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TPI COMPOSITES, INC (TPIC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 17.7% year over year to $346.5M, while adjusted EBITDA turned positive at $1.2M (0.4% margin); GAAP diluted EPS from continuing ops was -$1.03 as higher interest expense, restructuring, and legacy warranty adjustments weighed on results .
  • Sequentially, revenue fell from $380.8M in Q3 to $346.5M in Q4 as TPI deliberately reduced wind blade work-in-process to improve cash and invested in 24/7 Mexico shifts; free cash flow was strong at $83.2M and year-end unrestricted cash was ~$196.5M .
  • 2025 outlook: net sales $1.4–$1.5B, adjusted EBITDA margin 2%–4%, utilization ~85% on 34 installed lines, and capex $25–$30M; drivers include stronger U.S. demand via Mexico and Iowa re-start, partially offset by underutilization in Türkiye/India and labor inflation (Türkiye) .
  • Strategic/catalyst updates: extended supply agreements with Vestas and GE Vernova; Mexico demand exceeds 2025 capacity (ramping to 24/7), Iowa plant reopening mid-2025 for GE; management evaluating capital structure amid macro/policy uncertainty (tariffs, IRA, EU dynamics) .
  • Wall Street consensus (S&P Global) for Q4 2024 was unavailable via our feed; result/estimate comparisons could not be shown and may require external broker models or direct SPGI access (see Estimates Context) [GetEstimates error: S&P Global feed unavailable].

What Went Well and What Went Wrong

  • What Went Well

    • Utilization and free cash flow: utilization reached 91% and free cash flow was $83.2M in Q4; CEO: “Free cash flow was also very strong in the quarter at $83 million, and we ended the year with $197 million of unrestricted cash.” .
    • Mexico ramp and U.S. demand: “Our customers are asking for all the volume we can get out of our Mexico factories for the U.S. market in 2025… ramping up production lines in Mexico to support 24/7 operations.” .
    • Quality/technology initiative: Launch of Blade Assure to elevate blade manufacturing quality (AI-aided vision, selective automation, advanced sensors), with rollout across plants by year-end .

  • What Went Wrong

    • Profitability headwinds: GAAP net loss from continuing ops in Q4 (-$49.1M) driven by higher interest on Oaktree term loan, Türkiye workforce restructuring, wage inflation (Mexico/Türkiye), and legacy warranty estimate changes; Q4 adjusted EBITDA was positive but below internal expectations due to these items .
    • Regional underutilization: Management flagged underutilized plants in Türkiye and India and ongoing inflation in Türkiye as the principal drag on 2025 EBITDA versus an ex-items Q4 run-rate; they still expect Türkiye to deliver positive EBITDA for 2025 after actions taken .
    • Policy/tariff uncertainty: Potential U.S. tariffs on Mexico/Canada and evolving IRA-related policy/permitting create planning uncertainty; contracts generally shift tariff liability to customers via Incoterms, but timing/impact remains unclear .

Financial Results

Sequential results (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($M)$309.8 $380.8 $346.5
Adjusted EBITDA ($M)($24.9) $8.0 $1.2
Adjusted EBITDA Margin (%)(8.0%) 2.1% 0.4%
Diluted EPS – Continuing Ops ($)($1.30) ($0.81) ($1.03)
Utilization (%)63% 89% 91%

Year-over-year (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Net Sales ($M)$294.3 $346.5
Adjusted EBITDA ($M)($24.5) $1.2
Adjusted EBITDA Margin (%)(8.3%) 0.4%
Diluted EPS – Continuing Ops ($)$0.34 ($1.03)
Utilization (%)71% 91%

Segment revenue (continuing ops)

Segment Revenue ($M)Q2 2024Q3 2024Q4 2024
Wind (blades, tooling, other wind)$304.3 $369.1 $336.0
Field Services$5.5 $11.7 $10.5

Key KPIs

KPIQ2 2024Q3 2024Q4 2024
Sets (blade sets)473 1,601 613
Estimated MW2,024 2,526 2,516
Utilization (%)63% 89% 91%
Dedicated Lines38 34 34
Installed Lines38 34 34
Wind Blade ASP ($k)$208 $199 $177

Balance sheet and cash flow (selected)

  • Cash and cash equivalents: $196.5M at 12/31/2024; Net debt: ($418.6)M; Free cash flow Q4: $83.2M .
  • Operating cash flow Q4: $87.3M; Capex Q4: $4.1M; Year-end cash, cash equivalents and restricted: $207.7M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (cont. ops)FY 2024$1.3–$1.4B (Q2 guide) ~ $1.35B (Q3 update) Narrowed
Adjusted EBITDA Margin (cont. ops)FY 2024~1% (Q2 guide) ~ (2%) loss (Q3 update) Lowered
Utilization (%)FY 202475–80% (Q2 guide) 75–80% (Q3 update) Maintained
Capital ExpendituresFY 2024$25–$30M (Q2 guide) ~ $30M (Q3 update) Raised to top-end
Net Sales (cont. ops)FY 2025N/A$1.4–$1.5B New
Adjusted EBITDA Margin (cont. ops)FY 2025N/A2%–4% New
Utilization (%)FY 2025N/A~85% on 34 lines New
Capital ExpendituresFY 2025N/A$25–$30M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/Technology qualityFocus on quality for new blades; slowed ramps to ensure quality Continued measured transition pace for quality Blade Assure (AI vision, automation, sensors) rolling out by year-end Increasing tech/quality emphasis
Supply chain & input costsRaw materials stable/slightly down; logistics moderately higher 2025 raw materials projected ~8% down Supply chain stable; ~8% cost improvement expected in 2025 Improving COGS outlook
Tariffs/macro policyIRA/timing uncertainties; 2025/26 recovery timing Post-election uncertainty; potential tariff risk 90-day tariff delay noted; Incoterms push tariff liability to customers in Mexico Ongoing uncertainty; mitigants in contracts
Product performance/ramp10 lines in startup/transition; expect 2H improvement 7/10 lines at full rate; 89% utilization 10/10 lines at full rate; 91% utilization; 24/7 Mexico Achieved; pushing throughput
Regional trendsU.S. strong; EU/Türkiye dynamic U.S. near full for 2025; EU challenges U.S. demand “all we can produce”; Turkey/India underutilization drag U.S. strong; EU/Türkiye mixed
Regulatory/legalIRA/domestic content guidance helpful EU permitting/transmission headwinds Policy uncertainty persists; monitoring tariffs and permitting Persistent headwinds
R&D/operationsLean, quality, transitions Lean, quality, positive AEBITDA Lean hub launched; Blade Assure initiative Operational excellence building
Field ServicesLower revenue due to non-revenue inspection Returning to revenue work; EBITDA improving Expected >50% rev growth in 2025; EBITDA-positive Improving contribution
Capital structure——Capital structure evaluation underway in 2025 New focus

Management Commentary

  • “Our operational performance continues to improve… Free cash flow was also very strong in the quarter at $83 million, and we ended the year with $197 million of unrestricted cash.” — CEO Bill Siwek .
  • “Our customers are asking for all the volume we can get out of our Mexico factories for the U.S. market in 2025… we are converting 4 factories down in Mexico to 24/7 operations.” — Management .
  • “Blade Assure… includes AI aided vision solutions, selective automation and robotic systems, advanced sensors and inspection technologies… rolling out… by the end of the year.” — CEO .
  • “We recently signed an agreement with GE Vernova to restart production at our Iowa facility later this year… expected to create over 400 good-paying jobs.” — CEO .
  • “We are working… to evaluate options to optimize our capital structure for the current environment.” — CEO .

Q&A Highlights

  • 24/7 ramping cost/timing: ~$4–$5M investment, mostly in Q1, with payback in 2H as volumes increase; utilization cadence: low-70% in Q1, mid-to-upper-80% in Q2–Q3, slight dip in Q4 seasonally .
  • Tariffs risk sharing: Contracts typically ex-works with customers bearing import duties; a 25% blade tariff equates to ~3–4% of total turbine cost; contingency planning ongoing .
  • Demand composition: 2025 U.S. demand strong (some repowering); limited visibility into 2026 volumes until mid-2025 .
  • Türkiye/India: Underutilization and Türkiye inflation are 2025 EBITDA drags; nonetheless, Türkiye expected to be EBITDA positive for the year; two Turkish lines likely go away mid-year .
  • Second U.S. facility: Capex guide excludes the potential second U.S. brownfield; if pursued, Capex ~ $30M; Iowa two-line start-up mid-2025 with minimal Capex .

Estimates Context

  • S&P Global (Capital IQ) consensus for Q4 2024 EPS and revenue was unavailable via our feed at this time, so we could not present actual-versus-consensus comparisons. If needed, we can refresh directly from SPGI or broker models once access is restored. Values would typically be anchored to SPGI consensus.

Key Takeaways for Investors

  • Mix-driven ASP normalization but higher throughput: Q4 ASP stepped down ($177k/blade) as mix normalized from Q2–Q3 peaks; throughput improved with 91% utilization and 24/7 Mexico ramp .
  • Cash inflection achieved: $83.2M Q4 free cash flow and $196.5M cash provide near-term liquidity; working capital actions (lower WIP, higher advances) were key .
  • 2025 profit trajectory: Guidance implies material EBITDA improvement (2%–4% margin) on U.S. strength and fewer transitions, offset by Türkiye/India underutilization and Turkish inflation; execution on Mexico 24/7 and Iowa ramp is critical .
  • Watch policy/tariffs: Tariff outcomes/IRA permitting changes are wildcards; Incoterms mitigate some blade tariff exposure, but broader project economics could still be affected .
  • Capital structure review could be a catalyst: Management is evaluating options in 2025; given net debt of ~$419M, developments here could drive the stock .
  • Field Services recovery: As technicians pivot back to revenue work, management expects >50% growth in 2025 and EBITDA-positive contribution—a potential incremental earnings lever .
  • Monitoring EU/Türkiye demand: EU permitting/transmission and Chinese competition pressure volumes and margins; Türkiye could remain volatile but is expected to be EBITDA positive after restructuring .

Supporting data and sources:

  • Q4/FY 2024 press release and 8-K exhibits (financial statements, KPIs, guidance) .
  • Q4 2024 earnings call transcript (operational detail, strategic initiatives, Q&A) .
  • Prior quarters’ releases/8-Ks for trend analysis (Q3 and Q2 2024) .