• Net Sales: $309.8 million, a decrease of 17% from the same period in 2023.
• Adjusted EBITDA: Loss of $24.9 million, compared to a loss of $33.3 million in the same period in 2023.
• Free Cash Flow: Negative $44 million in the second quarter of 2024.
• Unrestricted Cash and Cash Equivalents: $102 million at the end of the quarter.
• Net Debt: $554 million.
• Blade Sets Delivered: 257 blade sets, representing 1.2 gigawatts of capacity.
• Full Year 2024 Sales Guidance: $1.3 billion to $1.4 billion.
• Capital Expenditures: Anticipated to be $25 million to $30 million for the full year 2024.

• Warning! GuruFocus has detected 6 Warning Signs with TPIC.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TPI Composites Inc (NASDAQ:TPIC) anticipates a profitable second half of 2024 after a challenging first half, with improved factory utilization and positive free cash flow.
• The company's blade facilities in India and Turkiye remained profitable, delivering 257 blade sets, representing 1.2 gigawatts of capacity during the quarter.
• TPIC expects to achieve at least $100 million of adjusted EBITDA in 2025, driven by operational improvements and increased production capacity.
• Raw material prices have declined year-over-year and are expected to remain stable, contributing to cost efficiency.
• The company is optimistic about the long-term recovery of the onshore wind energy market, with supportive policies in the U.S. and E.U. expected to drive growth.

Negative Points

• Sales and adjusted EBITDA were lower than expectations in Q2 2024 due to startup and transition delays and the unexpected cancellation of purchase orders by Nordex.
• The shutdown of the Nordex Matamoros facility resulted in significant losses, impacting Q2 revenue and adjusted EBITDA.
• Net sales decreased by 17% compared to the same period in 2023, driven by a decrease in wind blade production and unfavorable foreign currency fluctuations.
• Free cash flow was negative $44 million in Q2 2024, primarily due to EBITDA losses and capital expenditures related to transitions and startups.
• Challenges such as high interest rates, inflation, and permitting issues are hindering certain project timelines, affecting market recovery.

Q & A Highlights

Q: How confident are you about achieving the $100 million EBITDA target for 2025 given the uncertainty in the wind market recovery? A: William Siwek, President and CEO, stated that they are confident in reaching the $100 million EBITDA target. Despite the overall market recovery being slower, TPI's volumes are expected to increase year-over-year from 2024 to 2025, with customers demanding all they can deliver.

Q: Can you provide an update on the idled facility in Juarez and its impact on your outlook for 2024 and 2025? A: William Siwek confirmed that the Juarez facility, which started up for GE, has been in start-up for the first two quarters of 2024. It will have a meaningful impact this year and next year as it ramps up production.

Q: What is the latest update on the Iowa facility and potential timing for ramping up volumes there? A: William Siwek mentioned that the best-case scenario for the Iowa facility would be early 2025. The main challenge will be hiring the necessary workforce, which could take about six months.

Q: How do you see cash generation in the second half of the year, particularly between Q3 and Q4? A: Ryan Miller, CFO, indicated that the fourth quarter is expected to generate more cash than the third quarter. The third quarter will likely be flat due to ongoing CapEx investments, with most cash generation occurring in Q4.

Q: Is the higher unit pricing on blades in Q2 sustainable, or was it specific to that quarter? A: Ryan Miller explained that the higher pricing was due to a mix impact, with longer, more expensive blades ramping up. This is expected to normalize as shorter blades increase in production over the second half of the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.