ITEM l. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by us without audit, pursuant to the rules and regulations of the SEC and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted, as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in the opinion of our management, all normal recurring adjustments necessary to present fairly our financial position at March 31, 2021, and the results of our operations, comprehensive income (loss) and cash flows for the periods presented. Interim results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full years. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation.
The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The accompanying condensed consolidated financial statements include the accounts of TPI Composites, Inc. and all of our majority owned subsidiaries. All significant intercompany transactions and balances have been eliminated.
References to TPI Composites, Inc, the “Company,” “we,” “us” or “our” in these notes refer to TPI Composites, Inc. and its consolidated subsidiaries.
Accounting Pronouncements
Recently Adopted Accounting Pronouncements
Convertible Instruments
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU is intended to simplify the accounting for certain convertible instruments with characteristics of both liability and equity. This ASU removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. As a result, after the adoption of this guidance, an entity’s convertible debt instrument will be wholly accounted for as debt. This ASU also expands disclosure requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share calculations by requiring the use of the if-converted method.
This ASU is effective for all public business entities (other than smaller reporting companies) for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis. An entity should adopt the guidance at the beginning of its annual fiscal year. We adopted this standard on January 1, 2021 on a modified retrospective basis and it did not have a material effect on our condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This ASU only applies to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. This ASU is effective for all entities beginning on March 12, 2020 and entities may elect to apply the ASU prospectively through December 31, 2022. The FASB later issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, to clarify the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. We are currently evaluating the impact this guidance may have on our condensed consolidated financial statements and related disclosures.
11
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2. Revenue From Contracts with Customers
For a detailed discussion of our revenue recognition policy, refer to the discussion in Note 1, Summary of Operations and Summary of Significant Accounting Policies – (c) Revenue Recognition, to the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K.
The following tables represents the disaggregation of our net sales revenue by product for each of our reportable segments:
|
|
Three Months Ended March 31, 2021
|
|
|
|
U.S.
|
|
|
Asia
|
|
|
Mexico
|
|
|
EMEA
|
|
|
India
|
|
|
Total
|
|
|
|
(in thousands)
|
|
Wind blade sales
|
|
$
|
39,627
|
|
|
$
|
72,503
|
|
|
$
|
108,442
|
|
|
$
|
111,027
|
|
|
$
|
47,580
|
|
|
$
|
379,179
|
|
Precision molding and
assembly systems sales
|
|
|
—
|
|
|
|
3,964
|
|
|
|
4,963
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,927
|
|
Transportation sales
|
|
|
6,424
|
|
|
|
—
|
|
|
|
1,707
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,131
|
|
Other sales
|
|
|
3,235
|
|
|
|
461
|
|
|
|
3,347
|
|
|
|
1,339
|
|
|
|
61
|
|
|
|
8,443
|
|
Total net sales
|
|
$
|
49,286
|
|
|
$
|
76,928
|
|
|
$
|
118,459
|
|
|
$
|
112,366
|
|
|
$
|
47,641
|
|
|
$
|
404,680
|
|
|
|
Three Months Ended March 31, 2020
|
|
|
|
U.S.
|
|
|
Asia
|
|
|
Mexico
|
|
|
EMEA
|
|
|
India
|
|
|
Total
|
|
|
|
(in thousands)
|
|
Wind blade sales
|
|
$
|
35,933
|
|
|
$
|
85,876
|
|
|
$
|
115,186
|
|
|
$
|
88,481
|
|
|
$
|
10,861
|
|
|
$
|
336,337
|
|
Precision molding and
assembly systems sales
|
|
|
—
|
|
|
|
5,061
|
|
|
|
1,702
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,763
|
|
Transportation sales
|
|
|
6,679
|
|
|
|
—
|
|
|
|
210
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,889
|
|
Other sales
|
|
|
4,819
|
|
|
|
200
|
|
|
|
1,152
|
|
|
|
476
|
|
|
|
—
|
|
|
|
6,647
|
|
Total net sales
|
|
$
|
47,431
|
|
|
$
|
91,137
|
|
|
$
|
118,250
|
|
|
$
|
88,957
|
|
|
$
|
10,861
|
|
|
$
|
356,636
|
|
For a further discussion regarding our operating segments, see Note 14, Segment Reporting. The geography of Europe, the Middle East and Africa comprises the EMEA segment.
Contract Assets and Liabilities
Contract assets consist of the amount of revenue recognized over time for performance obligations in production where control has transferred to the customer but the contract does not yet allow for the customer to be billed. Typically, customers are billed when the product finishes production and meets the technical specifications contained in the contract. The majority of the contract asset balance relates to materials procured based on customer specifications. The contract assets are recorded as current assets in the condensed consolidated balance sheets. Contract liabilities consist of advance payments in excess of revenue earned. These amounts primarily represent progress payments received as precision molding and assembly systems are being manufactured. The contract liabilities are recorded as current liabilities in the condensed consolidated balance sheets and are reduced as we record revenue over time.
These contract assets and liabilities are reported on the condensed consolidated balance sheets net on a contract-by-contract basis at the end of each reporting period.
Contract assets and contract liabilities consisted of the following:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$ Change
|
|
|
|
(in thousands)
|
|
Gross contract assets
|
|
$
|
221,938
|
|
|
$
|
223,428
|
|
|
$
|
(1,490
|
)
|
Less: reclassification from contract liabilities
|
|
|
(5,903
|
)
|
|
|
(6,500
|
)
|
|
|
597
|
|
Contract assets
|
|
$
|
216,035
|
|
|
$
|
216,928
|
|
|
$
|
(893
|
)
|
12
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$ Change
|
|
|
|
(in thousands)
|
|
Gross contract liabilities
|
|
$
|
8,035
|
|
|
$
|
7,114
|
|
|
$
|
921
|
|
Less: reclassification to contract assets
|
|
|
(5,903
|
)
|
|
|
(6,500
|
)
|
|
|
597
|
|
Contract liabilities
|
|
$
|
2,132
|
|
|
$
|
614
|
|
|
$
|
1,518
|
|
Contract assets decreased by $0.9 million from December 31, 2020 to March 31, 2021 due to a decrease in customer specific material purchases and incremental unbilled production during the three months ended March 31, 2021. Contracts liabilities increased by $1.5 million from December 31, 2020 to March 31, 2021 primarily due to amounts billed to a customer in advance of the production of
precision molding and assembly systems during the three months ended March 31, 2021.
For the three months ended March 31, 2021, we recognized $0.1 million of revenue related to precision molding and assembly systems and wind blades, which was included in the corresponding contract liability balance at the beginning of the period.
Performance Obligations
Remaining performance obligations represent the transaction price for which work has not been performed and excludes any unexercised contract options. The transaction price includes estimated variable consideration as determined based on the estimated production output within the range of the contractual guaranteed minimum volume obligations and production capacity.
As of March 31, 2021, the aggregate amount of the transaction price allocated to the remaining performance obligations to be satisfied in future periods was approximately $3.5 billion. We estimate that we will recognize the remaining performance obligations as revenue as follows:
|
|
$
|
|
|
% of Total
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
Year Ending December 31,
|
|
|
|
|
|
|
|
|
|
Remainder of 2021
|
|
$
|
1,332,175
|
|
|
|
38.6
|
|
%
|
2022
|
|
|
1,426,379
|
|
|
|
41.3
|
|
|
2023
|
|
|
613,392
|
|
|
|
17.8
|
|
|
2024
|
|
|
78,353
|
|
|
|
2.3
|
|
|
Total remaining performance obligations
|
|
$
|
3,450,299
|
|
|
|
100.0
|
|
%
|
For the three months ended March 31, 2021, net revenue recognized from our performance obligations satisfied in previous periods decreased by $8.5 million. The current year decrease primarily relates to changes in certain of our estimated total contract values and related direct costs to complete the performance obligations.
Note 3. Significant Risks and Uncertainties
Our revenues and receivables are earned from a small number of customers. As such, our production levels are dependent on these customers’ orders. See Note 13, Concentration of Customers.
We may be required to reinstate temporary production suspensions or volume reductions at our manufacturing facilities to the extent there are new resurgences of COVID-19 cases in the regions where we operate or there is an outbreak of positive COVID-19 cases in any of our manufacturing facilities. In addition, our global supply chain may in the future be adversely affected if the COVID-19 pandemic persists.
We maintain our U.S. cash in bank deposit and money market accounts that, at times, exceed U.S. federally insured limits. U.S. bank accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) in an amount up to $250,000 during 2021 and 2020. U.S. money market accounts are not guaranteed by the FDIC. At March 31, 2021 and December 31, 2020, we had $97.0 million and $68.9 million, respectively, of cash in bank deposit and money market accounts in high quality U.S. banks, which was in excess of FDIC limits. We have not experienced losses in any such accounts.
13
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We also maintain cash in bank deposit accounts outside the U.S. with no insurance. At March 31, 2021, this included $32.7 million in China, $3.5 million in Turkey, $1.8 million in India, $0.8 million in Mexico and $0.4 million in other countries. As of December 31, 2020, this included $47.4 million in China, $6.0 million in Turkey, $5.0 million in India, $2.1 million in Mexico and $0.5 million in other countries. We have not experienced losses in these accounts. In addition, at March 31, 2021 and December 31, 2020, we had short-term deposits in interest bearing accounts of $0.3 million in both periods in China, which are reported as restricted cash in our condensed consolidated balance sheets.
Certain of our debt agreements are either tied to LIBOR or the Euro Interbank Offered Rate (EURIBOR) and certain of them have associated interest rate hedges. Due to the relatively low LIBOR and EURIBOR rates in effect as of March 31, 2021, a 10% change in the LIBOR or EURIBOR rate would not have had a material impact on our future earnings, fair values or cash flows.
Note 4. Accrued Warranty
The warranty accrual activity for the periods noted consisted of the following:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Warranty accrual at beginning of period
|
|
$
|
50,852
|
|
|
$
|
47,639
|
|
Accrual during the period
|
|
|
4,847
|
|
|
|
3,865
|
|
Cost of warranty services provided during the period
|
|
|
(7,571
|
)
|
|
|
(3,215
|
)
|
Changes in estimate for pre-existing warranties,
including expirations during the period
|
|
|
(2,172
|
)
|
|
|
3,239
|
|
Warranty accrual at end of period
|
|
$
|
45,956
|
|
|
$
|
51,528
|
|
Note 5. Long-Term Debt, Net of Debt Issuance Costs and Current Maturities
Long-term debt, net of debt issuance costs and current maturities, consisted of the following:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Senior revolving loan—U.S.
|
|
$
|
171,154
|
|
|
$
|
171,154
|
|
Unsecured financing—EMEA
|
|
|
50,211
|
|
|
|
30,040
|
|
Equipment financing—EMEA
|
|
|
3,107
|
|
|
|
4,335
|
|
Equipment finance lease—Mexico
|
|
|
7,083
|
|
|
|
8,038
|
|
Equipment finance lease—EMEA
|
|
|
3,458
|
|
|
|
4,119
|
|
Other equipment finance leases
|
|
|
194
|
|
|
|
232
|
|
Total debt - principal
|
|
|
235,207
|
|
|
|
217,918
|
|
Less: Debt issuance costs
|
|
|
(937
|
)
|
|
|
(1,051
|
)
|
Total debt, net of debt issuance costs
|
|
|
234,270
|
|
|
|
216,867
|
|
Less: Current maturities of long-term debt
|
|
|
(53,294
|
)
|
|
|
(32,551
|
)
|
Long-term debt, net of debt issuance costs and
current maturities
|
|
$
|
180,976
|
|
|
$
|
184,316
|
|
Note 6. Share-Based Compensation Plans
During the three months ended March 31, 2021, we issued to certain employees an aggregate of 145,643 timed-based restricted stock units (RSUs), 58,396 performance-based restricted stock units (PSUs) that vest upon achievement of a cumulative, three-year Adjusted EBITDA target measured from January 1, 2021 through December 31, 2023, and 79,784 PSUs that vest upon achievement of certain stock price hurdles for the period of the grant date through December 31, 2023. All of the time-based RSUs vest on the third
14
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
anniversary date of the grant date. Each of the time-based and performance-based awards are subject to the recipient’s continued service with us, the terms and conditions of the 2015 Plan and the applicable award agreement.
The share-based compensation expense recognized in the condensed consolidated statements of operations was as follows:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Cost of goods sold
|
|
$
|
203
|
|
|
$
|
171
|
|
General and administrative expenses
|
|
|
2,196
|
|
|
|
2,771
|
|
Total share-based compensation expense
|
|
$
|
2,399
|
|
|
$
|
2,942
|
|
The share-based compensation expense recognized by award type was as follows:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
RSUs
|
|
$
|
1,255
|
|
|
$
|
956
|
|
Stock options
|
|
|
618
|
|
|
|
1,653
|
|
PSUs
|
|
|
526
|
|
|
|
333
|
|
Total share-based compensation expense
|
|
$
|
2,399
|
|
|
$
|
2,942
|
|
Note 7. Leases
We have operating and finance leases for our manufacturing facilities, warehouses, offices, automobiles and certain of our machinery and equipment. Our leases have remaining lease terms of between one and 15 years, some of which may include options to extend the leases up to five years.
The components of lease cost were as follows:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Total operating lease cost
|
|
$
|
9,716
|
|
|
$
|
8,571
|
|
|
|
|
|
|
|
|
|
|
Finance lease cost
|
|
|
|
|
|
|
|
|
Amortization of assets under finance leases
|
|
$
|
900
|
|
|
$
|
1,547
|
|
Interest on finance leases
|
|
|
189
|
|
|
|
279
|
|
Total finance lease cost
|
|
$
|
1,089
|
|
|
$
|
1,826
|
|
Total lease liabilities as of March 31, 2021 were as follows:
|
|
Operating
|
|
|
Finance
|
|
|
|
Leases
|
|
|
Leases
|
|
|
|
(in thousands)
|
|
Current operating lease liabilities
|
|
$
|
26,496
|
|
|
$
|
—
|
|
Current maturities of long-term debt
|
|
|
—
|
|
|
|
5,989
|
|
Noncurrent operating lease liabilities
|
|
|
150,289
|
|
|
|
—
|
|
Long-term debt, net of debt issuance costs and current maturities
|
|
|
—
|
|
|
|
4,746
|
|
Total lease liabilities
|
|
$
|
176,785
|
|
|
$
|
10,735
|
|
15
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of March 31, 2021, the cost and accumulated depreciation of property, plant and equipment that we are leasing under finance lease arrangements were $27.5 million and $12.8 million, respectively. As of December 31, 2020, the cost and accumulated depreciation of property, plant and equipment that we are leasing under finance lease arrangements were $28.5 million and $12.5 million, respectively.
Future minimum lease payments under noncancelable leases as of March 31, 2021 were as follows:
|
|
Operating
|
|
|
Finance
|
|
|
|
Leases
|
|
|
Leases
|
|
|
|
(in thousands)
|
|
Year Ending December 31,
|
|
|
|
|
|
|
|
|
Remainder of 2021
|
|
$
|
26,297
|
|
|
$
|
4,565
|
|
2022
|
|
|
32,414
|
|
|
|
5,771
|
|
2023
|
|
|
30,585
|
|
|
|
871
|
|
2024
|
|
|
26,903
|
|
|
|
224
|
|
2025
|
|
|
26,721
|
|
|
|
7
|
|
Thereafter
|
|
|
98,447
|
|
|
|
—
|
|
Total future minimum lease payments
|
|
|
241,367
|
|
|
|
11,438
|
|
Less: interest
|
|
|
(64,582
|
)
|
|
|
(703
|
)
|
Total lease liabilities
|
|
$
|
176,785
|
|
|
$
|
10,735
|
|
Supplemental cash flow information related to leases was as follows:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Cash paid for amounts included in the measurement of lease
liabilities:
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
9,250
|
|
|
$
|
7,508
|
|
Operating cash flows from finance leases
|
|
|
189
|
|
|
|
279
|
|
Financing cash flows from finance leases
|
|
|
1,406
|
|
|
|
1,492
|
|
Other information related to leases was as follows:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Weighted-Average Remaining Lease Term (In Years):
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
7.5
|
|
|
|
7.7
|
|
Finance leases
|
|
|
2.0
|
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Discount Rate:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
7.9
|
%
|
|
|
7.9
|
%
|
Finance leases
|
|
|
6.4
|
%
|
|
|
6.4
|
%
|
As of March 31, 2021, there were no material additional leases related to our manufacturing facilities, warehouses, offices, automobiles or our machinery and equipment which have not yet commenced.
Note 8. Financial Instruments
Interest Rate Swap
16
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We use interest rate swap contracts to mitigate our exposure to interest rate fluctuations associated with our U.S. senior revolving credit agreement (the Credit Agreement). We do not use such swap contracts for speculative or trading purposes.
As of March 31, 2021, no interest rate swaps originally designated for hedge accounting were de-designated or terminated. No ineffectiveness on our interest rate swaps was recognized as of March 31, 2021, and none is anticipated over the remaining term of the agreement.
Foreign Exchange Forward Contracts
We use foreign exchange forward contracts to mitigate our exposure to fluctuations in exchange rates between the functional currencies of our subsidiaries and the other currencies in which they transact. We do not use such forward contracts for speculative or trading purposes.
Mexican Peso
All of our remaining outstanding foreign exchange forward contracts (excluding those with call options) expired during the three months ended March 31, 2021. As of December 31, 2020, the notional values associated with our foreign exchange forward contracts qualifying as cash flow hedges were approximately 0.3 billion Mexican Pesos (approximately $14.0 million).
With regards to our foreign exchange call option contracts, for the three months ended March 31, 2021, $0.7 million of premium amortization was recorded through cost of sales within our condensed consolidated statements of operations. The net income (loss) recognized in accumulated other comprehensive loss in our condensed consolidated statements of changes in stockholders’ equity for our foreign exchange call option contracts is expected to be recognized in cost of sales in our condensed consolidated statements of operations during the next nine months.
As of March 31, 2021 and December 31, 2020, the notional values associated with our foreign exchange call option contracts qualifying as cash flow hedges were approximately 1.4 billion Mexican Pesos (approximately $68.1 million) and approximately 0.4 billion Mexican Pesos (approximately $17.3 million), respectively.
Chinese Renminbi
With regards to our balance sheet hedges, for the three months ended March 31, 2021, $0.1 million in gains were recorded through foreign currency loss within our condensed consolidated statements of operations.
The fair values and location of our financial instruments in our condensed consolidated balance sheets were as follows:
|
|
Condensed Consolidated
|
|
March 31,
|
|
|
December 31,
|
|
Financial Instrument
|
|
Balance Sheet Line Item
|
|
2021
|
|
|
2020
|
|
|
|
|
|
(in thousands)
|
|
Foreign exchange forward contracts
|
|
Other current assets
|
|
|
1,693
|
|
|
|
5,832
|
|
Foreign exchange forward contracts
|
|
Accounts payable and accrued
expenses
|
|
|
1,283
|
|
|
|
2,096
|
|
Interest rate swap
|
|
Other noncurrent liabilities
|
|
|
3,818
|
|
|
|
4,414
|
|
The following table presents the pretax amounts reclassified from accumulated other comprehensive loss into our condensed consolidated statements of operations:
Accumulated Other
|
|
Condensed
|
|
Three Months Ended
|
|
Comprehensive
|
|
Consolidated Statement
|
|
March 31,
|
|
Loss Component
|
|
of Operations Line Item
|
|
2021
|
|
|
2020
|
|
|
|
|
|
(in thousands)
|
|
Foreign exchange forward
contracts
|
|
Cost of sales
|
|
$
|
(2,002
|
)
|
|
$
|
(222
|
)
|
17
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9. Income Taxes
The income tax benefit for the three months ended March 31, 2021 was lower than for the corresponding period ended March 31, 2020 primarily due to the earnings mix by jurisdiction in 2021 as compared to 2020.
We do not record a deferred tax liability related to unremitted foreign earnings as we maintain our assertion to indefinitely reinvest our unremitted foreign earnings. No changes in tax law occurred during the quarter which have a material impact on our income tax provision.
Note 10. Net Income (Loss) Per Common Share Calculation
Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during a period. Diluted net income per common share is computed by giving effect to all potentially dilutive securities, unless there is a net loss for the period and/or performance-based awards which are not included until performance conditions are met. In computing diluted net income per common share, we use the treasury stock method. The table below reflects the calculation of the weighted-average number of common shares outstanding, using the treasury stock method, used in computing basic and diluted net income (loss) per common share:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Basic weighted-average shares outstanding
|
|
|
36,601
|
|
|
|
35,213
|
|
Effect of dilutive awards
|
|
|
—
|
|
|
|
—
|
|
Diluted weighted-average shares outstanding
|
|
|
36,601
|
|
|
|
35,213
|
|
For the three months ended March 31, 2021 and 2020, approximately 2,040,000 and 890,000 potentially dilutive shares, respectively, were excluded from the calculation due to net losses. In addition, for the three months ended March 31, 2020, approximately 66,000 share-based compensation awards were excluded from the computation of net income (loss) per common share because their effect would be anti-dilutive. Certain performance-based restricted stock units have been excluded from the computation of diluted shares outstanding for the 2021 and 2020 periods presented as the performance conditions had not yet been met.
Note 11. Stockholders’ Equity
Accumulated Other Comprehensive Loss
The following tables presents the changes in accumulated other comprehensive loss (AOCL) by component:
|
|
Three Months Ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
currency
|
|
|
|
|
|
|
exchange
|
|
|
|
|
|
|
|
translation
|
|
|
Interest rate
|
|
|
forward
|
|
|
Total
|
|
|
|
adjustments
|
|
|
swap
|
|
|
contracts
|
|
|
AOCL
|
|
|
|
(in thousands)
|
|
Balance at December 31, 2020
|
|
$
|
(30,111
|
)
|
|
$
|
(3,443
|
)
|
|
$
|
564
|
|
|
$
|
(32,990
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
(5,291
|
)
|
|
|
597
|
|
|
|
(2,281
|
)
|
|
|
(6,975
|
)
|
Amounts reclassified from AOCL
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,002
|
)
|
|
|
(2,002
|
)
|
Net tax effect
|
|
|
—
|
|
|
|
(139
|
)
|
|
|
790
|
|
|
|
651
|
|
Net current period other comprehensive income (loss)
|
|
|
(5,291
|
)
|
|
|
458
|
|
|
|
(3,493
|
)
|
|
|
(8,326
|
)
|
Balance at March 31, 2021
|
|
$
|
(35,402
|
)
|
|
$
|
(2,985
|
)
|
|
$
|
(2,929
|
)
|
|
$
|
(41,316
|
)
|
18
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
Three Months Ended March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
currency
|
|
|
|
|
|
|
exchange
|
|
|
|
|
|
|
|
translation
|
|
|
Interest rate
|
|
|
forward
|
|
|
Total
|
|
|
|
adjustments
|
|
|
swap
|
|
|
contracts
|
|
|
AOCL
|
|
|
|
(in thousands)
|
|
Balance at December 31, 2019
|
|
$
|
(22,012
|
)
|
|
$
|
(2,145
|
)
|
|
$
|
545
|
|
|
$
|
(23,612
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
(9,223
|
)
|
|
|
(2,550
|
)
|
|
|
(6,936
|
)
|
|
|
(18,709
|
)
|
Amounts reclassified from AOCL
|
|
|
—
|
|
|
|
—
|
|
|
|
(222
|
)
|
|
|
(222
|
)
|
Net tax effect
|
|
|
—
|
|
|
|
535
|
|
|
|
1,503
|
|
|
|
2,038
|
|
Net current period other comprehensive income (loss)
|
|
|
(9,223
|
)
|
|
|
(2,015
|
)
|
|
|
(5,655
|
)
|
|
|
(16,893
|
)
|
Balance at March 31, 2020
|
|
$
|
(31,235
|
)
|
|
$
|
(4,160
|
)
|
|
$
|
(5,110
|
)
|
|
$
|
(40,505
|
)
|
Note 12. Commitments and Contingencies
Legal Proceedings
From time to time, we are party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which may not be covered by insurance. Upon resolution of any pending legal matters, we may incur charges in excess of presently established reserves. Our management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.
Note 13. Concentration of Customers
Revenues from certain customers (in thousands) in excess of 10 percent of our total consolidated revenues are as follows:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Customer
|
|
Revenues
|
|
|
% of Total
|
|
|
Revenues
|
|
|
% of Total
|
|
Vestas
|
|
$
|
169,218
|
|
|
|
41.8
|
%
|
|
$
|
157,412
|
|
|
|
44.1
|
%
|
GE
|
|
|
104,852
|
|
|
|
25.9
|
%
|
|
|
100,132
|
|
|
|
28.1
|
%
|
Nordex
|
|
|
76,543
|
|
|
|
18.9
|
%
|
|
|
53,257
|
|
|
|
14.9
|
%
|
Trade accounts receivable from certain customers in excess of 10 percent of our total consolidated trade accounts receivable are as follows:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Customer
|
|
% of Total
|
|
|
% of Total
|
|
Vestas
|
|
|
26.7
|
%
|
|
|
35.0
|
%
|
Nordex
|
|
|
44.3
|
%
|
|
|
40.8
|
%
|
Enercon
|
|
|
11.2
|
%
|
|
|
8.3
|
%
|
Note 14. Segment Reporting
Our operating segments are defined geographically into five geographic operating segments—(1) the United States (U.S.), (2) Asia, (3) Mexico, (4) EMEA and (5) India. For a detailed discussion of our operating segments, refer to the discussion in Note 19, Segment Reporting, to the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K.
All of our segments operate in their local currency except for the Mexico and Asia segments, which both include a U.S. parent company, and India and Switzerland, which operate in the U.S. dollar.
19
TPI COMPOSITES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables set forth certain information regarding each of our segments:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Net sales by segment:
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
49,286
|
|
|
$
|
47,431
|
|
Asia
|
|
|
76,928
|
|
|
|
91,137
|
|
Mexico
|
|
|
118,459
|
|
|
|
118,250
|
|
EMEA
|
|
|
112,366
|
|
|
|
88,957
|
|
India
|
|
|
47,641
|
|
|
|
10,861
|
|
Total net sales
|
|
$
|
404,680
|
|
|
$
|
356,636
|
|
|
|
|
|
|
|
|
|
|
Net sales by geographic location (1):
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
49,286
|
|
|
$
|
47,431
|
|
China
|
|
|
76,928
|
|
|
|
91,137
|
|
Mexico
|
|
|
118,459
|
|
|
|
118,250
|
|
Turkey
|
|
|
112,366
|
|
|
|
88,957
|
|
India
|
|
|
47,641
|
|
|
|
10,861
|
|
Total net sales
|
|
$
|
404,680
|
|
|
$
|
356,636
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
U.S. (2)
|
|
$
|
(11,620
|
)
|
|
$
|
(15,586
|
)
|
Asia
|
|
|
2,709
|
|
|
|
5,072
|
|
Mexico
|
|
|
(4,024
|
)
|
|
|
(1,768
|
)
|
EMEA
|
|
|
9,788
|
|
|
|
2,664
|
|
India
|
|
|
(60
|
)
|
|
|
(5,786
|
)
|
Total loss from operations
|
|
$
|
(3,207
|
)
|
|
$
|
(15,404
|
)
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(in thousands)
|
|
Property, plant and equipment, net:
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
32,884
|
|
|
$
|
31,811
|
|
Asia (China)
|
|
|
43,771
|
|
|
|
46,075
|
|
Mexico
|
|
|
81,857
|
|
|
|
78,813
|
|
EMEA (Turkey)
|
|
|
23,890
|
|
|
|
28,312
|
|
India
|
|
|
29,727
|
|
|
|
23,990
|
|
Total property, plant and equipment, net
|
|
$
|
212,129
|
|
|
$
|
209,001
|
|
(1)
|
Net sales are attributable to countries based on the location where the product is manufactured or the services are performed.
|
(2)
|
The losses from operations in our U.S. segment includes corporate general and administrative costs of $8.9 million and $9.5 million for the three months ended March 31, 2021 and 2020, respectively.
|
20