Newsletter

TPI Composites, Inc. reported financial results for the second quarter ended June 30, 2018.

Highlights

For the quarter ended June 30, 2018:
•Net sales of $230.6 million
•Total billings of $237.4 million
•Net loss of $4.1 million or $0.12 per diluted share
•EBITDA of $10.1 million, with an EBITDA margin of 4.4%
•Adjusted EBITDA of $13.5 million, with an Adjusted EBITDA margin of 5.8%

Net sales for the quarter decreased by $9.0 million or 3.7% to $230.6 million compared to $239.6 million in the same period in 2017. Total billings increased by $6.3 million or 2.7% to $237.4 million for the three months ended June 30, 2018 compared to $231.1 million in the 2017 period. Net sales of wind blades were $206.4 million for the quarter as compared to $225.8 million in the same period in 2017. The decrease was primarily driven by a 17.3% decrease in the number of wind blades produced during the three months ended June 30, 2018 compared to the same period in 2017 primarily as a result of the increase in transitions and startups, the loss of volume from the expiration of contracts in Mexico and Turkey and a delayed customer startup. This was partially offset by higher average sales prices due to the mix of wind blade models produced during the three months ended June 30, 2018 compared to the same period in 2017 and by foreign currency fluctuations. The favorable impact of the currency movements on consolidated net sales and total billings were both 2.4% for the quarter.

Total cost of goods sold for the quarter was $215.6 million and included aggregate costs of $17.3 million primarily related to startup costs in TPI Composites’ new plants in Turkey and Mexico and for a new customer in Taicang, China and costs related to seven lines in transition during the quarter. This compares to total cost of goods sold of $209.7 million for the same period in 2017, which included aggregate costs of $10.5 million related to startup costs in the company’s new plants in Turkey and Mexico and the startup of a new wind blade model for one of its customers in Dafeng, China. Cost of goods sold as a percentage of net sales increased by six percentage points during the three months ended June 30, 2018 as compared to the same period in 2017, driven by the $6.8 million increase in startup and transition costs and unfavorable foreign currency fluctuations, partially offset by improved operating efficiencies and the impact of savings in raw material costs. The unfavorable impact of the currency movements on consolidated cost of goods sold was 0.5% for the quarter.

General and administrative expenses for the three months ended June 30, 2018 totaled $11.0 million, up slightly from $10.8 million for the same period in 2017. As a percentage of net sales, general and administrative expenses were 4.8% for the three months ended June 30, 2018, up from 4.5% in the same period in 2017.

Net loss for the quarter was $4.1 million as compared to a net income of $9.6 million in the same period in 2017. Diluted loss per share was $0.12 for the three months ended June 30, 2018, compared to earnings per share of $0.28 for the three months ended June 30, 2017.

Capital expenditures were $30.6 million for the quarter compared to $9.8 million during the same period in 2017.

TPI Composites ended the quarter with $114.0 million of cash and cash equivalents and net debt was $17.4 million as compared to net cash of $24.6 million at December 31, 2017.

2018 Outlook
For 2018, the Company is providing the following guidance:
•Net sales of between $1.0 billion and $1.05 billion
•Total billings of between $1.0 billion and $1.05 billion
•Adjusted EBITDA of between $65 million and $70 million
•Fully diluted earnings per share of between $0.10 and $0.14
•Sets invoiced of between 2,450 and 2,480
•Average sales price per blade of between $125,000 and $130,000
•Estimated megawatts of sets invoiced to be between 6,800 and 6,900
•Dedicated manufacturing lines