TPI Composites(TPIC)2025-02-20 22:10Sales and Revenue - TPI Composites, Inc. generated approximately 97% of total net sales from wind blade manufacturing for the years ended December 31, 2024, 2023, and 2022[23]. - Net sales for the year ended December 31, 2024, were 1,432,408 in 2023 and 1,331,131 thousand, down from 20,204 thousand in 2024, compared to 696,762 thousand in 2024, driven by higher average sales prices and a shift to larger wind blade models[208]. - EMEA segment total net sales decreased by 21.9% to 573,483,000 in 2023, primarily due to a 24% decrease in wind blade production[210]. - India segment total net sales also decreased by 31.0% to 241,061,000 in 2023, attributed to a 24% decrease in wind blade production and lower average sales prices[211]. Manufacturing and Production - TPI's restructuring plan included ceasing production at its Yangzhou, China facility as of December 31, 2022, significantly impacting its global manufacturing footprint and financial results[19]. - The company operates wind blade manufacturing facilities in four locations: Mexico, Türkiye, India, and plans to restart operations in Iowa in the second half of 2025[78]. - The company has produced over 98,000 wind blades since 2001, showcasing a strong long-term field performance record[27]. - TPI's manufacturing capabilities allow for the production of wind blades ranging from 30 meters to over 80 meters in length, with flexibility to adapt to customer specifications[27]. - The company experienced significant production delays at the Matamoros, Mexico facility, which adversely impacted profitability and financial condition over the three-year supply agreement term[78]. - Estimated megawatts produced decreased to 9,116 in 2024 from 11,382 in 2023, reflecting a decline in production capacity[195]. - Utilization rate dropped to 77% in 2024 from 82% in 2023, indicating reduced operational efficiency[195]. Financial Performance - The net loss from continuing operations for 2024 was (151,966) in 2023 and (75,267), an improvement from (38,691) compared to (13,703), an improvement from 616,602 in 2024 from (418,582) thousand, compared to 9.6 million in restructuring charges in Q4 2024 due to a workforce rationalization plan in Türkiye[86]. - The company reported higher startup and transition costs during the ramp-up of new wind blade models, impacting cost of goods sold[174]. Strategic Initiatives - The company completed the divestiture of its automotive subsidiary on June 30, 2024, marking a strategic shift to focus entirely on the wind industry[18]. - TPI plans to expand its field service inspection and repair business, expecting operating margins in this segment to surpass those of wind blade manufacturing in future periods[25]. - The company is exploring the divestiture of its tooling business to prioritize capital for growth in the wind blade sector, expected to be completed in 2025[33]. - The company has entered into supply agreements with GE Vernova, extending contracts through 2025 for three manufacturing facilities in Juarez, Mexico, and reopening the Iowa facility in the second half of 2025[26]. - The company extended supply agreements with Vestas through 2025, transitioning two manufacturing lines in Matamoros to a larger wind blade model[41]. - GE Vernova agreements were extended through December 2025, adding a third manufacturing facility in Juárez, Mexico for four new lines[42]. Market and Competition - Customers represented approximately 77% of the global onshore wind energy market (excluding China) and 88% of the U.S. onshore wind turbine market over the three years ended December 31, 2023[39]. - The competitive landscape includes significant pressure from Chinese manufacturers expanding into Europe and other regions, impacting market dynamics[51]. - The U.S. wind energy industry relies on governmental support through incentives, which may not be extended, posing risks to demand for wind blades[95][97]. - The company faces intense competition from other wind blade manufacturers and in-house production by wind turbine OEMs, limiting customer base[94]. Regulatory and Environmental Factors - The Inflation Reduction Act of 2022 extended the Production Tax Credit for Renewable Energy until at least 2032, which is expected to boost demand for wind energy[56]. - The company is subject to various environmental regulations, and non-compliance could result in fines and negatively impact its reputation[68]. - Regulatory changes and tariffs on goods imported from Mexico, effective March 2025, could adversely affect wind blade sales[81]. - The company has adopted environmental, health, and safety policies to promote accountability and eliminate unsafe behaviors in the workplace[68]. Workforce and Employment - As of December 31, 2024, the company employed over 11,700 full-time associates across various countries, with the majority located in Mexico[61]. - The overall turnover rate for the company declined in 2024, reflecting high retention levels across all geographies[67]. - Approximately 29% of the company's workforce is covered by collective bargaining agreements, which could lead to increased operating costs and potential work disruptions[113]. - The company has high levels of associate engagement and retention, supported by a strong culture of inclusion and diversity[65]. Research and Development - The company is collaborating on research and development projects focused on advanced manufacturing, sustainability, and innovative inspection technologies[46]. - The company is expanding its intellectual property portfolio and leveraging in-house expertise in machine learning and AI to enhance manufacturing processes[47]. - The company is developing BladeAssure™, a process integrating advanced technologies to ensure high-quality wind blade production, expected to be implemented across all factories by the end of 2025[36]. Corporate Governance and Risk Management - The company maintains a system of internal controls to ensure reliable financial reporting, but any failure could harm its business and lead to regulatory scrutiny[107]. - The company’s board of directors oversees strategic risk exposure, including cybersecurity risks, through the Audit Committee, which receives quarterly updates[138]. - The company is subject to counterparty risk related to capped call transactions, which could affect its financial stability if a counterparty defaults[126].