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
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ITEM 1. |
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4 |
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Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 |
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4 |
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5 |
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6 |
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7 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 |
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9 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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11 |
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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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24 |
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ITEM 3. |
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35 |
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ITEM 4. |
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36 |
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ITEM 1. |
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37 |
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ITEM 1A. |
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37 |
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ITEM 2. |
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37 |
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ITEM 3. |
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37 |
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ITEM 4. |
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37 |
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ITEM 5. |
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37 |
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ITEM 6. |
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38 |
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39 |
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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:
2
These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or 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)
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June 30, |
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December 31, |
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2024 |
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2023 |
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(in thousands, except par value data) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
101,861 |
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$ |
161,059 |
|
Restricted cash |
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8,451 |
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|
10,838 |
|
Accounts receivable |
|
|
145,907 |
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138,029 |
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Contract assets |
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111,228 |
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|
112,237 |
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Prepaid expenses |
|
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19,380 |
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17,621 |
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Other current assets |
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29,278 |
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34,564 |
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Inventories |
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5,454 |
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9,420 |
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Current assets of discontinued operations |
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|
867 |
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|
19,307 |
|
Total current assets |
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422,426 |
|
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503,075 |
|
Property, plant and equipment, net |
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120,787 |
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128,808 |
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Operating lease right of use assets |
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133,745 |
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136,124 |
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Other noncurrent assets |
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38,464 |
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36,073 |
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Total assets |
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$ |
715,422 |
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$ |
804,080 |
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Liabilities and Stockholders’ Deficit |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
250,602 |
|
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$ |
227,723 |
|
Accrued warranty |
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34,000 |
|
|
|
37,483 |
|
Current maturities of long-term debt |
|
|
106,163 |
|
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70,465 |
|
Current operating lease liabilities |
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|
24,815 |
|
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22,017 |
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Contract liabilities |
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4,408 |
|
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24,021 |
|
Current liabilities of discontinued operations |
|
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1,777 |
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|
4,712 |
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Total current liabilities |
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421,765 |
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386,421 |
|
Long-term debt, net of current maturities |
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448,283 |
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414,728 |
|
Noncurrent operating lease liabilities |
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112,420 |
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|
117,133 |
|
Other noncurrent liabilities |
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7,213 |
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|
8,102 |
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Total liabilities |
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989,681 |
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926,384 |
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Stockholders’ deficit: |
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Common shares, $0.01 par value, 100,000 shares authorized, 48,601 |
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486 |
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|
470 |
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Paid-in capital |
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434,975 |
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431,335 |
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Accumulated other comprehensive loss |
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(9,032 |
) |
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(7,627 |
) |
Accumulated deficit |
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(688,905 |
) |
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(536,348 |
) |
Treasury stock, at cost, 1,047 shares at June 30, 2024 and 519 shares at |
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(11,783 |
) |
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(10,134 |
) |
Total stockholders’ deficit |
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(274,259 |
) |
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(122,304 |
) |
Total liabilities and stockholders’ deficit |
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$ |
715,422 |
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$ |
804,080 |
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See accompanying notes to our unaudited condensed consolidated financial statements.
4
TPI COMPOSITES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(in thousands, except per share data) |
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Net sales |
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$ |
309,817 |
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$ |
374,021 |
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$ |
603,863 |
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$ |
767,826 |
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Cost of sales |
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313,562 |
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411,461 |
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613,057 |
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795,512 |
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Startup and transition costs |
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20,678 |
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3,377 |
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42,907 |
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5,357 |
|
Total cost of goods sold |
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334,240 |
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414,838 |
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655,964 |
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800,869 |
|
Gross loss |
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(24,423 |
) |
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(40,817 |
) |
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(52,101 |
) |
|
|
(33,043 |
) |
General and administrative expenses |
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9,211 |
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6,767 |
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17,614 |
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13,801 |
|
Loss on sale of assets and asset impairments |
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3,083 |
|
|
|
5,819 |
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4,918 |
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9,412 |
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Restructuring charges, net |
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298 |
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2,248 |
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|
480 |
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2,224 |
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Loss from continuing operations |
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(37,015 |
) |
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(55,651 |
) |
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(75,113 |
) |
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(58,480 |
) |
Other income (expense): |
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Interest expense, net |
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(22,428 |
) |
|
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(1,876 |
) |
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(43,811 |
) |
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(4,401 |
) |
Foreign currency income (loss) |
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132 |
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(1,564 |
) |
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(499 |
) |
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(2,746 |
) |
Miscellaneous income |
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227 |
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|
682 |
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|
2,702 |
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|
1,115 |
|
Total other expense |
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(22,069 |
) |
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(2,758 |
) |
|
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(41,608 |
) |
|
|
(6,032 |
) |
Loss from continuing operations before income taxes |
|
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(59,084 |
) |
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(58,409 |
) |
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(116,721 |
) |
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(64,512 |
) |
Income tax provision |
|
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(2,412 |
) |
|
|
(287 |
) |
|
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(5,654 |
) |
|
|
(4,116 |
) |
Net loss from continuing operations |
|
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(61,496 |
) |
|
|
(58,696 |
) |
|
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(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 |
) |
|
|
|
|
|
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||||
Weighted-average shares of common stock outstanding: |
|
|
|
|
|
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|
|
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|
|
|
||||
Basic |
|
|
47,504 |
|
|
|
42,517 |
|
|
|
47,354 |
|
|
|
42,386 |
|
Diluted |
|
|
47,504 |
|
|
|
42,517 |
|
|
|
47,354 |
|
|
|
42,386 |
|
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Net loss from continuing operations per common share: |
|
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||||
Basic |
|
$ |
(1.30 |
) |
|
$ |
(1.75 |
) |
|
$ |
(2.58 |
) |
|
$ |
(2.35 |
) |
Diluted |
|
$ |
(1.30 |
) |
|
$ |
(1.75 |
) |
|
$ |
(2.58 |
) |
|
$ |
(2.35 |
) |
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Net loss from discontinued operations per common share: |
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Basic |
|
$ |
(0.62 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.44 |
) |
Diluted |
|
$ |
(0.62 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.44 |
) |
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Net loss per common share: |
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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 |
|
||||
|
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(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 |
|
|
— |
|
|
|
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 |
|
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Accumulated |
|
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|
|
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|
|
Series A Preferred Stock |
|
|
|
Common |
|
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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 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,641 |
) |
|
|
(1,641 |
) |
Issuances under share- |
|
|
— |
|
|
|
— |
|
|
|
|
1,524 |
|
|
|
15 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15 |
|
Share-based |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
2,589 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,589 |
|
Balance at |
|
|
— |
|
|
|
— |
|
|
|
|
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 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8 |
) |
|
|
(8 |
) |
Issuances under share- |
|
|
— |
|
|
|
— |
|
|
|
|
87 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Share-based |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
1,051 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,051 |
|
Balance at |
|
|
— |
|
|
$ |
— |
|
|
|
|
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 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,549 |
) |
|
|
(2,549 |
) |
Issuances under share- |
|
|
— |
|
|
|
— |
|
|
|
|
627 |
|
|
|
6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6 |
|
Share-based |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
2,720 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,720 |
|
Accretion of Series A |
|
|
— |
|
|
|
4,467 |
|
|
|
|
— |
|
|
|
— |
|
|
|
(4,467 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,467 |
) |
Capped call transactions |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
(18,590 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(18,590 |
) |
Balance at |
|
|
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 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(34 |
) |
|
|
(34 |
) |
Issuances under share- |
|
|
— |
|
|
|
— |
|
|
|
|
93 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Share-based |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
3,926 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,926 |
|
Accretion of Series A |
|
|
— |
|
|
|
4,480 |
|
|
|
|
— |
|
|
|
— |
|
|
|
(4,480 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,480 |
) |
Balance at |
|
|
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 |
|
$ |
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.