TPI Composites(US:TPIC)2025-08-11 20:59PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, reflect significant financial distress, culminating in a Chapter 11 bankruptcy filing, with a $632.3 thousand working capital deficiency, a $485.4 thousand stockholders' deficit, and a $116.5 thousand net loss - On August 11, 2025, the company and certain subsidiaries filed for Chapter 11 bankruptcy protection to facilitate a financial and operational restructuring, constituting an event of default and accelerating debt obligations101147 - Management has concluded that substantial doubt exists about the Company's ability to continue as a going concern, citing the Chapter 11 filing, a working capital deficiency of $632.3 thousand, a net loss of $116.5 thousand for the six-month period, and constrained liquidity124546 Key Financial Position Data (as of June 30, 2025) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $106,419 | $196,518 | | Total Current Assets | $348,668 | $445,090 | | Total Assets | $591,709 | $692,464 | | Total Current Liabilities | $981,012 | $473,968 | | Long-term debt, net | $0 | $485,239 | | Total Liabilities | $1,077,146 | $1,065,700 | | Total stockholders' deficit | $(485,437) | $(373,236) | Condensed Consolidated Statements of Operations Highlights | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net sales | $612,402 | $603,863 | | Gross loss | $(42,960) | $(52,101) | | Loss from continuing operations | $(62,198) | $(75,113) | | Net loss attributable to common stockholders | $(116,540) | $(152,557) | | Net loss per common share (Basic) | $(2.41) | $(3.22) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion centers on the voluntary Chapter 11 bankruptcy filing on August 11, 2025, aimed at restructuring the company's finances, with operational challenges including a labor strike in Türkiye and a production stoppage in Mexico, leading to a $90.6 thousand cash decrease and a 'going concern' warning - The company filed for Chapter 11 bankruptcy on August 11, 2025, to restructure its business and balance sheet, continuing operations as a 'debtor-in-possession'134135 - Significant operational challenges in Q2 2025 included an ongoing labor strike in Türkiye starting May 13, 2025, and a temporary production stoppage in Mexico, both of which negatively impacted production volumes and financial results145146 - The company received a non-compliance notice from Nasdaq on August 8, 2025, for its stock price falling below the $1.00 minimum bid requirement and expects to be delisted due to the Chapter 11 filing138232 Key Financial Measures Summary | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net sales | $612,402 | $603,863 | | Net loss from continuing operations | $(116,866) | $(122,375) | | Adjusted EBITDA | $(36,739) | $(47,953) | | Free cash flow | $(31,785) | $(91,313) | Results of Operations For the six months ended June 30, 2025, net sales increased by 1.4% to $612.4 thousand, driven by a 24.1% increase in the Mexico segment offsetting declines in EMEA and India, with gross loss decreasing due to lower startup costs and facility shutdown, narrowing the loss from continuing operations to $62.2 thousand Net Sales by Segment (Six Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | U.S. | $17,685 | $6,760 | 161.6% | | Mexico | $386,806 | $311,769 | 24.1% | | EMEA | $136,454 | $201,505 | (32.3)% | | India | $71,457 | $83,829 | (14.8)% | | Total | $612,402 | $603,863 | 1.4% | - The decrease in EMEA sales was primarily due to a 41% net decrease in wind blades produced in Türkiye, caused by an ongoing labor strike that commenced on May 13, 2025160 - Total cost of goods sold decreased as a percentage of sales, mainly due to a $25.9 million (60.3%) reduction in startup and transition costs compared to the prior year162164 Liquidity and Capital Resources The company's liquidity has been severely strained, with unrestricted cash and equivalents falling to $106.4 thousand at June 30, 2025, from $196.5 thousand at year-end 2024, leading to a Chapter 11 filing that accelerated approximately $600 million in debt obligations and raised substantial doubt about going concern - Unrestricted cash and cash equivalents decreased by $90.1 thousand, from $196.5 thousand at Dec 31, 2024, to $106.4 thousand at June 30, 2025181 - The Chapter 11 filing constituted an event of default, accelerating debt obligations of approximately $465.9 million under the Credit Agreement and $132.5 million under the Convertible Notes184 Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(21,569) | $(75,908) | | Net cash used in investing activities | $(10,216) | $(15,405) | | Net cash (used in) provided by financing activities | $(56,181) | $29,407 | | Net change in cash | $(90,570) | $(61,775) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to market risks from foreign currency exchange rates and commodity prices, with a hypothetical 10% change in exchange rates impacting income from operations by approximately $9.4 million, and a 10% change in resin prices impacting income by about $4.1 million - A hypothetical 10% change in foreign currency exchange rates would have resulted in a change to income from operations of approximately $9.4 million for the six months ended June 30, 2025195 - A 10% change in the price of resin and resin systems would impact income from operations by approximately $4.1 million for the six months ended June 30, 2025, after accounting for customer cost-sharing agreements198 - As of June 30, 2025, all financing obligations are fixed-rate instruments, minimizing exposure to interest rate fluctuations199 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025201 - No material changes to the internal control over financial reporting were identified during the three months ended June 30, 2025202 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in a legal proceeding in Germany related to the Senvion insolvency, defending against a $13.3 million voidance claim, with the Chapter 11 filing resulting in an automatic stay on most legal proceedings - The company is defending against a $13.3 million voidance claim from the Senvion insolvency estate, with an independent expert's report in July 2025 largely supporting the company's position that Senvion was solvent when payments were made106108 - The filing of the Chapter 11 Cases automatically stayed most legal proceedings against the company to recover on claims arising before the petition date109 Item 1A. Risk Factors This section introduces significant new risks arising from the Chapter 11 bankruptcy filing, including substantial doubt about the company's ability to continue as a going concern, the high probability of common stock cancellation, and numerous uncertainties of the bankruptcy process - The company has identified conditions that raise substantial doubt about its ability to continue as a going concern, which could adversely impact its business, reputation, and relationships207 - It is expected that the company's common stock will be cancelled as part of the Chapter 11 cases, with no value distributed to shareholders, and trading in the stock is described as highly speculative208 - The company is subject to numerous risks associated with the Chapter 11 process, including the ability to confirm a reorganization plan, the high costs of the proceedings, and potential loss of confidence from customers and suppliers209210215 - The company expects its common stock to be delisted from Nasdaq as a result of the Chapter 11 filing, which will adversely affect the stock's liquidity and market price224 Item 3. Defaults Upon Senior Securities The company's Chapter 11 bankruptcy filing on August 11, 2025, constituted an event of default under certain debt agreements, accelerating principal and interest, though creditor enforcement actions are automatically stayed - The Chapter 11 filing on August 11, 2025, triggered an event of default and acceleration of debt under certain senior securities agreements230 Item 5. Other Information On August 8, 2025, Nasdaq notified the company of non-compliance with the minimum $1.00 bid price requirement, though the company anticipates imminent delisting due to the Chapter 11 filing, rendering the compliance period moot - On August 8, 2025, Nasdaq notified the company of non-compliance with the minimum $1.00 bid price rule, giving it until February 4, 2026, to regain compliance232233 - The company anticipates being delisted from Nasdaq imminently due to the Chapter 11 filing, which would supersede the bid price compliance issue234 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL data files