Part I Condensed Consolidated Financial Statements (Unaudited) The company reported a net loss of $39.8 million in Q2 2021, an improvement from $66.1 million, with total assets at $940.5 million Consolidated Financial Statements For H1 2021, net sales increased to $863.5 million, net loss narrowed to $41.6 million, and cash used in operations significantly reduced to $3.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | Total Current Assets | $557,575 | $548,159 | | Total Assets | $940,514 | $956,257 | | Total Current Liabilities | $439,277 | $406,108 | | Total Liabilities | $779,617 | $755,222 | | Total Stockholders' Equity | $160,897 | $201,035 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 ($) | Three Months Ended June 30, 2020 ($) | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $458,841 | $373,817 | $863,521 | $730,453 | | Gross Profit (Loss) | $8,326 | $(4,747) | $15,596 | $(8,620) | | Loss from Operations | $(2,033) | $(13,255) | $(5,240) | $(28,659) | | Net Loss | $(39,797) | $(66,101) | $(41,594) | $(66,593) | | Diluted Net Loss Per Share | $(1.08) | $(1.87) | $(1.13) | $(1.89) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,255) | $(27,005) | | Net cash used in investing activities | $(27,059) | $(42,030) | | Net cash provided by financing activities | $23,702 | $97,255 | | Net change in cash, cash equivalents and restricted cash | $(6,935) | $25,695 | Notes to Condensed Consolidated Financial Statements Key disclosures detail revenue by segment, $3.2 billion in remaining performance obligations, raw material risks, and significant customer concentration - As of June 30, 2021, the company had approximately $3.2 billion in remaining performance obligations, with 46.7% expected to be recognized as revenue in 20224748 - The company faces significant risks from price increases and supply constraints for key raw materials like resin and carbon fiber, as well as increased logistics costs; for materials not covered by customer contracts, the company typically bears 30% of price increases53 Customer Concentration - % of Total Net Sales (Q2 2021) | Customer | % of Total Net Sales | | :--- | :--- | | Vestas | 45.5% | | GE | 23.1% | | Nordex | 17.8% | Net Sales by Segment (in thousands) | Segment | Q2 2021 ($) | Q2 2020 ($) | | :--- | :--- | :--- | | U.S. | $56,761 | $42,079 | | Asia | $91,106 | $145,918 | | Mexico | $143,170 | $83,420 | | EMEA | $105,350 | $87,541 | | India | $62,454 | $14,859 | Management's Discussion and Analysis of Financial Condition and Results of Operations Q2 2021 net sales increased 22.7%, but demand is expected to decrease due to raw material costs and policy uncertainty, with restructuring charges anticipated Key Trends and Recent Developments The company anticipates decreased wind blade demand and a $20 million adverse impact from raw material costs, alongside $22-37 million in restructuring charges - The company expects decreased demand for wind blades in the remainder of 2021, particularly in Q4, due to global policy uncertainty and raw material cost increases, which is expected to reduce 2021 Adjusted EBITDA by approximately $28 million98 - Significant price increases and supply constraints for resin and carbon fiber, plus higher logistics costs, are expected to adversely impact 2021 results by approximately $20 million after accounting for customer cost-sharing agreements99 - The company forecasts total restructuring charges of $22 million to $37 million in 2021 and 2022 related to its global footprint alignment, with $15 million to $22 million expected in 2021100 Results of Operations Q2 2021 net sales rose 22.7% to $458.8 million, driven by volume and pricing, improving gross margin to 1.8% and narrowing operating loss to $2.0 million Net Sales by Product (in thousands) | Product/Service | Q2 2021 ($) | Q2 2020 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Wind blade sales | $418,704 | $348,063 | +20.3% | | Precision molding and assembly | $13,603 | $6,894 | +97.3% | | Transportation sales | $14,915 | $14,902 | +0.1% | | Total net sales | $458,841 | $373,817 | +22.7% | - The increase in wind blade sales was driven by a 7% increase in the number of blades produced and a higher average sales price due to product mix and foreign currency fluctuations107 - Total cost of goods sold as a percentage of net sales decreased from 101.3% to 98.2% in Q2 2021 vs Q2 2020, primarily due to lower warranty and direct labor costs, partially offset by higher direct material costs116 Income (Loss) from Operations by Segment (in thousands) | Segment | Q2 2021 ($) | Q2 2020 ($) | | :--- | :--- | :--- | | U.S. | $148 | $(12,045) | | Asia | $8,105 | $18,492 | | Mexico | $(25,256) | $(11,324) | | EMEA | $10,782 | $(1,145) | | India | $4,188 | $(7,233) | | Total Loss from Operations | $(2,033) | $(13,255) | Liquidity and Capital Resources As of June 30, 2021, the company had $123.1 million in cash and $237.1 million in debt, with improved operating cash flow and sufficient liquidity for the next twelve months - As of June 30, 2021, the company had $123.1 million in cash and cash equivalents and $237.1 million in outstanding debt130133 - Of the $123.1 million in cash, $67.9 million was located outside the U.S., including $58.7 million in China, where repatriation is subject to government restrictions133134 Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2020 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,255) | $(27,005) | | Net cash used in investing activities | $(27,059) | $(42,030) | | Net cash provided by financing activities | $23,702 | $97,255 | - The company anticipates fiscal year 2021 capital expenditures to be between $55 million and $65 million138 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign currency and commodity price fluctuations, with a 10% FX change impacting operating income by $15.7 million - Foreign Currency Risk: A hypothetical 10% change in exchange rates would have resulted in a change to income from operations of approximately $15.7 million for the six months ended June 30, 2021148 - Commodity Price Risk: A 10% change in the price of resin and resin systems would have impacted income from operations by approximately $11.8 million for the full year 2021, before accounting for customer risk-sharing mechanisms151 - Interest Rate Risk: Due to low LIBOR and EURIBOR rates, a 10% change in these rates would not have a material impact on earnings, fair values, or cash flows152 Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2021154 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls155 Part II Legal Proceedings & Risk Factors The company reports no material legal proceedings, but highlights ongoing risks from potential future COVID-19 pandemic disruptions - The company is not party to any material legal proceedings that would have a material adverse effect on its financial condition87157 - A key risk factor is the potential future impact of the COVID-19 pandemic; although not materially affected in H1 2021, new resurgences could disrupt manufacturing operations and the global supply chain159160 Other Information (Items 2-6) This section confirms no unregistered equity sales, no defaults on senior securities, no mine safety disclosures, and lists filed exhibits - The company reported no activity for Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, or Mine Safety Disclosures161163164
TPI Composites(TPIC) - 2021 Q2 - Quarterly Report