TPI Composites Expects Return to Profitability in H2

TPI Composites, Inc. Q2 2024 Earnings Conference Call Overview

TPI Composites, Inc., a manufacturer of composite wind blades, recently conducted its Second Quarter 2024 Earnings Conference Call, presenting both the challenges and optimistic prospects for the company moving forward.

During Q2, TPI Composites faced reduced sales and adjusted EBITDA but anticipates a recovery in the latter half of the year. The company is committed to reaching a minimum of $100 million in adjusted EBITDA by 2025.

The facilities in India and Türkiye have maintained profitability, and there are signs of improvement in operations in Mexico. TPI Composites has reaffirmed its full-year 2024 guidance and is expecting volume growth in the US market, supported by new blade production lines and government incentives. The company ended the quarter with a robust cash position and is concentrating on long-term growth and profitability.

Key Takeaways:

• Lower sales and adjusted EBITDA in Q2 are attributed to quality issues and canceled orders.
• TPI Composites aims for at least $100 million in adjusted EBITDA and positive free cash flow by 2025.
• Profitability is expected in H2 2024, with the full-year guidance reaffirmed.
• Profits continue in the company’s facilities in India and Türkiye, while Mexico plants show signs of improvement.
• Volume growth in the US is anticipated for 2025 due to new blade lines and government support.
• At the end of Q2, TPI held $102 million in cash and $554 million in net debt.

Company Outlook:

• TPI Composites is optimistic about recovery, predicting improved adjusted EBITDA margins in H2 2024.
• The company expects capital expenditures between $25 million to $30 million for FY 2024, focusing on recommencing idle production lines for sustainable growth.
• Plans for expansion in Europe, potentially in Turkey or other low-cost EU countries, are being considered.

Bearish Highlights:

• Quality issues and canceled orders impacted Q2 results significantly.
• Losses continued from the Nordex Matamoros plant and the automotive sector.

Bullish Highlights:

• A positive relationship with Nordex is in place, with potential collaboration on a new blade design for the US market.
• An increase is expected in field service revenue by the third quarter.
• TPI is fully booked in the US market and is determining production volumes for the EU market.

The earnings call covered various perspectives on TPI Composites’ performance, focusing on the challenges that the company has faced, the mitigation strategies employed, and the plans in place for future growth.

Looking ahead, TPI Composites is confident in its recovery strategy and believes the operational changes being implemented will drive positive results as the markets evolve.