TPI Composites, Inc. (Nasdaq:TPIC), the only independent
manufacturer of composite wind blades with a global footprint,
today reported financial results for the second quarter ended
June 30, 2017.
Highlights
For the quarter ended June 30, 2017:
- Net sales of $248.2 million
- Total billings of $231.1 million
- Net income of $13.9 million or $0.41 per diluted share
- EBITDA of $27.5 million, with an EBITDA margin of 11.1%
- Adjusted EBITDA of $30.8 million, with an Adjusted EBITDA
margin of 12.4%
|
|
|
|
|
KPIs |
|
|
|
Q2'17 |
Q2'16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sets¹ |
692 |
551 |
|
|
|
|
|
|
|
|
Estimated
megawatts² |
1,620 |
1,252 |
|
|
|
|
|
|
|
|
Dedicated manufacturing
lines³ |
46 |
38 |
|
|
|
|
|
|
|
|
Total manufacturing
lines installed⁴ |
39 |
30 |
|
|
|
|
|
|
|
|
Manufacturing lines in
startup⁵ |
9 |
— |
|
|
|
|
|
|
|
|
Manufacturing lines in transition⁶ |
— |
3 |
- Number of wind blade sets (which consist of three wind blades)
invoiced worldwide in the period.
- Estimated megawatts of energy capacity to be generated by wind
blade sets invoiced in the period.
- Number of manufacturing lines that are dedicated to our
customers under long-term supply agreements.
- Number of manufacturing lines installed and either in
operation, startup or transition.
- Number of manufacturing lines in a startup phase during the
period.
- Number of manufacturing lines that were being transitioned to a
new wind blade model during the period.
“We are pleased with our strong operational and
financial performance in the second quarter of 2017 in which we
exceeded both our total billings and adjusted EBITDA targets,” said
Steve Lockard, TPI Composites’ President and Chief Executive
Officer. “We are also announcing today that we signed a multiyear
supply agreement to supply blades from two manufacturing lines in
our factory in Taicang, China. This will help backfill volume
in our Taicang plant when we commence production before the end of
Q1 of 2018. This deal highlights our commitment to our strategy of
global growth, customer diversification and expanded
profitability.”
“We expect solid results for the balance of the
year and reaffirm our guidance range of $930 million to $950
million for total billings for the year. We currently have
approximately $4.4 billion of revenue under long-term contracts
covering 48 molds and a strong global pipeline of opportunities to
support our growth targets. We remain confident in our ability to
expand our production lines globally across numerous partners and
continue to target a 25% revenue CAGR through 2019.”
Second Quarter 2017 Financial
ResultsNet sales for the three months ended June 30,
2017 increased by $53.9 million or 27.8% to $248.2 million compared
to $194.3 million in the same period in 2016. Net sales of wind
blades increased by 31.1% to $239.8 million for the three months
ended June 30, 2017 as compared to $182.9 million in the same
period in 2016. The increase was primarily driven by a 36% increase
in the number of wind blades delivered during the three months
ended June 30, 2017 compared to the same period in 2016
primarily from our China and Mexico plants, partially offset by a
decline in the average sales prices of the same blade models
delivered in both periods as a result of geographic mix and savings
in raw material costs, a portion of which we share with our
customers, and foreign currency fluctuations in China and Turkey.
Net sales from the manufacturing of precision molding and assembly
systems during the three months ended June 30, 2017 decreased
to $4.8 million from $10.0 million in the same period in 2016. This
decrease was primarily the result of our customers requiring less
precision molding and assembly systems from our Rhode Island
facility during the three months ended June 30, 2017. Total
billings for the three months ended June 30, 2017 increased by
$34.9 million or 17.8% to $231.1 million compared to $196.1 million
in the same period in 2016. The impact of the strengthening of the
U.S. dollar against the Euro at our Turkey operations and the
Chinese Renminbi at our China operations on consolidated net sales
and total billings for the three months ended June 30, 2017
were reductions of 2.0% and 1.9%, respectively, but were not
significant for the three months ended June 30, 2016.
Total cost of goods sold for the three months ended
June 30, 2017 was $213.6 million and included aggregate costs
of $10.5 million related to startup costs in our new plants in
Mexico and Turkey and the startup of a new wind blade model for one
of our customers in Dafeng, China. This compares to total cost of
goods sold for the three months ended June 30, 2016 of $171.4
million, including aggregate costs of $3.1 million related to
startup costs in our new plants in Mexico and Turkey as well as the
transition of wind blade models in our original plant in Mexico.
Cost of goods sold as a percentage of net sales of wind blades
decreased by three percentage points during the three months ended
June 30, 2017 as compared to the same period in 2016, driven
by improved operating efficiencies, the impact of savings in raw
material costs and foreign currency fluctuations, partially offset
by the increase in startup and transition costs. Similar to the
impact to net sales above, the impact of the strengthening of the
U.S. dollar against the Euro, Turkish Lira, Chinese Renminbi and
Mexican Peso reduced consolidated cost of goods sold by 3.9% for
three months ended June 30, 2017 but was not significant for
the three months ended June 30, 2016.
Net income for the three months ended June 30,
2017 was $13.9 million, as compared to $11.6 million in the same
period in 2016. The increase was primarily due to the reasons set
forth above.
Net income attributable to preferred shareholders
was $2.4 million for the three months ended June 30, 2016 and
there was none in the 2017 period as following our IPO in July
2016, all of our preferred shares were converted to common
shares.
Net income attributable to common shareholders was
$13.9 million for the three months ended June 30, 2017,
compared to $9.1 million in the same period in 2016. This was
primarily due to the improved operating results discussed above.
Diluted earnings per share was $0.41 for the three months ended
June 30, 2017, compared to $2.15 for the three months ended
June 30, 2016.
EBITDA for three months ended June 30, 2017
increased to $27.5 million, compared to $20.8 million during the
same period in 2016. The EBITDA margin increased to 11.1% compared
to 10.7% in the 2016 period. Adjusted EBITDA for three months ended
June 30, 2017 increased to $30.8 million compared to $20.8
million during the same period a year ago. The Adjusted EBITDA
margin increased to 12.4%, compared to 10.7% during the same period
a year ago.
Capital expenditures were $9.8 million for three
months ended June 30, 2017 compared to $3.4 million during the
same period a year ago. Capex is primarily related to our new
facilities in Mexico and Turkey.
We ended the quarter with $130.8 million of cash
and cash equivalents and net debt was a net cash position of $0.5
million as compared to net debt of $6.4 million as of December 31,
2016.
Conference Call and Webcast InformationTPI
Composites will host an investor conference call this afternoon,
Tuesday, August 8, 2017 at 5:00pm ET. Interested parties are
invited to listen to the conference call which can be accessed live
over the phone by dialing 1-877-407-9208, or for international
callers, 1-201-493-6784. A replay will be available two hours after
the call and can be accessed by dialing 1-844-512-2921, or for
international callers, 1-412-317-6671. The passcode for the live
call and the replay is 13666568. The replay will be available until
August 15, 2017. Interested investors and other parties may
also listen to a simultaneous webcast of the conference call by
logging onto the Investor Relations section of the Company’s
website at www.tpicomposites.com. The online replay will be
available for a limited time beginning immediately following the
call.
About TPI Composites, Inc.TPI Composites, Inc.
is the only independent manufacturer of composite wind blades for
the wind energy market with a global manufacturing footprint. TPI
delivers high-quality, cost-effective composite solutions through
long term relationships with leading wind turbine manufacturers.
TPI is headquartered in Scottsdale, Arizona and operates factories
throughout the U.S., Mexico, China and Turkey.
Forward-Looking StatementsThis release contains
forward-looking statements which are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements, among other
things, concerning: effects on our financial statements and our
financial outlook; our business strategy, including anticipated
trends and developments in and management plans for our business
and the wind industry and other markets in which we operate; our
projected annual revenue growth; our ability to backfill molds with
respect to GE supply contracts that are not renewed; competition;
future financial results, operating results, revenues, gross
margin, operating expenses, products, projected costs, warranties,
our ability to improve our operating margins, and capital
expenditures. These forward-looking statements are often
characterized by the use of words such as “estimate,” “expect,”
“anticipate,” “project,” “plan,” “intend,” “seek,” “believe,”
“forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,”
“might,” “will,” “could,” “predict,” “continue” and the negative or
plural of these words and other comparable terminology.
Forward-looking statements are only predictions based on our
current expectations and our projections about future events. You
should not place undue reliance on these forward-looking
statements. We undertake no obligation to update any of these
forward-looking statements for any reason. These forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity,
performance or achievements to differ materially from those
expressed or implied by these statements. These factors include,
but are not limited to, the matters discussed in “Risk Factors” in
our Annual Report on Form 10-K and other reports that we will file
with the SEC.
Non-GAAP DefinitionsThis press release includes
unaudited non-GAAP financial measures, including total billings,
EBITDA, adjusted EBITDA, net debt and free cash flow. We define
total billings as the total amounts we have invoiced our customers
for products and services for which we are entitled to payment
under the terms of our long-term supply agreements or other
contractual arrangements. We define EBITDA as net income plus
interest expense (including losses on extinguishment of debt and
net of interest income), income taxes and depreciation and
amortization. We define adjusted EBITDA as EBITDA plus any
share-based compensation expense plus or minus any gains or losses
from foreign currency transactions. We define net debt as the total
principal amount of debt outstanding less unrestricted cash and
equivalents. We define free cash flow as net cash flow generated
from operating activities less capital expenditures. We present
non-GAAP measures when we believe that the additional information
is useful and meaningful to investors. Non-GAAP financial measures
do not have any standardized meaning and are therefore unlikely to
be comparable to similar measures presented by other companies. The
presentation of non-GAAP financial measures is not intended to be a
substitute for, and should not be considered in isolation from, the
financial measures reported in accordance with GAAP. See below for
a reconciliation of certain non-GAAP financial measures to the
comparable GAAP measures.
TPI COMPOSITES, INC.
AND SUBSIDIARIES |
|
|
TABLE ONE - CONDENSED
CONSOLIDATED INCOME STATEMENTS |
|
|
(UNAUDITED) |
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
(in
thousands, except per share data) |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
248,186 |
|
$ |
194,255 |
|
|
$ |
439,788 |
|
$ |
370,365 |
|
|
|
Cost of
sales |
|
|
203,095 |
|
|
168,382 |
|
|
|
370,518 |
|
|
328,248 |
|
|
|
Startup
and transition costs |
|
|
10,540 |
|
|
3,055 |
|
|
|
16,699 |
|
|
6,361 |
|
|
|
Total
cost of goods sold |
|
|
213,635 |
|
|
171,437 |
|
|
|
387,217 |
|
|
334,609 |
|
|
|
Gross
profit |
|
|
34,551 |
|
|
22,818 |
|
|
|
52,571 |
|
|
35,756 |
|
|
|
General
and administrative expenses |
|
|
10,752 |
|
|
5,340 |
|
|
|
19,058 |
|
|
10,089 |
|
|
|
Income
from operations |
|
|
23,799 |
|
|
17,478 |
|
|
|
33,513 |
|
|
25,667 |
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
|
11 |
|
|
28 |
|
|
|
30 |
|
|
49 |
|
|
|
Interest
expense |
|
|
(2,935 |
) |
|
(4,134 |
) |
|
|
(5,961 |
) |
|
(8,046 |
) |
|
|
Realized
loss on foreign currency remeasurement |
|
|
(1,233 |
) |
|
(18 |
) |
|
|
(2,614 |
) |
|
(457 |
) |
|
|
Miscellaneous income |
|
|
258 |
|
|
154 |
|
|
|
578 |
|
|
344 |
|
|
|
Total
other expense |
|
|
(3,899 |
) |
|
(3,970 |
) |
|
|
(7,967 |
) |
|
(8,110 |
) |
|
|
Income
before income taxes |
|
|
19,900 |
|
|
13,508 |
|
|
|
25,546 |
|
|
17,557 |
|
|
|
Income
tax provision |
|
|
(6,042 |
) |
|
(1,953 |
) |
|
|
(8,143 |
) |
|
(4,256 |
) |
|
|
Net
income |
|
|
13,858 |
|
|
11,555 |
|
|
|
17,403 |
|
|
13,301 |
|
|
|
Net
income attributable to preferred shareholders |
|
|
- |
|
|
2,438 |
|
|
|
- |
|
|
4,875 |
|
|
|
Net
income attributable to common shareholders |
|
$ |
13,858 |
|
$ |
9,117 |
|
|
$ |
17,403 |
|
$ |
8,426 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
33,737 |
|
|
4,238 |
|
|
|
33,737 |
|
|
4,238 |
|
|
|
Diluted |
|
|
33,828 |
|
|
4,244 |
|
|
|
33,827 |
|
|
4,244 |
|
|
|
Net
income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.41 |
|
$ |
2.15 |
|
|
$ |
0.52 |
|
$ |
1.99 |
|
|
|
Diluted |
|
$ |
0.41 |
|
$ |
2.15 |
|
|
$ |
0.51 |
|
$ |
1.99 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures: |
|
|
|
|
|
|
|
|
Total
billings |
|
$ |
231,069 |
|
$ |
196,146 |
|
|
$ |
442,429 |
|
$ |
370,684 |
|
|
|
EBITDA |
|
$ |
27,478 |
|
$ |
20,776 |
|
|
$ |
39,960 |
|
$ |
31,727 |
|
|
|
Adjusted
EBITDA |
|
$ |
30,755 |
|
$ |
20,794 |
|
|
$ |
46,325 |
|
$ |
32,184 |
|
|
|
TPI COMPOSITES, INC. AND
SUBSIDIARIES |
TABLE TWO - CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
June 30, |
December 31, |
($ in
thousands) |
|
2017 |
|
|
2016 |
|
(unaudited) |
|
Current
assets: |
|
|
Cash and
cash equivalents |
$ |
130,834 |
|
$ |
119,066 |
Restricted cash |
|
2,783 |
|
|
2,259 |
Accounts
receivable |
|
117,202 |
|
|
67,842 |
Inventories |
|
59,753 |
|
|
53,095 |
Inventories held for customer orders |
|
56,974 |
|
|
52,308 |
Prepaid
expenses and other current assets |
|
25,487 |
|
|
30,657 |
Total
current assets |
|
393,033 |
|
|
325,227 |
Noncurrent assets: |
|
|
Property,
plant, and equipment, net |
|
112,432 |
|
|
91,166 |
Other
noncurrent assets |
|
14,432 |
|
|
20,813 |
Total
assets |
$ |
519,897 |
|
$ |
437,206 |
|
|
|
Current
liabilities: |
|
|
Accounts
payable and accrued expenses |
$ |
149,285 |
|
$ |
112,281 |
Accrued
warranty |
|
25,873 |
|
|
19,912 |
Deferred
revenue |
|
74,255 |
|
|
69,568 |
Customer
deposits and customer advances |
|
8,663 |
|
|
1,390 |
Current
maturities of long-term debt |
|
38,511 |
|
|
33,403 |
Total
current liabilities |
|
296,587 |
|
|
236,554 |
Noncurrent liabilities: |
|
|
Long-term
debt, net of debt issuance costs and |
|
|
current
maturities |
|
89,852 |
|
|
89,752 |
Other
noncurrent liabilities |
|
4,222 |
|
|
4,393 |
Total
liabilities |
|
390,661 |
|
|
330,699 |
Shareholders' equity |
|
129,236 |
|
|
106,507 |
Total
liabilities and shareholders' equity |
$ |
519,897 |
|
$ |
437,206 |
|
|
|
Non-GAAP Measure: |
|
|
Net
debt |
$ |
(467 |
) |
$ |
6,379 |
TPI COMPOSITES, INC.
AND SUBSIDIARIES |
|
|
TABLE THREE - CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
(UNAUDITED) |
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
($ in
thousands) |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
$ |
17,995 |
|
$ |
11,314 |
|
|
$ |
33,933 |
|
$ |
10,175 |
|
|
|
Net cash
used in investing activities |
|
|
(9,805 |
) |
|
(3,356 |
) |
|
|
(26,727 |
) |
|
(14,244 |
) |
|
|
Net cash
provided by (used in) financing activities |
|
|
6,876 |
|
|
(12,644 |
) |
|
|
4,398 |
|
|
(10,641 |
) |
|
|
Impact
of foreign exchange rates on cash and cash |
|
|
|
|
|
|
|
|
equivalents |
|
|
227 |
|
|
(99 |
) |
|
|
164 |
|
|
(150 |
) |
|
|
Cash and
cash equivalents, beginning of period |
|
|
115,541 |
|
|
35,842 |
|
|
|
119,066 |
|
|
45,917 |
|
|
|
Cash and
cash equivalents, end of period |
|
$ |
130,834 |
|
$ |
31,057 |
|
|
$ |
130,834 |
|
$ |
31,057 |
|
|
|
TPI COMPOSITES, INC.
AND SUBSIDIARIES |
|
TABLE FOUR -
RECONCILIATION OF NON-GAAP
MEASURES |
|
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total billings is
reconciled as follows: |
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
($ in
thousands) |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
Net
sales |
$ |
248,186 |
|
$ |
194,255 |
|
|
$ |
439,788 |
|
$ |
370,365 |
|
|
Change
in deferred revenue: |
|
|
|
|
|
|
Blade-related deferred revenue at beginning of period (1) |
|
(89,319 |
) |
|
(65,027 |
) |
|
|
(69,568 |
) |
|
(65,520 |
) |
|
Blade-related deferred revenue at end of period (1) |
|
74,255 |
|
|
65,656 |
|
|
|
74,255 |
|
|
65,656 |
|
|
Foreign exchange impact (2) |
|
(2,053 |
) |
|
1,262 |
|
|
|
(2,046 |
) |
|
183 |
|
|
Change in deferred revenue |
|
(17,117 |
) |
|
1,891 |
|
|
|
2,641 |
|
|
319 |
|
|
Total
billings |
$ |
231,069 |
|
$ |
196,146 |
|
|
$ |
442,429 |
|
$ |
370,684 |
|
|
|
|
|
|
|
|
|
EBITDA and adjusted EBITDA
are reconciled as follows: |
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
($ in
thousands) |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
Net
income |
$ |
13,858 |
|
$ |
11,555 |
|
|
$ |
17,403 |
|
$ |
13,301 |
|
|
Adjustments: |
|
|
|
|
|
|
Depreciation and amortization |
|
4,654 |
|
|
3,162 |
|
|
|
8,483 |
|
|
6,173 |
|
|
Interest expense (net of interest income) |
|
2,924 |
|
|
4,106 |
|
|
|
5,931 |
|
|
7,997 |
|
|
Income tax provision |
|
6,042 |
|
|
1,953 |
|
|
|
8,143 |
|
|
4,256 |
|
|
EBITDA |
|
27,478 |
|
|
20,776 |
|
|
|
39,960 |
|
|
31,727 |
|
|
Share-based compensation expense |
|
2,044 |
|
|
- |
|
|
|
3,751 |
|
|
- |
|
|
Realized loss on foreign currency remeasurement |
|
1,233 |
|
|
18 |
|
|
|
2,614 |
|
|
457 |
|
|
Adjusted
EBITDA |
$ |
30,755 |
|
$ |
20,794 |
|
|
$ |
46,325 |
|
$ |
32,184 |
|
|
|
|
|
|
|
|
|
Free cash flow is
reconciled as follows: |
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
($ in
thousands) |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
Net cash
provided by operating activities |
$ |
17,995 |
|
$ |
11,314 |
|
|
$ |
33,933 |
|
$ |
10,175 |
|
|
Capital
expenditures |
|
(9,805 |
) |
|
(3,356 |
) |
|
|
(26,727 |
) |
|
(14,244 |
) |
|
Free
cash flow |
$ |
8,190 |
|
$ |
7,958 |
|
|
$ |
7,206 |
|
$ |
(4,069 |
) |
|
|
|
|
|
|
|
|
Net debt is reconciled
as follows: |
|
|
|
|
|
|
|
June 30, |
December 31, |
|
|
|
|
($ in
thousands) |
|
2017 |
|
|
2016 |
|
|
|
|
|
Total
debt, net of debt issuance costs |
$ |
128,363 |
|
$ |
123,155 |
|
|
|
|
|
Add debt
issuance costs |
|
2,004 |
|
|
2,290 |
|
|
|
|
|
Less
cash and cash equivalents |
|
(130,834 |
) |
|
(119,066 |
) |
|
|
|
|
Net
debt |
$ |
(467 |
) |
$ |
6,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Total billings is reconciled using the blade-related
deferred revenue amounts at the beginning and the end of the period
as follows: |
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
($ in
thousands) |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
Blade-related deferred revenue at beginning of period |
$ |
89,319 |
|
$ |
65,027 |
|
|
$ |
69,568 |
|
$ |
65,520 |
|
|
Non-blade related deferred revenue at beginning of
period |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
Total
current and noncurrent deferred revenue at beginning of
period |
$ |
89,319 |
|
$ |
65,027 |
|
|
$ |
69,568 |
|
$ |
65,520 |
|
|
|
|
|
|
|
|
|
Blade-related deferred revenue at end of period |
$ |
74,255 |
|
$ |
65,656 |
|
|
$ |
74,255 |
|
$ |
65,656 |
|
|
Non-blade related deferred revenue at end of period |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
Total
current and noncurrent deferred revenue at end of period |
$ |
74,255 |
|
$ |
65,656 |
|
|
$ |
74,255 |
|
$ |
65,656 |
|
|
|
|
|
|
|
|
|
(2) Represents the effect of the difference between the
exchange rate used by our various foreign subsidiaries on the
invoice date versus the |
|
exchange rate used at the period-end balance sheet date. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Relations
480-315-8742
investors@TPIComposites.com
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