |
|
Equipment capital lease—EMEA |
|
|
5,045 |
|
|
|
5,058 |
|
Equipment capital lease—Mexico |
|
|
10,815 |
|
|
|
12,844 |
|
Equipment loan—Mexico |
|
|
47 |
|
|
|
47 |
|
Total long-term debt |
|
|
127,733 |
|
|
|
123,556 |
|
Less: Debt issuance costs |
|
|
(1,990 |
) |
|
|
(2,171 |
) |
Total long-term debt, net of debt issuance costs |
|
|
125,743 |
|
|
|
121,385 |
|
Less: Current maturities of long-term debt |
|
|
(43,085 |
) |
|
|
(35,506 |
) |
Long-term debt, net of debt issuance costs and current maturities |
|
$ |
82,658 |
|
|
$ |
85,879 |
|
Note 8. Share-Based Compensation Plans
The Company’s Amended and Restated 2015 Stock Option and Incentive Plan (the 2015 Plan) provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights to certain employees, non-employee directors and consultants. Under the 2015 Plan, the Company has granted awards of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PSUs) to certain employees and non-employee directors.
In March 2018, the Company issued to certain employees of the Company an aggregate of 121,386 timed-based restricted stock units, 121,386 performance-based restricted stock units that vest upon achievement of a cumulative, three-year Adjusted EBITDA target measured from January 1, 2018 through December 31, 2020, and 170,712 performance-based restricted stock units that vest upon achievement of certain stock price hurdles for the period of the grant date through December 31, 2020. 100% of the time-based restricted stock units vest on the third anniversary date of the grant date. Each of the time-based restricted stock unit awards and performance-based restricted stock unit awards are subject to the employee’s continued service with the Company, the terms and conditions of the 2015 Plan and the applicable award agreement.
The share-based compensation expense recognized in the condensed consolidated income statements was as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2018 |
|
|
2017 |
|
||
|
|
(in thousands) |
|
|||||
Cost of goods sold |
|
$ |
412 |
|
|
$ |
213 |
|
General and administrative expenses |
|
|
1,976 |
|
|
|
1,494 |
|
Total share-based compensation expense |
|
$ |
2,388 |
|
|
$ |
1,707 |
|
14
TPI COMPOSITES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
The share-based compensation expense recognized by award type was as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2018 |
|
|
2017 |
|
||
|
|
(in thousands) |
|
|||||
RSUs |
|
$ |
1,318 |
|
|
$ |
535 |
|
Stock options |
|
|
990 |
|
|
|
1,172 |
|
PSUs |
|
|
80 |
|
|
|
- |
|
Total share-based compensation expense |
|
$ |
2,388 |
|
|
$ |
1,707 |
|
As of March 31, 2018, the unamortized cost of the outstanding RSUs and PSUs was $6.4 million and $4.8 million, respectively, which the Company expects to recognize in the condensed consolidated financial statements over weighted-average periods of approximately 2.1 years and 3.0 years, respectively. Additionally, the total unrecognized cost related to non-vested stock option awards was $4.0 million, which the Company expects to recognize in the condensed consolidated financial statements over a weighted-average period of approximately 1.7 years.
The summary of activity for the Company’s incentive plans is as follows:
|
|
|
|
|
|
Stock Options |
|
|
RSUs |
|
|
PSUs |
|
|||||||||||||||||||
|
|
Shares Available for Grant |
|
|
Shares |
|
|
Weighted- Average Exercise Price |
|
|
Options Exercisable |
|
|
Units |
|
|
Weighted- Average Grant Date Fair Value |
|
|
Units |
|
|
Weighted- Average Grant Date Fair Value |
|
||||||||
Balance as of December 31, 2017 |
|
|
4,731,117 |
|
|
|
3,203,290 |
|
|
$ |
13.34 |
|
|
|
890,433 |
|
|
|
613,380 |
|
|
$ |
15.02 |
|
|
|
— |
|
|
$ |
— |
|
Increase in shares authorized |
|
|
1,360,826 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|