Executive Summary

Q2 2024 marked a transitional quarter with net sales of $309.8M and a net loss from continuing operations of $61.5M; adjusted EBITDA loss improved to $24.9M vs. $33.3M a year ago as warranty charges rolled off, but quality-focused start-up pacing and Nordex Matamoros cancellations weighed on volumes .
Management reaffirmed FY 2024 guidance for $1.3–$1.4B sales and narrowed adjusted EBITDA margin to “approximately 1%” (from 1–3%), reflecting higher-than-expected losses from the Nordex Matamoros plant; positive free cash flow and at least mid-single-digit adjusted EBITDA margins are targeted for H2 2024 .
Strategic actions: Automotive business divested effective June 30, 2024, and Nordex Matamoros facility closed—removing loss-making operations and improving 2H profitability setup .
Key near-term stock catalysts: confirmation of H2 profitability and free cash flow turn, ramp of 4 new GE lines in Mexico, ASP normalization as shorter blades rebalance mix, and any Iowa facility activation signals for 2025; risks include EU demand softness and FX (TRY) headwinds .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA loss improved year-over-year to ($24.9M) vs. ($33.3M), aided by absence of prior-year $32.7M warranty charge, FX tailwinds, and cost savings initiatives .
Strategic portfolio reshaping: completed divestiture of Automotive and closed Nordex Matamoros, removing loss-making operations to position for H2 profitability and positive free cash flow .
Strong regional operations: India and Türkiye remained profitable; Mexico plants showing improvement with LEAN and quality initiatives; supply chain stability with raw material prices down year-over-year .

What Went Wrong

Q2 revenue and adjusted EBITDA were below internal expectations due to a heightened quality focus slowing start-ups (~$20M revenue impact) and Nordex’s unexpected cancellation of Matamoros orders, requiring an accelerated shutdown .
Field Services revenue fell 51% YoY to $5.5M as technicians were diverted to inspection/repair campaigns, limiting EBITDA contribution; normalization expected to resume in H2 .
Elevated interest expense ($22.4M in Q2) from the Oaktree refinancing weighed on bottom line, while inflation and higher wages pressured cost base .

Financial Results

Consolidated Financials vs. Prior Year and Prior Quarter

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$374.0	$299.1	$309.8
Diluted EPS – Continuing Ops ($)	($1.75)	($1.31)	($1.30)
Net Loss – Continuing Ops ($USD Millions)	($58.7)	($61.8)	($61.5)
Adjusted EBITDA ($USD Millions)	($33.3)	($23.0)	($24.9)
Adjusted EBITDA Margin (%)	(8.9%)	(7.7%)	(8.0%)
Free Cash Flow ($USD Millions)	$6.2	($47.3)	($44.0)

Notes: Adjusted EBITDA margin is from company disclosures; free cash flow defined as operating cash flow minus capex .

Segment Breakdown (Continuing Operations)

Segment	Q2 2023 ($USD Millions)	Q2 2024 ($USD Millions)
Wind (blades, tooling, other)	$362.7	$304.3
Field Services	$11.3	$5.5

Drivers: Lower Wind sales driven by start-ups/transitions, expected volume declines, Matamoros cancellations, and FX; partial offset from higher ASPs and tooling. Field Services declined on technician redeployment to inspection/repair .

KPIs (Continuing Operations)

KPI	Q2 2023	Q2 2024
Sets (3 blades/set)	661	473
Estimated Megawatts	2,910	2,024
Utilization (%)	85%	63%
Dedicated Manufacturing Lines	37	38
Manufacturing Lines Installed	37	38
Wind Blade ASP ($ thousands)	$179	$208

Guidance Changes

Metric	Period	Previous Guidance (Q1 2024 8-K)	Current Guidance (Q2 2024 8-K)	Change
Net Sales (Continuing Ops)	FY 2024	$1.3B–$1.4B	$1.3B–$1.4B	Maintained
Adjusted EBITDA Margin (Continuing Ops)	FY 2024	1%–3%	Approximately 1% (narrowed to low end)	Lowered/Narrowed
Utilization (%)	FY 2024	75%–80% (34 lines)	75%–80% (34 lines)	Maintained
Capital Expenditures	FY 2024	$25–$30M	$25–$30M	Maintained

Management rationale: Higher-than-expected losses from Nordex Matamoros and TRY FX headwinds drove the narrowing to the low end; line start-ups/transition to serial production expected to drive H2 improvement .

Earnings Call Themes & Trends

Topic	Q4 2023 (Feb-22)	Q1 2024 (May-02)	Q2 2024 (Aug-08)	Trend
Market Recovery Timing	Expect installations to materialize in 2025; policy support strong, permitting/transmission bottlenecks persist	Inflection in 2025; IRA/European policy clarity needed; delays from rates/inflation	Recovery likely pushed to back half of 2025 or into 2026; U.S. volumes strong for TPIC	Recovery expectations pushed out modestly
GE Mexico Lines	New GE blade agreement; 4 lines starting in 2024	2 lines running, 2 more in Q2; serial production 2H24	Ramping; ASP peak driven by mix; shorter GE blade volumes to rebalance in 2H	Execution progressing
Nordex Matamoros	~$20M Q4 losses; transition back mid-2024	$9M Q1 impact; handover by June 30	Orders canceled; shutdown before quarter-end; all severance funded by Nordex; losses behind	Resolved; overhang removed
Field Services	Warranty campaigns reduced revenue; expected to turn in 2024	Return to revenue-generating work by mid-year	Improving into Q3–Q4; margins higher than manufacturing, growth planned	Normalizing
ASP/Mix	Higher ASPs aiding margin	Q1 ASP down on mix/material costs; expected +$8K/blade longer-term	ASP peaked at $208K/blade; mix to normalize as shorter blades ramp	ASP peak normalizing
Regional Performance	India/Türkiye excel; global utilization 87%	India/Türkiye profitable; Mexico improving	India/Türkiye profitable; Mexico poised to turn profitable in H2	Improving trajectory
FX / TRY Headwinds	Noted inflation/currency impacts	Inflation headwinds in Türkiye/Mexico; cost reductions planned	TRY FX devaluation worse than planned; contributed to EBITDA guidance narrowing	Ongoing headwind
Iowa Facility (Newton)	Not in ’24 guidance; blade choice drives CapEx	Early 2025 best case; 6-month hiring ramp	Timeline unchanged; readiness contingent on GE decision	Watch for 2025

Management Commentary

“As these lines enter serial production and utilization increases…we are positioned to return the company to profitability and positive free cash flow in the second half of the year.” — Bill Siwek, CEO .
“Sales and adjusted EBITDA were lower than expectations in Q2…heightened emphasis on quality…slowed our start-up…impacting our sales by about $20 million…Nordex’s unexpectedly canceled purchase orders…requested that we wind down the factory.” .
“Excluding [start-up/transition costs and Matamoros losses], our adjusted EBITDA was nearly 5%…we anticipate at least mid-single-digit adjusted EBITDA margins in Q3 and Q4 as well as positive free cash flow.” .
“We are reaffirming our guidance for the full year 2024, however, we are narrowing our adjusted EBITDA guidance to the low end of the range…” .
“We believe we are truly at a pivotal point in time for TPI…we plan to achieve at least $100 million of adjusted EBITDA in 2025.” .

Q&A Highlights

2025 EBITDA confidence: $100M target feasible even if broader market recovery is slower; TPIC volumes up, customers seeking all capacity; U.S. lines likely minimal transitions in 2025 .
Iowa facility timing: Earliest start in early 2025; ~6-month ramp tied to hiring; blade selection will determine CapEx .
Cash cadence: Q3 flattish; majority of cash inflow in Q4 as capex moderates and lines reach serial production .
ASP sustainability: Q2 $208K per blade seen as peak; mix expected to normalize as shorter blades ramp, lowering ASP in 2H .
Nordex relationship: Despite shutdown strains, relationship intact; opportunity to participate in new U.S. blade design .
Lines count/utilization: 34 operating lines by year-end 2024; idled capacity in India provides optionality for 2025 .

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable for TPIC due to missing CIQ mapping at the time of retrieval; as a result, we cannot quantify beats/misses versus Street for Q2 2024. Values would normally be retrieved from S&P Global*.
Given management’s disclosure that Q2 sales and adjusted EBITDA were below internal expectations due to quality pacing and Matamoros cancellations, Street models may need to reflect: lower Q2 volumes, sharper ASP/mix dynamics in H1, offset by H2 utilization approaching ~90% and margin turn to mid-single digits .

*Values retrieved from S&P Global (unavailable due to mapping at query time).

Key Takeaways for Investors

H2 2024 setup is cleaner: loss-making Matamoros and Automotive are out; expect at least mid-single-digit adjusted EBITDA margins and positive free cash flow in Q3/Q4 as utilization climbs toward ~90% .
ASP normalization to watch: Q2’s ASP peak ($208K/blade) should ease as shorter blades ramp; monitor revenue vs. margin trade-off as mix shifts .
FY24 margin guide narrowed to ~1%: a prudent reset reflecting Matamoros losses and TRY FX; any upside hinges on faster start-up normalization and field services recovery .
2025 visibility improving: Mexico and U.S. demand strong; potential Iowa activation and India capacity fill provide optional upside to volumes and EBITDA path toward $100M .
Cash inflection skewed to Q4: Capex and working capital needs in Q3 imply limited cash generation until late year; balance sheet discipline remains a focus .
Execution risks: Start-up timing/quality pacing, EU demand uncertainty, FX (TRY), and inflation/wage pressures; offset by LEAN initiatives and cost reductions .
Near-term trading lens: Confirmation of H2 profitability/free cash flow, GE line ramp milestones, and any Iowa facility news are potential positive catalysts; watch for EU volume updates and FX commentary as possible headwinds .

Additional Q2 2024 Press Releases and Prior Quarters

Q2 2024 results release and call schedule announcement (July 18, 2024) .
Automotive divestiture agreement (June 17, 2024), closing expected June 30, 2024 .
Q1 2024 results: Revenue $299.1M, adjusted EBITDA ($23.0M), narrowed utilization outlook to 34 lines; reiterated FY24 guidance .
Q4 2023 results: Revenue $297.0M, adjusted EBITDA ($28.1M); highlighted refinancing and contract expansions; set up for FY24 transition .

TPI COMPOSITES, INC (TPIC)·Q2 2024 Earnings Summary