TPI Composites(US:TPIC)2024-11-07 21:17Cash and Liquidity - Cash and cash equivalents decreased to $125.871 million as of September 30, 2024, from $161.059 million as of December 31, 2023[9] - The company is concerned about the sufficiency of its cash and cash equivalents to meet liquidity needs[3] - Cash flows from operating activities resulted in a net cash usage of $74.843 million for the nine months ended September 30, 2024, compared to $85.908 million in the same period in 2023[18] - Cash flows from investing activities showed a net cash usage of $22.079 million for the nine months ended September 30, 2024, compared to $3.010 million in the same period in 2023[18] - Cash flows from financing activities provided a net cash inflow of $60.776 million for the nine months ended September 30, 2024, compared to $109.029 million in the same period in 2023[18] - Total cash, cash equivalents, and restricted cash at the end of September 30, 2024, was $136.182 million, down from $172.813 million at the beginning of the year[18] - Cash in U.S. bank deposit and money market accounts exceeded FDIC limits by $74.4 million as of September 30, 2024[50] - International cash holdings as of September 30, 2024, included $45.0 million in Türkiye, $4.6 million in India, and $1.3 million in Mexico[51] - Short-term deposits in U.S. interest-bearing accounts totaled $9.6 million as of September 30, 2024, reported as restricted cash[51] Accounts Receivable and Payable - Accounts receivable increased to $150.186 million as of September 30, 2024, from $138.029 million as of December 31, 2023[9] - Contract assets increased by $31.67 million from December 31, 2023, to September 30, 2024, due to higher customer-specific material purchases and unbilled production[45] - Contract liabilities decreased by $2.2 million from December 31, 2023, to September 30, 2024, due to a reduction in customer advances[45] - The company recognized $21.3 million of revenue related to customer advances for the nine months ended September 30, 2024[46] - Trade accounts receivable from Nordex accounted for 61.0% of total consolidated trade accounts receivable as of September 30, 2024, compared to 61.5% as of December 31, 2023[76] Assets and Liabilities - Total current assets decreased to $467.548 million as of September 30, 2024, from $503.075 million as of December 31, 2023[9] - Total liabilities increased to $1.07464 billion as of September 30, 2024, from $926.384 million as of December 31, 2023[9] - Total stockholders' deficit as of September 30, 2024, was $321.99 million, compared to $122.30 million as of December 31, 2023[15] - Total debt principal increased to $702.894 million as of September 30, 2024, up from $606.140 million at the end of 2023[54] - Current liabilities increased from $386.4 million to $493.1 million, a rise of 27.6%[9] - Long-term debt, net of current maturities, increased from $414.7 million to $466.0 million, a rise of 12.4%[9] - Lease liabilities increased to $134.196 million as of September 30, 2024, from $139.150 million at the end of 2023[62] - Total property, plant, and equipment, net, decreased to $116.282 million as of September 30, 2024, from $128.808 million as of December 31, 2023[79] Revenue and Sales - Net sales for the three months ended September 30, 2024, were $380.76 million, compared to $370.24 million in the same period in 2023[11] - Net sales for the nine months ended September 30, 2024, totaled $380.76 million, with wind blade, tooling, and other wind-related sales contributing $369.08 million[39] - GE accounted for 36.8% of total net sales in Q3 2024, up from 25.2% in Q3 2023[75] - Vestas' share of total net sales decreased to 25.3% in Q3 2024 from 41.2% in Q3 2023[75] - Net sales concentration to top three customers (GE, Nordex, Vestas) remained high at 95.2% in Q3 2024[75] - The U.S. segment reported net sales of $7.417 million for the three months ended September 30, 2024, a significant increase from $4.566 million in the same period in 2023[79] - Mexico segment net sales reached $206.342 million for the three months ended September 30, 2024, up from $156.861 million in the same period in 2023[79] - EMEA segment net sales were $123.950 million for the three months ended September 30, 2024, a decrease from $149.254 million in the same period in 2023[79] - India segment net sales were $43.053 million for the three months ended September 30, 2024, down from $59.561 million in the same period in 2023[79] - Total net sales for the nine months ended September 30, 2024, were $984.625 million, a decrease from $1.138 billion in the same period in 2023[79] Losses and Expenses - Gross loss for the three months ended September 30, 2024, was $2.77 million, compared to a gross loss of $2.49 million in the same period in 2023[11] - Net loss from continuing operations for the three months ended September 30, 2024, was $38.60 million, compared to $26.95 million in the same period in 2023[11] - Net loss attributable to common stockholders for the three months ended September 30, 2024, was $40.07 million, compared to $72.85 million in the same period in 2023[11] - Total comprehensive loss for the three months ended September 30, 2024, was $49.35 million, compared to $71.37 million in the same period in 2023[14] - Net loss for the nine months ended September 30, 2024, was $192.625 million, compared to $144.179 million in the same period in 2023[18] - Gross loss for the nine months ended September 30, 2024, was $25.96 million, primarily driven by a $20.31 million loss in the Automotive segment[36] - Interest expense increased significantly to $24.2 million in Q3 2024 from $1.6 million in Q3 2023[11] - Startup and transition costs rose to $8.1 million in Q3 2024 from $4.8 million in Q3 2023[11] - Loss on sale of assets and asset impairments increased to $9.2 million in Q3 2024 from $5.2 million in Q3 2023[11] - Foreign currency loss increased to $2.3 million in Q3 2024 from $0.5 million in Q3 2023[11] - Total loss from continuing operations for the nine months ended September 30, 2024, was $86.7 million, compared to $75.7 million in the same period in 2023[79] Share-Based Compensation and Equity - Share-based compensation expense for the three months ended September 30, 2024, was $1.64 million[15] - Common stock repurchased for treasury during the three months ended September 30, 2024, amounted to $31,000[15] - Issuances under share-based compensation plans during the three months ended September 30, 2024, were $17,000[15] - Share-based compensation expense for the nine months ended September 30, 2024, was $5.282 million, compared to $9.278 million in the same period in 2023[18] - TPI Composites granted 722,534 time-based RSUs, 151,795 performance-based RSUs, and 66,261 stock options to employees during the nine months ended September 30, 2024[56] - Total share-based compensation expense was $5.321 million for the nine months ended September 30, 2024, compared to $8.993 million in the same period of 2023[59] Discontinued Operations and Divestitures - The company classified $5.0 million of assets and $1.1 million of liabilities as held for sale related to the divestiture of its tooling business, recognizing $3.9 million in impairment charges during Q3 2024[25] - The company completed the divestiture of its Automotive subsidiary on June 30, 2024, recording a $19.7 million non-cash impairment charge and a $6.3 million loss on sale for the nine months ended September 30, 2024[29] - Discontinued operations for the Automotive subsidiary resulted in a net loss of $1.246 million for Q3 2024, while the Asia segment reported a net loss of $226,000 for the same period[33] - The company ceased production at its Yangzhou, China manufacturing facility as of December 31, 2022, and is in the process of shutting down its business operations in China, which comprised the entirety of its "Asia" reporting segment[29] - Total assets of discontinued operations for the Asia segment as of September 30, 2024, were $865,000, with total liabilities of $1.782 million[30] - The company recorded a net loss from discontinued operations of $1.472 million for the three months ended September 30, 2024, including a $1.246 million loss from the Automotive segment and a $226,000 loss from the Asia segment[33] - The company recorded a net loss from discontinued operations of $29.867 million for the three months ended September 30, 2023, including a $29.815 million loss from the Automotive segment and a $52,000 loss from the Asia segment[34] - The company recorded a net loss from discontinued operations of $31.654 million for the nine months ended September 30, 2024, including a $31.794 million loss from the Automotive segment and a $140,000 gain from the Asia segment[35] Taxes and Legal Proceedings - The company plans to adopt ASU No. 2023-09, Income Taxes (Topic 740), effective January 1, 2025, which will improve the transparency of income tax disclosures[28] - Income tax provision for the nine months ended September 30, 2024, was $6.9 million, down from $12.1 million in the same period of 2023[68] - TPI Composites maintains its assertion to indefinitely reinvest unremitted foreign earnings, resulting in no deferred tax liability[69] - The company faces a potential $13.3 million liability related to the Senvion insolvency case, with the outcome still uncertain[74] - The company is involved in a legal proceeding with Senvion GmbH regarding alleged voidance claims of $13.3 million[74] Operational Costs and Leases - The company is monitoring the impact of wage inflation in the countries where it operates[3] - The company is managing the impact of price increases in raw materials such as resin and carbon reinforcements[3] - Total operating lease cost was $29.165 million for the nine months ended September 30, 2024, slightly lower than $30.140 million in the same period of 2023[60] - Cash paid for operating leases was $28.260 million for the nine months ended September 30, 2024, compared to $28.883 million in the same period of 2023[63] - Total finance lease cost increased to $3.196 million for the nine months ended September 30, 2024, compared to $3.125 million in 2023[60] Performance Obligations and Contracts - Remaining performance obligations as of September 30, 2024, totaled $820.17 million, with 40.9% expected to be recognized in the remainder of 2024 and 59.1% in 2025[48] - Net revenue recognized from performance obligations satisfied in previous periods decreased by $24.7 million for the nine months ended September 30, 2024[48] - Warranty accrual at the end of the period was $35.251 million for the three months ended September 30, 2024, compared to $42.955 million for the same period in 2023[53] - The 5.25% Convertible senior unsecured notes will not be eligible for optional conversion during Q4 2024 due to unmet conversion requirements[55] Hedging and Currency Management - In November 2024, the company purchased call option contracts with a notional value of approximately 4.3 billion Mexican Pesos (approximately $215.9 million) to hedge against currency exchange rate fluctuations[80] - The company purchased call option contracts in November 2024 with a notional value of approximately 4.3 billion Mexican Pesos (or approximately $215.9 million) to mitigate cash flow variability[80] Accumulated Deficit and Comprehensive Loss - Accumulated deficit increased to $728.973 million as of September 30, 2024, from $536.348 million as of December 31, 2023[10] - Accumulated deficit as of September 30, 2024, was $728.97 million, compared to $536.35 million as of December 31, 2023[15] - Accumulated deficit increased to $728.9 million as of September 30, 2024 from $688.9 million as of June 30, 2024[15] - Accumulated Other Comprehensive Loss (AOCL) as of September 30, 2024 was $18.3 million, compared to $10.8 million as of September 30, 2023[72] Competition and Market Position - The company faces competition from other wind blade and wind turbine manufacturers, which could impact its market position[3] - The company is focused on expanding its field service inspection and repair services business[3]