TPI Composites(US:TPIC)2022-02-25 00:37Financial Data and Key Metrics Changes - For the full year 2021, the company reported net sales of $1.7 billion, a 3.7% increase from 2020, and adjusted EBITDA of $2.3 million, despite adverse impacts of approximately $52 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 $389.5 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 $165.3 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 $1.61 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 $200 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]