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TPI Composites(TPIC) - 2021 Q4 - Earnings Call Transcript
TPICTPI Composites(TPIC)2022-02-25 00:37
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Financial Data and Key Metrics Changes - For the full year 2021, the company reported net sales of 1.7billion,a3.71.7 billion, a 3.7% increase from 2020, and adjusted EBITDA of 2.3 million, despite adverse impacts of approximately 52millionand52 million and 40 million in revenue due to contract extensions and cost estimates under ASC 606 [7][36][38] - In Q4 2021, net sales were 389.5million,withwindbladesalesat389.5 million, with wind blade sales at 362.3 million, primarily affected by production declines and raw material shortages [31][33] - The net loss attributable to common stockholders for the year was 165.3million,comparedto165.3 million, compared to 19.0 million in 2020, driven by raw material inflation and other operational challenges [35] Business Line Data and Key Metrics Changes - Wind blade sales for the full year totaled 1.61billion,drivenbyincreasedaveragesalesprices,althoughproductionvolumesdecreased[34]−Thetransportationsegmentsawsignificantgrowth,withthecompanywinningitsfirstmajorprogramcommitmentforanelectricvehicleplatform[13][90]−Theglobalserviceorganizationexpandedtonearly400technicians,achievingovertwotimesrevenuegrowthcomparedto2020[11]MarketDataandKeyMetricsChanges−ThecompanyexperiencedchallengesintheU.S.marketduetostalledlegislativeinitiativesandsupplychainconstraints,whichdecreaseddemandforwindbladesin2021comparedto2020[25][26]−TheEuropeanmarketremainssignificant,withapproximately301.61 billion, driven by increased average sales prices, although production volumes decreased [34] - The transportation segment saw significant growth, with the company winning its first major program commitment for an electric vehicle platform [13][90] - The global service organization expanded to nearly 400 technicians, achieving over two times revenue growth compared to 2020 [11] Market Data and Key Metrics Changes - The company experienced challenges in the U.S. market due to stalled legislative initiatives and supply chain constraints, which decreased demand for wind blades in 2021 compared to 2020 [25][26] - The European market remains significant, with approximately 30% of blades built being shipped there, although permitting and citing challenges persist [99] Company Strategy and Development Direction - The company aims to capitalize on long-term growth in the wind market by expanding global service offerings and enhancing logistics and recycling capabilities [28] - Focus remains on localizing and regionalizing the supply chain to mitigate high logistics costs and ensure supply security [24] - The company is positioned to grow market share with leading OEMs as demand for wind energy is expected to strengthen [26] Management's Comments on Operating Environment and Future Outlook - Management highlighted ongoing market volatility and uncertainty, particularly in the U.S., affecting sales expectations for 2022 [45] - The company anticipates continued margin compression due to rising costs and competitive pressures, despite efforts to stabilize material costs [47] - Future growth is expected in the transportation segment, with a projected increase in service business revenue [90] Other Important Information - The company closed a 400 million financing deal to strengthen its balance sheet, with an additional 200millionavailableforfuturegrowthopportunities[15][39]−Thecompanyended2021with200 million available for future growth opportunities [15][39] - The company ended 2021 with 242.2 million in unrestricted cash and no net debt [39] Q&A Session Summary Question: Guidance on sales expectations for 2022 - Management indicated that current market volatility suggests net sales could be flat to slightly down, consistent with previous guidance [45] Question: Visibility on margin expansion - Management expects margins to remain compressed in 2022 due to ongoing cost pressures [47] Question: Thoughts on balance sheet and additional capital - The company is comfortable with the current capital raised and views the additional $200 million as a resource for future growth opportunities [48] Question: Update on transportation segment growth - Management expects significant growth in the transportation segment, projecting a 1.5 times increase in revenue compared to the previous year [90] Question: Progress on supply chain localization - Management reported substantial progress in localizing supply chains in Mexico and India, with expectations for continued improvement in 2022 [65] Question: Revenue contribution from European markets - Approximately 30% of the company's blades are shipped to Europe, with Turkey contributing less than 10% of its production [97] Question: Future outlook for the wind market - Management believes that demand for wind energy will strengthen, driven by the need for decarbonization and supportive policies [26]