TPI Composites, Inc. (NASDAQ:TPIC) Files An 8-K Results of Operations and Financial Condition
Item2.02.
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RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
On May1, 2017, TPI Composites, Inc. (we or the Company) announced
its preliminary estimated financial results for the three months
ended March31, 2017.
Set forth below are selected preliminary estimated unaudited
financial results as of and for the three months ended March31,
2017. These financial results are unaudited and should be
considered preliminary and subject to change. We have provided
ranges, rather than specific amounts, for the preliminary results
described below as our final results remain subject to the
completion of our closing procedures, final adjustments,
developments that may arise between now and the time the
financial results are finalized, and managements and the audit
committees final reviews. Accordingly, you should not place undue
reliance on this preliminary data, which may differ materially
from our final results. Please see the reports and other filings
we make from time to time with the Securities and Exchange
Commission for a discussion of certain factors that could result
in differences between the preliminary financial data reported
below and the final results, including, but not limited to the
matters discussed under the captions Risk Factors, Special Note
Regarding Forward-Looking Statements and Managements Discussion
and Analysis of Financial Condition and Results of Operations.
These preliminary estimates should not be viewed as a substitute
for our full unaudited condensed consolidated financial
statements prepared in accordance with U.S. generally accepted
accounting principles (GAAP). In addition, they are not
necessarily indicative of the results to be achieved in any
future period.
These estimates have been prepared by and are the responsibility
of management. Our independent registered public accounting firm
has not audited, compiled, performed any procedures on or
reviewed the preliminary financial data, and accordingly does not
express an opinion or any other form of assurance with respect to
the preliminary financial data.
The following are the selected preliminary estimated unaudited
financial results as of and for the three months ended March31,
2017, as well as a comparison to our unaudited financial results
as of and for the three months ended March31, 2016:
|
Three Months Ended March 31, 2017 |
ThreeMonthsEnded March 31, 2016 |
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| LowEndof Range | HighEndof Range | Actual | ||||||||||||||
| (inthousands, except per share data) | ||||||||||||||||
|
Other Financial Information: |
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|
Net sales |
$ | 189,650 | to | $ | 191,650 | $ | 176,110 | |||||||||
|
Total billings(1) |
$ | 209,500 | to | $ | 211,500 | $ | 174,538 | |||||||||
|
Gross profit |
$ | 18,400 | to | $ | 19,400 | $ | 12,938 | |||||||||
|
Net income |
$ | 3,050 | to | $ | 3,650 | $ | 1,746 | |||||||||
|
Weighted-average diluted common shares outstanding |
33,827 | to | 33,827 | 4,238 | ||||||||||||
|
Diluted earnings (loss) per common share |
$ | 0.09 | to | $ | 0.11 | $ | (0.16 | ) | ||||||||
|
EBITDA(1) |
$ | 11,970 | to | $ | 12,600 | $ | 10,951 | |||||||||
|
Adjusted EBITDA(1) |
$ | 15,050 | to | $ | 15,700 | $ | 11,390 |
| ThreeMonthsEnded March31, | ||||||||
|
Other Operating Information: |
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|
Sets(2) |
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|
Estimated megawatts(3) |
1,460 | 1,113 | ||||||
|
Dedicated manufacturing lines(4) |
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Total manufacturing lines installed(5) |
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|
Manufacturing lines in startup(6) |
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Manufacturing lines in transition(7) |
| (1) |
See Non-GAAP Financial Measures below for more information and the reconciliations contained therein of total billings, EBITDA and adjusted EBITDA to net sales, net income and net income, respectively, the most directly comparable financial measures calculated and presented in accordance with GAAP. |
| (2) |
Number of wind blade sets (which consist of three wind blades) invoiced worldwide. See Key Operating Metrics below for more information. |
| (3) |
Estimated megawatts of energy capacity to be generated by wind blade sets invoiced in the period. See Key Operating Metrics below for more information. |
| (4) |
Number of manufacturing lines that are dedicated to our customers under long-term supply agreements. See Key Operating Metrics below for more information. Dedicated manufacturing lines may be greater than total manufacturing line capacity in instances where we have signed new supply agreements for manufacturing facilities that are under construction or have not yet been built. |
| (5) |
Number of manufacturing lines installed and either in operation, startup or transition. See Key Operating Metrics below for more information. |
| (6) |
Number of manufacturing lines in a startup phase during the period. See Key Operating Metrics below for more information. |
| (7) |
Number of manufacturing lines that were being transitioned to a new wind blade model during the period. See Key Operating Metrics below for more information. |
For the three months ended March 31, 2017, we expect to report
net sales of between $189.7 million and $191.7 million and total
billings of between $209.5 million and $211.5 million. This
compares to net sales and total billings of $176.1 million and
$174.5 million, respectively, for the three months ended March31,
2016. The higher net sales is primarily due to increased wind
blade set production at our Mexico, China and U.S. plants.
We expect to report net income of between $3.1million and
$3.7million for the three months ended March31, 2017, as compared
to $1.7million for the three months ended March31, 2016. Diluted
earnings per common share are expected to be between $0.09 and
$0.11 for the three months ended March31, 2017, as compared to a
loss of $0.16 during the three months ended March31, 2016. The
increase is due to the higher net sales above as well as improved
operating efficiency.
For the three months ended March31, 2017, we expect to report
EBITDA of between $12.0million and $12.6million and adjusted
EBITDA of between $15.1million and $15.7million. This compares to
EBITDA of $11.0million and adjusted EBITDA of $11.4million for
the three months ended March31, 2016. The increase is due to the
factors described above.
We expect to report cash and cash equivalents as of March31, 2017
of approximately $116million and an aggregate amount of total
indebtedness as of March31, 2017 of approximately $123million.
During the three months ended March31, 2017, we had net
repayments of outstanding indebtedness of approximately
$3million.
The preliminary estimated financial and other data as of and for
the three months ended March31, 2017 set forth above is subject
to the completion of the Companys financial closing procedures.
This data has been prepared by, and is the responsibility of, the
Companys management. The Companys independent registered public
accounting firm has not audited, reviewed or performed any
procedures with respect to the accompanying preliminary financial
and other data, and accordingly does not express an opinion or
any other form of assurance with respect thereto. The Company
currently expects that its final results of operations and other
data will be consistent with the estimates set forth above, but
such estimates are preliminary and the Companys actual results of
operations and other data could differ materially from these
estimates due to the completion of its financial closing
procedures, final adjustments and other developments that may
arise between now and the time such unaudited interim
consolidated financial statements for the three months ended
March31, 2017 are issued.
Non-GAAP Financial Measures
In addition to providing results that are determined in
accordance with GAAP, the Company has provided certain financial
measures that are not in accordance with GAAP. Total billings,
EBITDA and adjusted EBITDA are non-GAAP financial measures. 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 agreements. Under GAAP, we do not recognize
revenue on our wind blade sales until they have been delivered to
our customers. In many cases, customers request us to store their
wind blades for a period of time
after we have invoiced them. The revenues associated with these
transactions are deferred and recognized upon delivery but we are
contractually entitled to payment for those wind blades and,
accordingly, invoice them when the blades are placed in storage.
We define EBITDA as net income (loss) attributable to the Company
plus interest expense (including losses on the 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 realized gains or losses
from foreign currency remeasurement.
Our use of total billings, EBITDA and adjusted EBITDA have
limitations, and you should not consider total billings, EBITDA
and adjusted EBITDA in isolation from or as a substitute for
measures such as net sales, net income (loss) or total debt, net
of debt issuance costs and discount reported under GAAP. We
monitor total billings, and believe it is useful to present to
investors as a supplement to our GAAP measures, because we
believe it more directly correlates to sales activity and
operations based on the timing of actual transactions with our
customers, which facilitates comparison of our performance
between periods and provides a more timely indication of trends
in sales. We monitor EBITDA and adjusted EBITDA as a supplement
to our GAAP measures and believe it is useful to present to
investors because we believe that it facilitates evaluation of
our period-to-period operating performance by eliminating items
that are not operational in nature, allowing comparison of our
recurring core business operating results over multiple periods
unaffected by differences in capital structure, capital
investment cycles and fixed asset base.
The following table presents reconciliations of our estimated
total billings to our preliminary estimated low end and high end
ranges for our estimated net sales as well as our estimated
EBITDA and adjusted EBITDA to our preliminary estimated low end
and high end ranges for our estimated net income, each for the
three months ended March31, 2017.
| ThreeMonthsEnded March 31, 2017 | ThreeMonthsEnded March 31, 2016 | |||||||||||||||
| LowEndof Range | HighEndof Range | Actual | ||||||||||||||
| (inthousands) | ||||||||||||||||
|
Net sales |
$ | 189,650 | to | $ | 191,650 | $ | 176,110 | |||||||||
|
Change in deferred revenue: |
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|
Blade-related deferred revenue at beginning of period |
(69,568 | ) | to | (69,568 | ) | (65,520 | ) | |||||||||
|
Blade-related deferred revenue at end of period |
89,300 | to | 89,350 | 65,027 | ||||||||||||
|
Foreign exchange impact(1) |
to | (1,079 | ) | |||||||||||||
|
Change in deferred revenue |
19,850 | to | 19,850 | (1,572 | ) | |||||||||||
|
Total billings |
$ | 209,500 | to | $ | 211,500 | $ | 174,538 | |||||||||
|
Net income |
$ | 3,050 | to | $ | 3,650 | $ | 1,746 | |||||||||
|
Adjustments: |
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|
Depreciation and amortization |
3,825 | to | 3,835 | 3,011 | ||||||||||||
|
Interest expense (net of interest income) |
3,000 | to | 3,010 | 3,891 | ||||||||||||
|
Income tax provision |
2,095 | to | 2,105 | 2,303 | ||||||||||||
|
EBITDA |
11,970 | to | 12,600 | 10,951 | ||||||||||||
|
Realized loss on foreign currency remeasurement |
1,380 | to | 1,390 | |||||||||||||
|
Share-based compensation expense |
1,700 | to | 1,710 | |||||||||||||
|
Adjusted EBITDA |
$ | 15,050 | to | $ | 15,700 | $ | 11,390 | |||||||||
| (1) |
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. |
Key Operating Metrics
Key operating metrics consist of sets invoiced, estimated
megawatts of energy capacity for wind blade sets invoiced,
dedicated manufacturing lines, total manufacturing lines
installed, manufacturing lines in startup and manufacturing lines
in transition. Sets represents the number of wind blade sets,
consisting of three wind blades each that we invoiced worldwide
during the period. We monitor sets and believe that presenting
sets to investors is helpful because we believe that it is the
most direct measurement of our manufacturing output during the
period. Sets primarily impact net sales and total billings.
Estimated megawatts are the energy capacity to be generated by
wind blade sets sold in the period. Our estimate is based solely
on name-plate capacity of the wind turbine on which our wind
blades are expected to be installed. We monitor estimated
megawatts and believe that presenting estimated megawatts to
investors is helpful because we believe that it is a commonly
followed measurement of energy capacity across our industry and
provides an indication of our share of the overall wind blade
market. Dedicated manufacturing lines are the number of
manufacturing lines that we have dedicated to our customers to
our long-term supply agreements. Total manufacturing lines
installed represents the number of manufacturing lines installed
and either in operation, startup or transition. We monitor
dedicated manufacturing lines and total manufacturing lines
installed and believe that presenting both of these metrics to
investors is helpful because we believe that the number of
dedicated manufacturing lines is the best indicator of demand for
our wind blades from customers under our long-term supply
agreements in any given period. Dedicated manufacturing lines
primarily impacts our net sales and total billings. We believe
that dedicated manufacturing lines provide an understanding of
additional capacity within an existing facility and that total
manufacturing lines installed provides an understanding of the
number of manufacturing lines installed and either in operation,
startup or transition. Manufacturing lines in startup is the
number of dedicated manufacturing lines that were in a startup
phase during the pre-production and production ramp up period, to
the opening of a new manufacturing facility, the expansion of an
existing manufacturing facility or the addition of new
manufacturing lines in an existing manufacturing facility. We
monitor and present this metric because we believe it helps
investors to better understand the impact of the startup phase of
our new manufacturing facilities on our gross profit (loss) and
net income (loss). Manufacturing lines in transition is the
number of dedicated manufacturing lines that were being
transitioned to a new wind blade model during the period. We
monitor and present this metric because we believe it helps
investors to better understand the impact of these transitions on
our gross profit (loss) and net income (loss).
The information furnished under this Item 2.02 shall not be
deemed filed for purposes of Section18 of the Securities Exchange
Act of 1934, as amended (the Exchange Act), or incorporated by
reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act regardless of any general
incorporation language in such filing, unless expressly
incorporated by specific reference in such filing.
About TPI Composites, Inc. (NASDAQ:TPIC)
TPI Composites, Inc. manufactures composite wind blades. The Company operates through four segments. The United States segment includes the manufacturing of wind blades at its Newton, Iowa plant; the manufacturing of precision molding and assembly systems used for the manufacture of wind blades in its Warren, Rhode Island facility, and the manufacturing of composite solutions for the transportation industry, which it also conducts in its Rhode Island and Massachusetts facilities. The Asia segment includes the manufacturing of wind blades in facilities in Taicang Port, China and two in Dafeng, China; the manufacturing of precision molding and assembly systems in its Taicang City, China facility; the manufacturing of components in its second Taicang Port, China facility, and wind blade inspection and repair services. The Mexico segment manufactures wind blades from a facility in Juarez, Mexico. The Middle East and Africa segment manufactures wind blades from a facility in Izmir, Turkey. TPI Composites, Inc. (NASDAQ:TPIC) Recent Trading Information
TPI Composites, Inc. (NASDAQ:TPIC) closed its last trading session up +0.08 at 19.65 with 91,205 shares trading hands.
