TPI COMPOSITES, INC. INVESTOR DAY
February 2020
February 7, 2020 |
Legal Disclaimer
This presentation contains forward-looking statements which are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward- looking statements include statements, among other things, concerning: our selected, preliminary estimated results for the year ended December 31, 2019; our guidance for 2020; effects on our financial statements and our financial outlook; our business strategy, including anticipated trends and developments in and management plans for our business and the wind industry and other markets in which we operate; our projected annual revenue growth; competition; future financial results, operating results, revenues, gross margin, operating expenses, profitability, products, projected costs, warranties, our ability to improve our operating margins, and capital expenditures. These forward-looking statements are often characterized by the use of words such as "estimate," "expect," "anticipate," "project," "plan," "intend," "seek," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict," "continue" and the negative or plural of these words and other comparable terminology. Forward-looking statements are only predictions based on our current expectations and our projections about future events. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include, but are not limited to, the matters discussed in "Risk Factors," in our Annual Report on Form 10-K and other reports that we will file with the SEC.
These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as guarantees of future events. Further information on the factors, risks and uncertainties that could affect our financial results and the forward- looking statements in this presentation are included in our filings with the Securities and Exchange Commission and will be included in subsequent periodic and current reports we make with the Securities and Exchange Commission from time to time, including in our Annual Report on Form 10-K filed with the Securities and Exchange Commission.
The forward-looking statements in this presentation represent our views as of the date of this presentation. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to update any
forward-looking statement to reflect events or developments after the date on which the statement is made or to reflect the occurrence of unanticipated events except to the extent required by applicable law. You should, therefore, not rely on these forward- looking statements as representing our views as of any date after the date of this presentation. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
This presentation includes unaudited non-GAAP financial measures including EBITDA, adjusted EBITDA, net cash (debt) and free cash flow. We define EBITDA as net income (loss) 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 gains or losses from foreign currency remeasurement and any gains or losses on the sale of assets. We define net cash (debt) as total unrestricted cash and cash equivalents less the total principal amount of debt outstanding. We define free cash flow as net cash flow generated from operating activities less capital expenditures. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See the appendix for the reconciliations of certain non-GAAP financial measures to the comparable GAAP measures.
This presentation also contains estimates and other information concerning our industry that are based on industry publications, surveys and forecasts. This information involves a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of the information.
February 7, 2020 | 2
INVESTOR DAY
Today's Agenda
9:00 Introduction & Opening Remarks
9:30 Wind Market Update
9:45 Wind Operations
10:30 Q&A
10:45 Coffee Break
11:00 Global Service
11:10 Diversified Markets
11:35 Financials
12:20 ESG
12:30 Closing Remarks
12:45 Q&A / Lunch
February 2020
February 7, 2020 | 3
February 2020
Introduction &
Opening Remarks
February 7, 2020 |
Macros:
- TPI is mapping our significant growth onto two major macros - decarbonizing the electric sector and electrifying the vehicle fleet.
- The future of electricity generation will be a cost-effective combination of wind, solar, storage and transmission.
- TWh of wind generation are projected to increase by a factor of more than 8 and grow from being 5% of global power generation in 2018 to 26% in 2050.
- These trends are driven more and more by economics, what customers want to buy, what investors want to invest in, and the need to positively affect climate change.
Global Power Generation Mix Forecast
OTHER | WIND | ||||
2% | |||||
16% | 5% | SOLAR | |||
HYDRO | 16% | 2018 | 37% | ||
26,188 TWh |
COAL
24%
GAS
OTHER
9% | WIND | ||
HYDRO | 26% | ||
12% | |||
2050
GAS 19% 42,412 TWh
22%
12% SOLAR
COAL
Source: BloombergNEF New Energy Outlook 2019
February 7, 2020 | 5
Electrifying the Vehicle Fleet
Weight savings in EV's provided by highly structural composite solutions drives added range, durability and performance
Municipal e-bus sales
8,000
7,000 29%
6,000 CAGR
5,000
4,000
3,000
2,000
1,000
- | |||
Europe | U.S. | ||
India | Japan | ||
RoW ex. China | |||
US, China and Europe commercial vehicles sales by drivetrain
12 | |
10 | |
Millions | 8 |
6 | |
4 |
2
0
Diesel | Natural gas | |
Electric | Hydrogen | |
Global new passenger vehicle sales forecast by drivetrain
100
Millions | 80 |
60 | |
40 | |
20 | |
0 |
BEV PHEV ICE
Source: BloombergNEF Long-Term Electric Vehicle Outlook 2019, "BEV" - Battery Electric Vehicle; "PHEV" - Plug-in Hybrid Electric Vehicle; "ICE" - Internal Combustion Engine
February 7, 2020 | 6
Investment Thesis
Capitalizing on Wind and EV Market Growth, Blade
Outsourcing and Improving Economics
Only Independent Blade Manufacturer with a Global Footprint
Advanced Composite Technology and Production Expertise
Provide Barrier to Entry
Collaborative Dedicated Supplier Model
Long-Term Supply Agreements Provide Significant Revenue
Visibility
Compelling Return on Invested Capital
Seasoned Management Team with Significant Global Growth
Experience
February 7, 2020 | 7
TPI is Building Global Infrastructure and Advancing Technology
- TPI is building value through its global world class footprint and profitable market share gain while maintaining a strong balance sheet.
- We are targeting 20% share of the global wind blade market and are building 18GW of blade capacity to achieve this position.
-
We are advancing wind
and transportation composites technology to improve our competitive advantage.
Global Market Growth (GW)
84 | 89 | ||||||||||
77 | 74 | 74 | 77 | ||||||||
66 | 70 | 68 | 72 | 20 | 22 | ||||||
6 | 9 | 15 | 17 | 17 | |||||||
7 | 11 | 11 | |||||||||
60 | 70 | 65 | 60 | 57 | 58 | 58 | 60 | 63 | 67 | ||
Offshore | |||||||||||
Onshore
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update"
February 7, 2020 | 8
Global Footprint Strategically Optimized for Regional Industry Demand
TPI has strategically built a strong global footprint that takes advantage of proximity to large existing regional markets, adjacent new markets and seaports for global export
13 manufacturing facilities with approximately 6 million square feet in 5 countries
February 7, 2020 | 9
Global Footprint Strategically Optimized for Regional Industry Demand
TPI has strategically built a strong global footprint that takes advantage of proximity to large existing regional markets, adjacent new markets and seaports for global export
Matamoros, MX | Yangzhou, China | |
• Square feet - 527k | • Square feet - 934k | |
• Capacity - ~1.9GW | • Capacity - ~3.7GW | |
Juarez, MX | Chennai, India | |
• Square feet - 155k | • Square feet - 776k | |
• Tooling and | • Capacity - ~3GW | |
Transportation | ||
13 manufacturing facilities with approximately 6 million square feet in 5 countries
February 7, 2020 | 10
Strong Customer Base of Industry Leaders
Key Customers with Significant Market Share
Current Customer Mix - 52(3) Dedicated Lines
Global Onshore Wind
2016-2018 | |||
Rank | OEM | Share (1) | |
1 | Vestas | 18% | |
2 | Goldwind | 12% | |
3 | SGRE (2) | 12% | |
4 | GE Wind | 12% | |
5 | ENERCON | 7% | |
6 | Envision | 6% | |
7 | Nordex Group | 6% | |
8 | Mingyang | 4% | |
9 | United Power | 3% | |
10 | CSIC Haizhuang | 3% | |
TPI Customer | ~55% | ||
Market Share | |||
Global Onshore Wind excl. China
2016-2018 | |||
Rank | OEM | Share (1) | |
1 | Vestas | 28% | |
2 | SGRE (2) | 19% | |
3 | GE Wind | 19% | |
4 | ENERCON | 11% | |
5 | Nordex Group | 10% | |
6 | Senvion | 4% | |
7 | Suzlon | 4% | |
8 | INOX | 1% | |
9 | Goldwind | <1% | |
10 | ReGen Powertech | <1% | |
TPI Customer |
Market Share | ~87% |
4%
27%
46%
13%
10%
= TPI Customer | = Chinese Player |
TPI's customers account for 99% of the U.S. onshore wind market and 55% of the global onshore market
Source: Wood Mackenzie, "Historical Global Wind Turbine OEM Market Share"
- Figures are rounded to nearest whole percent
- Figures for Siemens/Gamesa are pro forma for the April 2017 merger of Gamesa Corporación Tecnológica and Siemens Wind Power
- 52 dedicated lines under long term agreement; does not include 2 lines under an agreement for 2020 in China.
February 7, 2020 | 11
Wind Industry Success and Some Challenges
New product transitions have accelerated as turbine companies battle for market share and consolidation
Global Onshore Wind LCOE Over Time(1)
New Product | Onshore wind | Onshore wind | |||||||||||||||||||||||||||||||||||
Introductions | LCOE Mean | LCOE Range | |||||||||||||||||||||||||||||||||||
$250 | (On and | 80 | |||||||||||||||||||||||||||||||||||
offshore) | |||||||||||||||||||||||||||||||||||||
$/MWh | $99 | $62 | $60 | $56 | $54 | 70 | IntroductionsProduct | ||||||||||||||||||||||||||||||
$188 | 60 | ||||||||||||||||||||||||||||||||||||
$148 | |||||||||||||||||||||||||||||||||||||
50 | |||||||||||||||||||||||||||||||||||||
$125 | $92 | $95 | $95 | $81 | 40 | ||||||||||||||||||||||||||||||||
$77 | 30 | ||||||||||||||||||||||||||||||||||||
$63 | $ | 50 | $ | 48 | $ | 45 | 20 | New | |||||||||||||||||||||||||||||
$ | 10 | ||||||||||||||||||||||||||||||||||||
$ | |||||||||||||||||||||||||||||||||||||
$0 | 37 | 32 | $ | 32 | $ | 30 | $29 | $ | 28 | 0 | |||||||||||||||||||||||||||
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 | |||||||||||||||||||||||||||||||||||||
Turbine OEMs Average Annual Rotor Diameter
2019e - 2028e
(m) | 200 | |||||||||
190 | ||||||||||
Diameter | 180 | |||||||||
170 | ||||||||||
160 | ||||||||||
Rotor | 150 | |||||||||
140 | ||||||||||
Average | 130 | |||||||||
120 | ||||||||||
110 | ||||||||||
100 | ||||||||||
19e | 20e | 21e | 22e | 23e | 24e | 25e | 26e | 27e | 28e | |
Vestas | GE | Nordex | Enercon | SGRE |
Blade Size | 2007 Blades | 2014 Blades | 2020 Blades | Statue of Liberty | Big Ben | 2020 Wind Turbine |
151 ft | 46 m | 187 ft | 57 m | 246 ft | 75 m | 305 ft | 93 m | 314 ft | 96 m | 574 ft | 175 m | |
Comparison | ||||||
(Height) | ||||||
492 ft | 150 m | ||||||
(Rotor Diameter) | ||||||
Source: Lazard Levelized Cost of Energy Analysis (version 13.0) and Wood Mackenzie Global Wind Turbine Technology Trends 2019
1. Costs are on an unsubsidized basis. Ranges reflect differences in resources, geography, fuel costs and cost of capital, among other factors.
February 7, 2020 | 12
Gaining EV Traction and Building Our Team
- Long-termtarget of $500M annual revenue over time
- In 2019 and 2020 we will have invested ~$50M in our diversification strategy
- Optimizing cost structure for composite bus bodies
- First pilot production award for commercial delivery vehicle for Workhorse
- Building a strong team of automotive/composites experts
- Automated pilot production line on track for mid 2020 - structural parts made in minutes
- Creating product patents in addition to process knowhow
February 7, 2020 | 13
Building a Strong Team
40 Senior Leaders Added
US, | |||||
1,300 | |||||
Years of Experience | Mexico, | ~13,300 | Asia, | ||
5,500 | 2,900 | ||||
associates | |||||
worldwide |
Engineers and
Technicians
EMEAI,
3,600
February 7, 2020 | 14
Significant Topline and Market Share Growth (1)
Net Sales
$1,800 $1,600 20%
CAGR
$1,400
$1,200
$1,000 $800
$600
$400
$200 $0
Global Onshore Market Share(1)
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
MW Sold
14,000
12,000 26%
CAGR
10,000
8,000
6,000
4,000
2,000
0
(1) TPI's market share is based on TPI MWs relative to Wood Mackenzie OEM total onshore MW, 2019P reflects preliminary estimated results at the midpoint, and 2020G reflects 2020 guidance at the midpoint..
February 7, 2020 | 15
Growth Funded Primarily Through Cash Flow from Operations
- Funded growth largely from cash from operations since 2016 - $190M
- Maintaining strong balance sheet, net debt of $72M, just dipped into IPO proceeds during 2019
Capital Allocation Plan
Capital discipline
- Robust balance sheet
- Working capital management
- Return on invested capital
Reinvestment in business to drive long term profitable growth and productivity
Selective acquisitions aligned to core strategy
Potential to return of capital to shareholders
February 7, 2020 | 16
Building a Strong Independent and Diverse Board
Independent Board Members Added Since November 2015
Jim Hughes
- Over 25 years of experience in global energy industry
- Managing Partner at EnCap Investments Energy Transition since 2019
- Former CEO of First Solar
Jayshree Desai
- Over 20 years of extensive wind energy experience including EDPR and Clean Line Energy Partners
- Chief Corporate Development Officer at Quanta Services, Inc. since 2020
TJ Jordan
- 35 years of extensive automotive and aerospace global operations and executive leadership and board experience including GM, UTC, Oshkosh
- President and Chief Operating Officer of Dura Automotive Systems, LLC from 2015-2019
February 7, 2020 | 17
TPI Operating Imperatives
• Relentless focus on operational excellence
• Turn speed into a competitive advantage - cut transition and startup time in half
• Continue to advance our composites technology
• Partner more deeply with our customers
• Reduce and balance cost of transitions with our customers
• Apply scale to expand material capacity, continuity of supply, and drive cost down
• Continue to build and develop world class team
• Drive ESG vision
February 7, 2020 | 18
Key Biographies
Steve Lockard
Chief Executive Officer
- Joined TPI in December 1999
- 35 years in global manufacturing
- Satloc, ADFlex Solutions, Rogers Corp
- BS Electrical Engineering, ASU
Tom Adams
S.V.P., Wind
- Joined TPI in February 2018
- 25 years in business development
- ABS Group, Wood Group
- BS Mechanical Engineering, UC Davis
Ramesh Gopalakrishnan
Chief Operating Officer Wind
- Joined TPI in September 2016
- 25 years in operations and technology
- Senvion, Suzlon, Halliburton, GE
- BS Indian Institute Tech, MS and PhD SUNY
Jim Schimanski
V.P., Global Supply Chain
- Joined TPI in May 2016
- 30 years in manufacturing
- GE, Alstom
- BS Business Mgmt, Russell Sage College
Bill Siwek
President
- Joined TPI in September 2013
- 33 years in accounting, finance, IT, operations
- T.W. Lewis, Lyle Andersen, Arthur Anderson
- BS Accounting and Economics, Univ. of Redlands
Christian Edin
Sr. Director, Investor Relations
- Joined TPI in February 2008
- 12 years in wind
- BS Finance and BS Marketing, ASU
Adrian Oprescu
S.V.P., Technology and Global Projects
- Joined TPI in May 2019
- 20 years in global technology and operations
- FrontierWind, Vestas, Quest
- MS Transilvania, MBA Indiana Institute of Technology
Deane Ilukowicz
S.V.P., Global Human Resources
- Joined TPI in February 2016
- 28 years in human resources
- TransUnion, Hypertherm
- MBA Wake Forest, BA John Hopkins
February 7, 2020 | 19
Key Biographies
Lance Marram
S.V.P., Global Services
- Joined TPI in October 2019
- 18 years in wind
- Senvion, E2M International, Vestas, Gamesa
- BS UC Santa Barbara, MBA IESE Business School
T.J. Castle
S.V.P., Operations Diversified Markets
- Joined TPI in November 2015
- 21 years in aerospace
- Honeywell, GE
- BS Aeronautics St Louis University
Bryan Schumaker
Chief Financial Officer
- Joined TPI in May 2019
- 20 years in finance
- First Solar, 8point3 Energy Partners, Swift
- BS Business Administration, University of New Mexico
Jim Hughes
Board Member
- Joined TPI Board in October 2015
- 25 years in global energy industry
- Managing Partner at EnCap Investments Energy Transition since 2019
- Former CEO of First Solar
Joe Kerkhove
S.V.P., Diversified Markets
- Joined TPI in October 2017
- 20 years in business development and marketing
- ALCOA Forgings & Extrusions
- BS Industrial Mgmt/Manufacturing Mgmt, Purdue
Lyndon Lie
V.P., Technology & Innovation Diversified Markets
- Joined TPI in October 2019
- 30 years in automotive engineering
- LRL Automotive Consulting, GM
- BSEE Oakland Univ, Exec MBA Michigan State
Paul Giovacchini
Chairman
- Chairman of TPI Board since 2006
- Independent Consulting Advisor to Landmark Partners, Inc.
February 7, 2020 | 20
February 2020
Wind Market Update
February 7, 2020 |
Global Power Generation Market Through 2050
Wind projected to represent 40% of new power generation investment
Electricity demand, OECD* versus non-OECD | Global Investment in Power | ||||||||||||||||||
TWh | Generation by Region, 2019-50 | ||||||||||||||||||
45,000 | $ T, real 2018 | ||||||||||||||||||
40,000 | APAC | $5.8 | |||||||||||||||||
35,000 | |||||||||||||||||||
30,000 | 62% | Europe | $2.6 | ||||||||||||||||
25,000 | demand | Non-OECD | META | $2.0 | |||||||||||||||
20,000 | growth | OECD | |||||||||||||||||
15,000 | AMER | $1.9 | |||||||||||||||||
10,000 | |||||||||||||||||||
5,000 | Rest of the World | $1.2 | |||||||||||||||||
2018 2025 2030 2035 2040 2045 2050 | Wind | Solar | Gas | Nuclear | Hydro | Coal | |||||||||||||
Power Generation Mix | Global Electricity Generation |
Historical world power | NEO 2019 power | |||||||||
100% | generation mix | generation mix | ||||||||
Fuel based | ||||||||||
80% | 26% wind | 24% | 39% | |||||||
Fuel free | ||||||||||
60% | ||||||||||
62% | 2018 | 2050 | ||||||||
40% | renewables | 26,188 TWh | 42,421 TWh | |||||||
20% | 31% fossil | 61% | ||||||||
0% | fuels by 2050 | |||||||||
76% | ||||||||||
1970 1980 1990 2000 2010 2020 2030 2040 2050 | ||||||||||
Coal | Gas | Oil | Nuclear | Hydro | Wind | Solar | Other |
Source: BloombergNEF New Energy Outlook 2019
* Organisation for Economic Co-operation and Development
February 7, 2020 | 22
Wind Energy Is the Cheapest Form of New Generation in Many Markets
Unsubsidized Global Levelized Cost of Power Generation Range by Technology Forecast - ($/MWh)
Onshore wind | Natural Gas | Coal |
200
180
160
140
120
100
80
60
40
20
-
200
180
160
140
120
100
80
60
40
20
-
China | Germany | India | ||
Japan | United States | |||
China | Japan | |
MENA | U.K. | |
United States |
China Northeastern
China Northcentral
India
Indonesia
Global LCOE for onshore wind generation has become increasingly competitive at or below new combined cycle gas turbines and coal, unsubsidized.
Source: BloombergNEF New Energy Outlook 2019
February 7, 2020 | 23
New Wind LCOE is Lower than the Marginal Cost of Coal
($/MWh)
$90
$75
$60
$45
$30
$15
$0
Levelized Cost | Marginal Cost of Selected Existing |
of New-Build Wind and Solar | Conventional Generation(1) |
Unsubsidized Solar PV
Unsubsidized Wind
Onshore | Solar PV | Coal | Nuclear |
Wind | - Thin Film | ||
Utility Scale |
Source: Lazard Levelized Cost of Energy Analysis (version 13.0).
1. Represents the marginal cost of operating, fully depreciated coal and nuclear facilities, inclusive of decommissioning costs for nuclear facilities. Analysis assumes that the salvage value for a decommissioned coal plant is equivalent to the decommissioning and site restoration costs. Inputs are derived from a benchmark of operating, fully depreciated coal and nuclear assets across the U.S. Capacity factors, fuel, variable and fixed operating expenses are based on upper and lower quartile estimates derived from Lazard's research.
February 7, 2020 | 24
Large and Growing Global Market
Estimated Annual Installed Global Wind Capacity (GW): 2019 - 2028
77 | Onshore | Offshore | ||||
74 | 72 | 74 | ||||
6 | 70 | 68 | ||||
66 | 9 | |||||
15 | 17 | |||||
7 | 11 | 11 | ||||
70 | 65 | |||||
60 | 60 | 57 | 58 | 58 | ||
89
84
77 | Offshore | |
22 | CAGR | |
17 | 20 | ~ 14% |
(2019 - 2028) |
Onshore | |||
67 | CAGR | ||
60 | 63 | ~ 1% | |
(2019 - 2028) | |||
2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 |
Annual installed wind capacity growth is projected to average 75GW between 2018 and 2028.
Global markets (excluding the US and China) are projected to grow at a 8% CAGR. TPI is well positioned to participate in this growth.
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update"
February 7, 2020 | 25
U.S. Forecast - Forecasted GW Continue to Increase
2019-2028
16 15
14
13
12 | ||||||||||
11 | ||||||||||
10 | ||||||||||
GW | 8 | 8 | 7 | |||||||
8 | 15 | 7 | ||||||||
7 | 7 | |||||||||
6 | ||||||||||
6 | 13 | 0.4 | 4 | 3 | ||||||
3 | ||||||||||
11 | 2 | 4 | 4 | |||||||
4 | ||||||||||
6 | ||||||||||
2 | 4 | 3 | 3 | 4 | 4 | 4 | ||||
0 | ||||||||||
WM Onshore WM Offshore
GW
16
14 14
12
11 | |||||
10 | 9 | 8 | 9 | 9 | |
8 | |||||
8 | |||||
6
4
2
0
2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
UBS Onshore | ||||||
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update" and UBS Securities LLC
February 7, 2020 | 26
EMEA Forecast - Growth Dominated by Offshore
2019-2028
40 | |||||||||
35 | 34 | ||||||||
30 | 30 | ||||||||
25 | 25 | 25 | 25 | 27 | 11 | ||||
25 | 9 | ||||||||
3 | 5 | 23 | 6 | 7 | |||||
3 | 5 | ||||||||
GW | 20 | 20 | |||||||
17 | 2 | ||||||||
15 4
10 | 18 | 21 | 20 | 20 | 20 | 20 | 20 | 21 | 22 | |
13 | ||||||||||
5 | ||||||||||
0 | ||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 |
Onshore Offshore
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update"
Offshore
CAGR ~ 12%
(2019 - 2028)
Onshore
CAGR ~ 6%
(2019 - 2028)
February 7, 2020 | 27
APAC Onshore - 16% CAGR for India Forecasted
2019-2028
GW
40 | |||||||||||
35 | |||||||||||
35 | |||||||||||
33 | 31 | 32 | 4 | ||||||||
31 | |||||||||||
30 | 30 | 4 | 29 | 30 | 4 | ||||||
28 | 3 | 3 | India | ||||||||
3 | 3 | 3 | |||||||||
4 | 26 | 2 | 8 | CAGR | |||||||
2 | |||||||||||
25 | 3 | 6 | 6 | 5 | 6 | 7 | ~ 16% | ||||
7 | (2019 - 2028) | ||||||||||
20 | 4 |
15 | |
25 | 25 | 21 | 22 | 22 | 21 | 21 | 23 | |||||||
10 | 19 | 19 | ||||||||||||
5 | ||||||||||||||
0 | ||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |||||
China | India | Other APAC | ||||||||||||
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update"
February 7, 2020 | 28
APAC Offshore
2019-2028
GW
8
7
6
5
4
3
2
1
0
7.9 | 7.8 | CAGR | ||||||||
7.2 | ~ 13% | |||||||||
1.3 | 1.2 | (2019 - 2028) | ||||||||
0.6 | 6.5 | |||||||||
6.0 | 6.0 | 6.0 | 0.5 | 0.4 | 1.1 | 1.1 | ||||
0.4 | 5.1 | 0.6 | 0.5 | 1.7 | 0.7 | |||||
1.1 | 0.3 | 0.9 | 1.2 | |||||||
0.4 | 0.5 | 1.1 | 1.2 | |||||||
4.2 | ||||||||||
0.4 | ||||||||||
0.2 | ||||||||||
0.1 | 1.3 | |||||||||
2.5 | ||||||||||
0.1 | 4.5 | 4.7 | 4.5 | 4.5 | 4.3 | 4.4 | 4.3 | |||
3.9 |
3.1
2.4
2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |||
China | Taiwan | Japan | Other APAC | |||||||||
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update"
February 7, 2020 | 29
LATAM Forecast
2019-2028
GW
5.0 | ||||||||||
4.6 | 4.5 | 4.5 | 4.6 | |||||||
0.2 | ||||||||||
4.1 | 4.2 | |||||||||
0.4 | 4.0 | |||||||||
4.0 | 0.4 | 3.8 | 1.1 | 1.2 | ||||||
0.5 | 3.6 | 1.3 | ||||||||
1.2 | 3.3 | |||||||||
1.1 | 0.5 | 0.8 | 0.3 | 0.3 | ||||||
0.7 | 0.9 | 0.3 | ||||||||
3.0 | 0.9 | 0.3 | 0.4 | 0.4 | ||||||
1.0 | ||||||||||
0.3 | 0.5 | 0.4 | ||||||||
0.2 | 0.4 | |||||||||
0.2 | 0.7 | 0.8 | ||||||||
0.7 | 0.3 | 0.3 | 0.5 | 0.5 | ||||||
1.8 | ||||||||||
2.0 | 0.4 | 0.2 | ||||||||
0.4 | ||||||||||
1.1 | 0.3 | |||||||||
1.0 | 1.8 | 1.8 | 1.6 | 1.7 | 1.9 | 2.0 | 2.0 | 2.0 | ||
1.1 1.2
0.0
2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |||||
Brazil | Mexico | Argentina | Chile | Other LATAM | ||||||||||
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update"
February 7, 2020 | 30
February 2020
Wind Operations
February 7, 2020 |
Safety is a Core Value and Mindset
- Focused efforts on prevention
- Near Miss Identification and Solutions
- Good Catch Programs
- Behavior Based Safety Programs
- Layered Audits
Safety Programs Focused on
Prevention
Recordable and Lost Time Incident Rates
3.5 | |
hoursworked | 3 |
2 | |
2.5 | |
200,000per | 1.5 |
Cases | 1 |
0.5 | |
0 |
2015 | 2016 | 2017 | 2018 | 2019 | |
TPI RIR | TPI LTIR | ||||
Industry-BLS RIR (1) | Industry-BLS LTIR (1) |
(1) U.S. Bureau of Labor Statistics 2018 Survey of Occupational Injuries and Illnesses
February 7, 2020 | 32
Quality Management System
- Expanded Global Quality Audits
- Holistic implementation of process improvements
- Embedding quality into the manufacturing operation
- Strengthened Central Quality Team
- Infrastructure to capture and deploy lessons learned
Targeted Efforts to Eliminate Defects
(1) Metric based on a selection of the same blade type built in three consecutive years
Non-conformances/Blade(1)
13
12
11
10
9
8
2017 | 2018 | 2019 |
Warranty Spend as % of Net Sales
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
2017 | 2018 | 2019 |
February 7, 2020 | 33
Speed to Drive Output and On-time Delivery
- Manufacturing productivity and stabilizing operations
- Focused efforts on constrained operations
- Labor productivity improvements through efficient deployment
- Process optimization with technology, functional collaboration
- Non-linearscaling of productivity for larger blades
Continuous Improvement Enables
Consistent Delivery
Cycle Time in Hours (1)
32
3024%
28
26
24
22
2017 | 2018 | 2019 |
(1) Metric based on a selection of the same blade type built in three consecutive years
February 7, 2020 | 34
Driving Costs Down
- Key components include material and labor costs
- Bill of Material (BOM) cost reductions
- Supply chain strategies
- Value engineering
- Direct material productivity programs
- Labor cost reduction through benchmarking and global collaboration
- Reduce manufacturing overhead
- Upfront collaboration with customers
Driving Cost Down Through Material
and Labor Cost Reductions
(1) Metric based on a selection of the same blade type built in three consecutive years
BOM Reduction/Blade (1)
12%
2017 | 2018 | 2019 |
DL Hour Reduction/Blade (1)
11%
2017 | 2018 | 2019 |
February 7, 2020 | 35
Start-up and Transition Execution - Speed
- Speed up transitions with continuous improvement and lean manufacturing principles
- Scalable processes and standard stage gate model with metrics
- Core teams with functional expertise
- Upstream customer alignment/collaboration
- Cross functional collaboration to accelerate transitions
Disciplined Approach to Accelerate
and Execute on Start-ups and
Transitions
Ramp Down | Decommissioning | Commissioning | Cut Up | Ramp Up | |||||
Ramp Down | Commissioning | Cut Up | Ramp Up |
Decommissioning
Start-up example - Cycle Time in Hours by Week
120
110
100
90
80
70
60
50
40
30
20
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 |
February 7, 2020 | 36
Impact of Transitions
Facility Adj. EBITDA ($)
YEAR BEFORE | YEAR OF | YEAR 1 AFTER | YEAR 2 AFTER | ||
Adj. EBITDA Transition | Adj. EBITDA at Minimum Volume | ||||
Transitions Increase Contract Values and Expected AEBITDA Over Time
February 7, 2020 | 37
February 2020
Technology
February 7, 2020 |
Technology Focused on Driving Business Performance
Business Drivers
Lower LCOE | Technology Focus Areas |
Materials Process Tooling Analytics Disruptive
Speed Flexibility
24 hour cycle time
Product Transitions (Switch/Ramp Up)
Optimized Mfg. Processes, Tooling
Cost
BOM (Resin/Adhesives)
BOM (Spar Cap Materials Tech)
BOM Core
Innovation (Technology Readiness)
Jointed Blades
Selective Automation
Materials (recyclable materials)
February 7, 2020 | 39
Technology Advantage
Customer Technology | TPI Technology |
Collaborative Space
Design for Manufacturing
Technical Due Diligence
Process Technology | |
Develop manufacturing | |
process technology to | |
Structural Design | enable manufacture |
Design of internal
Aero Design structure
Design of external
Enhanced TPI Customer
Collaboration
Technology Partnership built on long-term relationships and mutual dependency
'True' Partnerships with customers in their New Product Development process
Move upstream - Collaborative due diligence on Design for Manufacturing and Risk Mitigation
Customer Intimacy - Joint prototyping of blades with customers in customer facilities and pilot production line in our facilities
Leads to
shape (airfoil)
Material Technology Develop new materials to reduce weight and cost
- Reduced Time to Market
- Design to Cost Target
- Enhanced Design for Manufacturing
- Margin Expansion
February 7, 2020 | 40
TPI Enabling Technologies
Analytics - Speed & Quality | Tooling - Speed & Flexibility |
Analytical Tools | Infusion Modeling | Integrated Controls | Heated Systems |
Curing characterization Laser Automation | Adjustable Frame Design | Modular Molds |
Materials - Cost
Characterization | Resins/Adhesives | |
Tie in to the business drivers | ||
Tie on to customer roadmaps | ||
Leverage external funding | Core | Spar Cap Material |
Manufacturing Processes
- Speed & Flexibility
'One Step' Close
Innovation - Tech Readiness
Jointed Blades | Thermoplastics |
Automation
February 7, 2020 | 41
February 2020
Global Supply Chain
February 7, 2020 |
Global Supply Chain Expertise
KEY COMMODITY MARKET TRENDS
Commodity | Market Trend | TPI Pricing |
Glass*
Carbon
Resin / Adhesive
Core
Hardware
Consumables
Coating
YEAR OVER YEAR RAW MATERIAL SAVINGS
8 % 8 %
7 %
4 % | 4 % |
2016 | 2017 | 2018 | 2019 | 2020 |
- TPI remains a preferred customer to our suppliers:
- Global presence and footprint
- Growth
- Large scale buying power
- Collaboration with TPI in other Industries
February 7, 2020 | 43
Global Supply Chain and Localization Strategy
AVERAGE CATEGORY SPEND
Carbon Blade Design | Glass Blade Design | |||||||||||||
18% | 27% | |||||||||||||
31% | ||||||||||||||
35% | ||||||||||||||
5% | ||||||||||||||
2% | ||||||||||||||
12% | 4% | |||||||||||||
7% | ||||||||||||||
8% | ||||||||||||||
17% | 7% | 4% | ||||||||||||
4% | 19% | |||||||||||||
Resin | Adhesive | Coatings | Core | Consumables | Hardware | Glass | Carbon | |||||||
EXPANDING GLOBAL SUPPLY CHAIN
- Supplier localization
- Capacity expansion in Best Cost Markets
ASIA
MEXICO
- Leveraging global suppliers to localize new TPI facilities
- Fabric Conversion
- Fabric and Core Kitting
- Capacity Expansion
- PET Foam Extrusion (Core)
CHINA / EAST ASIA
- New and fast growing suppliers
- Chemicals
- Core materials
- Expanded footprint in Korea, Taiwan and Vietnam
- Chemical Production
- Core Materials
- Carbon
INDIA
- Regional Localization
- Fabric Conversion
- Fabric and Core Kitting
- Capacity Expansion
- Chemical Production
- Glass direct roving furnace
- PET Foam Extrusion
- Carbonization and Pultrusions
February 7, 2020 | 44
February 2020
Global Talent
February 7, 2020 |
Adding Significant Global Talent
Post-IPO Headcount Growth
14000
12000
10000
8000
6000
4000
2000
0
AZ | RI | IA | ||
CN | TK | MX | ||
IN | Total Headcount | |||
40 Senior Leaders Added
Years of Experience
Engineers and
Technicians
- The acquisition, development, motivation and retention of this talent is critical to support our growth and success.
February 7, 2020 | 46
Improving Technical Capabilities Across the Organization
Improved Technical Capability
Faster and more effective startups and transitions
Quality that results in
zero-defect culture
Cost reduction through process
and DFM efforts
Innovation enabling diversified
business opportunities and growth
Hiring, developing, motivating, and retaining our technical talent is a critical strategy enabler:
- TPI Academy
- Associate mobility
- Individual development planning
- Engineering career ladder
- Competitive total rewards and destination for top talent
February 7, 2020 | 47
Global HR Strategy Builds the Foundation for Our Overall People Strategy
Culture | Develop leadership | |
excellence | ||
and Values | ||
at all levels | ||
Attract and retain top talent
Global talent | Talent | |
practices | analytics | |
February 7, 2020 | 48
Diversity and Inclusion Matters
TPI has great programs focused on recognizing and promoting diversity
- WRISE event for top performing women globally
- Global participation in International Women's Day activities
- Reporting metrics on diversity in talent management practices
The plan we are executing:
Create a vision and plan
Leadership involvement
Embed and Align
Tell Our Story
Measure Experience and Impact
February 7, 2020 | 49
February 2020
Q&A
February 7, 2020 |
February 2020
Coffee Break
February 7, 2020 |
February 2020
Global Service
February 7, 2020 |
Large and Growing Global Service Market Opportunity
Global Blade Service Market Forecast
3.5 | +$1.6B | ||||||||||
3.0 | 7% | ||||||||||
2.5 | CAGR | ||||||||||
billion | 2.0 | ||||||||||
1.5 | |||||||||||
US$ | |||||||||||
1.0 | |||||||||||
0.5 | |||||||||||
0.0 | |||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 |
Leading Edge Repair | Lightning Receptor Exchange | |
Blade Surface Add On-Install / Repairs | ||
Trailing Edge Repair | ||
Structural Repair | Other | |
Global Retrofits |
Blade Service Growth by Region
20182028
AMER $239 M $411 M
EMEA $741 M | $1.4 B |
APAC $596 M | $1.3 B |
Source: Wood Mackenzie, Global Onshore Wind Power O&M 2019
February 7, 2020 | 53
Wind Blade Service Offerings
Certified Professionals
Engineering & Preventative Maintenance
Inspection & Analysis
Repair & Improvements
Recycling
February 7, 2020 | 54
February 2020
Diversified Markets
February 7, 2020 |
Vehicle Strategy for Clean Transportation
Lighter weight equates to longer range
Lower capital investment required for composites structure
Multiple programs in: Passenger Automotive | EVs | Commercial Vehicles |
February 7, 2020 | 56
Large Market Opportunity
U.S. Electric Bus Market
- Addresses large opportunity given mission-critical nature of transit
- Cusp of wide-spread adoption
- Technology applicable everywhere
- Compelling growth potential
1,400 | 16% | ||||||||
1,200 | CAGR | ||||||||
1,000 | |||||||||
Units | 800 | ||||||||
600 | |||||||||
400 | |||||||||
200 | |||||||||
- | |||||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
U.S.
Source: BloombergNEF Long-Term Electric Vehicle Outlook 2019
- Proterra is a leader in North American electric transit bus market with 50%+ share
- >100 customers and >900 vehicles sold
- >50,000,000 pounds of CO2 emissions & 2,000,000 gallons of fuel avoided
February 7, 2020 | 57
Commercial Vehicles Market
Significant Growth Projections
- Commercial vehicle market growing, largely driven by ecommerce
- Opportunity for electric vehicles driven by economics
Light
6 | |||||||||||||||||||||||||||||||||||
5 | |||||||||||||||||||||||||||||||||||
36% | |||||||||||||||||||||||||||||||||||
4 | |||||||||||||||||||||||||||||||||||
units | CAGR | ||||||||||||||||||||||||||||||||||
3 | |||||||||||||||||||||||||||||||||||
Million | 2 | ||||||||||||||||||||||||||||||||||
1 | |||||||||||||||||||||||||||||||||||
0 | |||||||||||||||||||||||||||||||||||
2018 | 2020 | 2022 | 2024 | 2026 | 2028 | 2030 | 2032 | 2034 | 2036 | 2038 | 2040 |
Medium and Heavy
500 | Medium | Heavy | ||||||||||||
450 | ||||||||||||||
400 | ||||||||||||||
27% | ||||||||||||||
350 | ||||||||||||||
units | CAGR | |||||||||||||
300 | ||||||||||||||
250 | ||||||||||||||
Thousand | ||||||||||||||
200 | ||||||||||||||
150 | ||||||||||||||
100 | ||||||||||||||
50 | ||||||||||||||
0
2018 | 2020 | 2022 | 2024 | 2026 | 2028 | 2030 | 2032 | 2034 | 2036 | 2038 | 2040 |
Source: BloombergNEF Long-Term Electric Vehicle Outlook 2019
February 7, 2020 | 58
Purpose-Built Electric Delivery Vehicles
Building on our experience related to Cab Structures, in Q1 2019 we announced the award to develop and produce a chassis and cab structure for a purpose-build electric delivery vehicle. Pilot production is underway.
February 7, 2020 | 59
Passenger EV market
>55% of passenger vehicle sales to be electric by 2040
Global new passenger vehicle sales forecast by drivetrain
Millions
100
80
60
40
20
0
BEV PHEV ICE
Source: BloombergNEF Long-Term Electric Vehicle Outlook 2019
February 7, 2020 | 60
Technology and Innovation Center
Technology Center for Global TPI
- Continued design support for wind and diversified markets
- World class Composite Technology Hub
- Certified materials laboratory
- Product & process R&D
- Automation technology development
- Manufacturing process development
High Volume Automated Pilot Liquid Compression Molding (LCM) Line
- Initial investment of $12M+ for first automated LCM, cut and trim production line
- Installation on track for target of Q2 2020
- Moving from traditional, large scale, low volume composite manufacturing processes in to a highly automated, low labor, high volume production capability
- Driving production cycle times from tens of hours, to under 10 minutes
February 7, 2020 | 61
Composite Battery Enclosure Opportunity
- Mass, Cost and Producibility
- Material Characterization
- Form, Fit and Function
- Fire resistance
- External direct exposure to flame
- Internal thermal propagation
- EMI Shielding
- Structural integrity (Pack Level)
- Modal response
- 100kN Side crush
- Ground impact/jacking loads
- G-Loads
- Thermal Management Systems
- IP 67 Rating
Exploded CAD | TPI Prototype |
view of all-Composite | Composite Battery |
Enclosure | Enclosure |
TPI Battery Enclosure Physical Testing
External Fire | Internal Fire Propagation | Radiated Emissions | Vertical Crush | Horizontal Crush |
PASS | FAIL | PASS | FAIL | PASS | FAIL | PASS | FAIL | PASS | FAIL |
February 7, 2020 | 62
February 2020
Financials
February 7, 2020 |
2019 Guidance Update
Prior Guidance for 2019 | 2019 Selected, Preliminary | |||
Estimated Results | ||||
Net Sales | $1.45 billion to $1.50 billion | $1.42 billion to $1.44 billion | ||
Adjusted EBITDA (1) | $80 million to $85 million | Unchanged | ||
Loss Per Share | $0.18 to $0.23 | $0.43 to $0.47 | ||
Utilization % | ~ 80% | Unchanged | ||
Average Selling Price per Blade | $135,000 to $140,000 | Unchanged | ||
Non-Blade Sales | $100 million to $105 million | $110 million to $115 million | ||
Capital Expenditures | $95 million to $100 million | $75 million to $80 million | ||
Startup Costs | $47 million to $49 million | Unchanged | ||
(1) See Appendix for reconciliations on non-GAAP financial data.
February 7, 2020 | 64
Financial Performance (1)
Substantial Topline Growth funded largely from Cash from Operations
Net Sales
2016 - 2019P
$ millions | $1,600 | Topline Increase | ||||
$1,400 | 23% | $769 M | $1.4 B | |||
$1,200 | CAGR | |||||
$204 M | $169 M | |||||
$1,000 | ||||||
CAPEX | Start-up Costs | |||||
$800 | ||||||
$600 | Cumulative Cash Flow From Operations, Net | |||||
$400 | $189 M | |||||
$200 | Net Debt | |||||
$0 | $6 M | $72 M | ||||
2016 | 2017 | 2018 | 2019P Mid |
(1) 2019 amounts reflect preliminary estimated results at the midpoint.
February 7, 2020 | 65
Operational Execution Driving Performance Above Market
MW and Sets per Line
+56% MW/line | 100 | |||||
325 | ||||||
MW/Line | 275 | +19% Sets/line | 90 | Sets/Line | ||
2016-2019P | ||||||
80 | ||||||
225 | ||||||
175 | 70 | |||||
125 | 60 | |||||
2016 | 2017 | 2018 | 2019P | |||
MW/Line | Sets per Line |
GW SoldMW/Set
10.0 | 3.0 | |||||||||||||
+8% CAGR | ||||||||||||||
+ 24% CAGR | ||||||||||||||
8.0 | 2016-2019P | 2.8 | 2016-2019P | |||||||||||
2.6 | ||||||||||||||
6.0 | 2.4 | |||||||||||||
2.2 | ||||||||||||||
4.0 | 2.0 | |||||||||||||
2016 | 2017 | 2018 | 2019P | 2016 | 2017 | 2018 | 2019P | |||||||
Global Total GW Installed
70
60 | +8% CAGR | |||
2016-2019P | ||||
50 | ||||
40 | ||||
30 | ||||
20 | ||||
10 | ||||
0 | ||||
2016 | 2017 | 2018 | 2019P |
Source: Wood Mackenzie, "Q4 2019 Global Wind Power Market Outlook Update"
February 7, 2020 | 66
Focus on Cost (1)(2)
Performance | |||||
$ millions | $160 | ||||
$140 | |||||
$120 | |||||
$100 | |||||
$80 | |||||
$60 | |||||
$40 | |||||
$20 | |||||
$- | |||||
2016 | 2017 | 2018 | 2019P | 2020G |
Cost of Sales
Driving Cost of Raw Materials Down
Startup & Transition Cost
Accelerate Startups &
Quicker Transitions
General & Administrative Expenses
Driving Down MOH & Fixed Costs
1% Cost Reduction is >$10M
AEBITDA | Start-up Costs | |
- See Appendix for reconciliations on non-GAAP financial data.
- 2019 amounts reflect the preliminary estimated results at the midpoint and 2020 amounts reflect guidance at the midpoint.
February 7, 2020 | 67
2020 Guidance
2019 Selected, | ||||
Preliminary Estimated Results | 2020 Guidance(1) | |||
Net Sales | $1.42 billion to $1.44 billion | $1.55 billion to $1.65 billion | ||
Adjusted EBITDA (2) | $80 million to $85 million | $100 million to $125 million | ||
Utilization % | ~ 80% | 80% to 85% | ||
Wind Blade Set Capacity | 4,000 | 4,380 | ||
Average Selling Price per Blade | $135,000 to $140,000 | $140,000 to $145,000 | ||
Non-Blade Sales | $110 million to $115 million | $75 million to $100 million | ||
Capital Expenditures | $75 million to $80 million | $80 million to $90 million | ||
Startup Costs | $47 million to $49 million | $17 million to $20 million | ||
(1) Excludes the impact of the Coronavirus
(2) See Appendix for reconciliations of the non-GAAP financial data.
February 7, 2020 | 68
Adjusted EBITDA Walk 2019 to 2020 (1)(2)
$ millions | 160 | |||||||||||||||||
140 | ||||||||||||||||||
120 | ||||||||||||||||||
$112.5M (1) | ||||||||||||||||||
100 | ||||||||||||||||||
$82.5M | ||||||||||||||||||
80 | ||||||||||||||||||
Wind: | Wind: | |||||||||||||||||
60 | ||||||||||||||||||
$130.7M | $155.5M | |||||||||||||||||
40 | G&A: | G&A: | ||||||||||||||||
($26.2M) | ($35M) | |||||||||||||||||
Diversified Market: | Diversified Market: | |||||||||||||||||
20 | ($22.0M) | ($8M) | ||||||||||||||||
- | ||||||||||||||||||
2019 | Wind | Wind LD's | Diversified | ASC 606 | General & | 2020 |
AEBITDA | (excl LD's | Markets | Admin. (G&A) | AEBITDA | ||
Preliminary | & 606) | Expenses | Guidance | |||
Midpoint | Midpoint |
- Excludes the impact of the Coronavirus; 2019 reflects preliminary estimated results at the midpoint and 2020 amounts reflects guidance at the midpoint.
- See Appendix for reconciliations of the non-GAAP financial data.
Increase
Decrease
Total
February 7, 2020 | 69
Path to $2 Billion and Free Cash Flow
LONG-TERM WIND FINANCIAL TARGETS
80% UTILIZATION
15 GW
$2.0 B REVENUE
12% AEBITDA
$30 M - $60 M
CAPEX ANNUALLY 20%-25% CASH TAX
25% - 30% ROIC(1)
7% - 9% FCF
Future Estimated Wind Revenue Under Contract
Future Estimated Revenue - $4.3 B | ||
$2,500 | Annual Max and Min Contract Value Range | |
$2,000
$1,500
$1,000
$500
$0
2020 | 2021 | 2022 | 2023 | $2 B | |||||||
MX | TK | CN | US | IN | |||||||
- ROIC target is based on an estimate of tax effected income from operations plus implied interest on operating leases divided by beginning of the period capital which includes total stockholders' equity less cash and cash equivalents plus total outstanding debt and the net present value of operating leases.
February 7, 2020 | 70
CapEx and Free Cash Flow Momentum (1)(2)
$ thousands | 120,000 | |
100,000 | ||
80,000 | ||
60,000 | ||
40,000 | ||
20,000 | ||
- | ||
2016 | 2017 | |
(20,000) | ||
(40,000) | ||
(60,000) | ||
(80,000) |
2018 | 2019P | 2020G |
Cash Flow From Operations | CapEx | Free Cash Flow | ||
- 2019 reflects preliminary estimated results at the midpoint and 2020 amounts reflects guidance at the midpoint.
- See Appendix for reconciliations of the non-GAAP financial data.
February 7, 2020 | 71
80% Utilization and Why it Works
Transition Lines
Transition Lines | 20 |
Utilization | 70% |
Total Volume | 4,312 |
Startup Lines | |
Lines under Startup | |
6 | |
Utilization | 50% |
Total Volume | 240 |
Operating Lines | |
Lines under Operation | 34 |
Utilization | 92% |
Total Volume | 2,502 |
Total Lines | |
Total Volume | |
3,855 | |
100% Utilization Volume | 4,800 |
Utilization | 80% |
- Utilization represents the percentage of wind blades invoiced during a period compared to the total potential capacity of wind blades based on the number of manufacturing lines installed at the end of the period.
- Key Assumptions:
- 60 lines
- 20 under transition
- 6 in start-up
- 34 in operation
- 80 sets per line
- Current transition and startup speed
February 7, 2020 | 72
February 2020
ESG
February 7, 2020 |
Benefits of TPI's ESG Efforts
• Reduce Risk
- Monitor and lead business using ESG metrics to identify and mitigate risks
- Increase Associate Satisfaction
- Focus on ESG to improve associate engagement and health, improve quality, and reduce turnover.
• Improve Operational Execution
- Reduce waste to reduce environmental risk and operating costs
- Improve Financial Performance
- Margin expansion
- Reduce cost of capital
- Improve shareholder returns
• Improve governance to better align management, board and stakeholder
February 7, 2020 | 74
ESG Status Update
Materiality | Sustainability report |
assessment | - |
- | |
Conduct materiality | |
Data collection | refresh |
2018-2019 | Q1-2 2020 | |
Adopt additional ESG reporting frameworks such as:
CDP and TCFD
-
Set sustainability
goals
Future
February 7, 2020 | 75
ESG Materiality Matrix
Importance
to External
Shareholders
5.0 | Governance & Ethics | |||||||||||
4.5 | ||||||||||||
Economic Performance | ||||||||||||
4.0 | Occupational | |||||||||||
Training & Education | Environmental | Heath & Safety | ||||||||||
Compliance | Effluents & Waste | |||||||||||
3.5 | ||||||||||||
Materials & Material Efficiency | ||||||||||||
Emissions | Energy | |||||||||||
Local Community | Indirect Economic | |||||||||||
Management | ||||||||||||
Impact | ||||||||||||
3.0 | Procurement Practices | |||||||||||
Customer Health & Safety | / Material Sourcing | |||||||||||
Supplier Social Assessment | ||||||||||||
2.5 | Diversity & Equal Opportunity | |||||||||||
Supplier Environmental Assessment | ||||||||||||
Child Labor | Core Business/ | |||||||||||
2.0 | Economic / | |||||||||||
Anti Corruption | ||||||||||||
Water Management | Governance | |||||||||||
Environmental | ||||||||||||
1.5 | Social | |||||||||||
1.0 | Labor | |||||||||||
1.0 | 1.5 | 2.0 | 2.5 | 3.0 | 3.5 | 4.0 | 4.5 | 5.0 |
TPI Impacts
February 7, 2020 | 76
Reporting Metrics
Aligned to GRI and SASB Reporting Standards
Safety | Environmental |
• RIR | Compliance |
• LTIR | Local Communities |
Energy | |
• Volunteer hours | |
• Energy usage | Indirect Economic Impact |
Waste | |
• Community investments | |
• Waste by type | • Regionalized supply spend |
Emissions | CO2 Avoidance |
Materials
- Renewable materials used
Associates
- Average training per associate
- Engagement
Million Metric Tons of CO2
350
303
300
250
203 213
200
151
150
111
100
50
0
2015 | 2016 | 2017 | 2018 | 2019P |
February 7, 2020 | 77
February 2020
Closing Remarks
February 7, 2020 |
Summary Comments
Wind energy and EV's offer tremendous opportunity for TPI's diversified, profitable, global growth.
Wind growth is mostly about economics, customers, investors and the need to positively impact climate change.
Wind costs will continue to be driven down to compete primarily with solar.
Price discipline and margin opportunities should improve over time.
TPI is building global infrastructure with best-in-class composites technology to access the global growth with the lowest total delivered cost.
We will continue to partner deeply with the industry leading customers.
We are thrilled to be growing and diversifying the global TPI team.
We are applying our global scale to ensure lowest cost raw materials and to eliminate supply change constraints.
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Summary Comments
We are bringing relentless focus to manufacturing execution, productivity gains, cost reduction and risk mitigation.
We plan to turn speed into a source of competitive advantage - cut transition and startup time in half, reduce cost of transitions and share those costs with our customers.
We will continue to innovate and advance our state-of-the-art blade technology.
We plan to grow our profitable blade service business.
We plan to bring value to the EV sector with structural composite solutions and plan to build a $500M annual revenue stream. By developing bus, delivery vehicle, truck and passenger vehicle applications, we will see just how low down the cost curve and how high up the volume curve we can profitably grow.
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Summary Comments
Not many companies have funded 23% growth primarily from cash from operations.
Our capital allocation strategy includes maintaining a conservative balance sheet, smart long-term growth investments and return of capital to shareholders.
ESG is the right thing to do. We are committed to it and expect it to drive long term value.
We will continue to build a strong, independent and diverse board of directors as well as ensure that our management team is fully aligned with the interests of our stakeholders.
You've heard from our team how we expect to deliver on our mission of 18GW of capacity, 80% utilization, 20% global market share, $2B in annual revenue, 12% AEBITDA, 25-30% ROIC, and 7-9% free cash flow.
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February 2020
Q&A / Lunch
February 7, 2020 |
February 2020
Appendix - Non-GAAP Information
This presentation includes unaudited non-GAAP financial measures including EBITDA, adjusted EBITDA, net cash (debt) and free cash flow. We define EBITDA as net income (loss) plus interest expense (including losses on the extinguishment of debt and net of interest income), income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus any share-based compensation expense, plus or minus any gains or losses from foreign currency remeasurement and any gains or losses on the sale of assets. We define net cash (debt) as the total unrestricted cash and cash equivalents less the total principal amount of debt outstanding. We define free cash flow as net cash flow generated from operating activities less capital expenditures. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See below for a reconciliation of certain non-GAAP financial measures to the comparable GAAP measures.
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Non-GAAP Reconciliations
(unaudited)
A reconciliation of the low end and high end ranges of projected net income (loss) to projected EBITDA and projected adjusted EBITDA for the full years 2019 and 2020 is as follows:
2019 Preliminary | 2020 Guidance Range (1) | |||||||
Results Range (1) | ||||||||
($ in thousands) | Low End | High End | Low End | High End | ||||
Projected net income (loss) | $ | (16,500) | $ | (15,000) | $ | 16,000 | $ | 26,000 |
Adjustments: | ||||||||
Projected depreciation and amortization | 38,500 | 39,000 | 50,000 | 55,000 | ||||
Projected interest expense (net of interest income) | 8,000 | 8,300 | 11,000 | 13,000 | ||||
Projected loss on extinguishment of debt | - | - | ||||||
Projected income tax provision | 22,500 | 23,500 | 10,000 | 15,000 | ||||
Projected EBITDA | 52,500 | 55,800 | 87,000 | 109,000 | ||||
Projected share-based compensation expense | 5,500 | 5,900 | 5,000 | 6,000 | ||||
Projected realized loss on foreign currency remeasurement | 4,000 | 4,300 | - | - | ||||
Projected realized loss on sale of assets and asset impairments | 18,000 | 19,000 | 8,000 | 10,000 | ||||
Projected Adjusted EBITDA | $ | 80,000 | $ | 85,000 | $ | 100,000 | $ | 125,000 |
(1) All figures presented are projected estimates for the full years ending December 31, 2019 and 2020.
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Non-GAAP Reconciliations (continued)
(unaudited)
Net debt is reconciled as follows:
($ in thousands) | 2019 | |
Cash and cash equivalents | $ | 70,282 |
Less total debt, net of debt issuance costs | (141,294) | |
Less debt issuance costs | (672) | |
Net debt | $ | (71,684) |
Free cash flow is reconciled as follows:
2019 Preliminary | ||||||||
Results Range (1) | 2020 Guidance Range (1) | |||||||
($ in thousands) | Low End | High End | Low End | High End | ||||
Net cash provided by operating activities | $ | 55,000 | $ | 65,000 | $ | 95,000 | $ | 105,000 |
Less: Capital expenditures | (75,000) | (80,000) | (80,000) | (90,000) | ||||
Free cash flow (1) | $ | (20,000) | $ | (15,000) | $ | 15,000 | $ | 15,000 |
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TPI Composites Inc. published this content on 07 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 February 2020 18:32:08 UTC
