TPI Composites, Inc.

Greetings and welcome to the TPI Composites first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jason Wegman, Vice President, Investor Relations and Sustainability. Please go ahead.

Thank you, Operator. I would like to welcome everyone to TPI Composites' first quarter 2025 earnings call. We will be making forward-looking statements during this call that are subject to risks and uncertainties, which could cause actual results to differ materially. A detailed discussion of applicable risks is included in our latest reports and filings with the Securities and Exchange Commission, which can be found on our website, tpicomposites.com. Today's presentation will include references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures. With that, let me turn the call over to Bill Cywick, TPI Composites President and CEO.

Thanks, Jason. Good afternoon, everyone, and thank you for joining our call. In addition to Jason, I am here with Ryan Miller, our CFO. Please turn to slide five. I'm pleased to report a solid start to the year with Q1 revenue up 14% year over year, positive cash flows of $4.6 million provided by operating activities, and we ended the quarter with $172 million of cash. 2024 included a significant number of line startups and transitions with 10 lines reaching serial production and several facilities in Mexico moving to 24-7 operations. As we exit the first quarter, all the line startups and transitions that began in 2024 are completed. We have substantially completed four lines that transitioned in the first quarter of this year and are well into the hiring at our Newton, Iowa plant where we are starting production this week. Our focus now is on leveraging the investments made over the last year by utilizing lean tools to foster a culture of operational excellence. This drive aims to deliver repeatable world-class quality and delivery performance while achieving cost savings throughout the organization. As mentioned in previous quarters, customer demand continues to be strong for our Mexico operations capacity for 2025, and we are acutely focused on delivering on the commitments made to our customers. Sales for the quarter were $336.2 million and were in line with our expectations. The increase in sales of 14% over the prior year is primarily related to strong demand in the U.S. and the fact that we worked through a number of line transitions from 2024 that are now in serial production. Adjusted EBITDA was a loss of $10.3 million, but included a $12.7 million warranty charge, $8.4 million of startup and transition costs from six lines in startup and transition, and $4 million in costs to transition certain of our Mexico factories to the 24-7 shift structure. Our adjusted EBITDA margin benefited from strong sales into the U.S. in the quarter, partially offset by weaker sales coming out of our Turkey A factories. As previously disclosed, in December 2024, we committed to a restructuring plan in Turkey A to rationalize our workforce in response to lower forecasted demand amid intense Chinese competition and the continued hyperinflationary environment. This restructuring plan impacted approximately 20% of our Turkish workforce. Looking forward, we expect we will further rationalize our workforce during the second half of 2025, as we have extensions for just two manufacturing lines beyond 2025 at this time. And although there continues to be interest in our manufacturing capacity, It is unclear when or if that interest will ultimately result in firm contracts. Please turn to slide six. With respect to the wind market, the world is experiencing unprecedented energy demand by factors like the reshoring of manufacturing, industrial electrification, and a focus on national security. This demand is being further intensified by the rapid growth of data centers. In the United States, demand is expected to surpass 450 gigawatts by 2030, requiring a balanced and practical energy strategy. We believe this strategy should embrace all available energy solutions, recognizing the immediate and accelerating need for power. It must also be acknowledged that different energy technologies have varying levels of current readiness and cost implications. Today, renewable energy and battery storage are the most affordable power sources and can be deployed rapidly, unlike technologies like new natural gas plants and nuclear energy, which face increasing costs and likely cannot be deployed in time to address energy demands that are here today. Consequently, we believe a comprehensive energy policy focusing on an all-of-the-above approach is crucial to effectively meet the substantial demand while considering the timely availability and affordability of each energy option. As a trusted and key supplier of wind blades for the leading Western turbine OEMs, we remain a critical cog of the wind industry supply chain. The relationships we have developed with these OEMs and our strategic footprints in low-cost locations have positioned us well for their blade needs. While our supported markets are currently complex, their long-term prospects remain positive. It is crucial, however, to discuss the potential impacts on our business stemming from uncertainty around tariffs, permitting, and possible changes to the IRA in the U.S. Concerning tariffs, as you know, we operate eight plants across four countries. While completed blade sales from all plants into the U.S. are potentially subject to U.S. tariffs, assessing the impact requires a country-by-country analysis. Our Mexico plants almost exclusively support the U.S. market, as will our Iowa facility. Importantly, under current regulations, all blades produced in our Mexico plants are USMCA compliant and therefore exempt from tariffs. In Europe, our Turkey A plants primarily serve the EU and Turkey A with a small fraction of blades destined for the US. Our India plant supplies blades to the US, Asia, South America, and Africa with approximately 40% of its production shipped to the US during the first quarter. Blades sold into the US out of our plants in India and Turkey A are subject to the existing tariff structures for those countries. However, our current contractual agreements with OEMs we serve stipulate that the OEMs bear the responsibility for these tariffs. Our supply chain is also experiencing the effects of US tariffs. Years of developing strong strategic partnerships and redundancy within our supply base provide us with some flexibility to mitigate long-term cost impacts. The cost of blades produced at our Newton facility will likely be affected, though the final impact is still being assessed as we continue to develop mitigation strategies. It's important to remember that Newton is in the startup phase with minimal production expected in 2025. As for the IRA, the final content of a budget reconciliation bill and timing remain uncertain, while reshoring manufacturing and creating associated U.S. jobs are critical priorities for this U.S. administration. Given the significant impact on jobs and investment in the U.S., we currently believe a full repeal seems unlikely. However, we expect concessions will likely have to be made to align with the administration's spending priorities. The reopening of TPI's Newton, Iowa facility is evidence of an IRA-driven job creation. In collaboration with GE-Vernova, we plan to have two production lines operational this year, providing approximately 400 good-paying jobs. At full capacity, this facility can operate five lines and employ around 1,000 people. The EU market presents a significant long-term growth opportunity, though considerable challenges persist in the current environment, including strong competition from Chinese manufacturers and the ongoing impact of hyperinflation in Turkey, which pose continued risks for TPI. Positively, the EU's permitting reforms, notably the Renewable Energy Directive, have provided for streamlined processes and prioritized renewables, leading to faster project approvals as demonstrated by the wind energy market in Germany. where supportive legal frameworks recognize wind energy's overriding public interest. While the EU's permitting reforms and initiatives like the Net Zero Industrial Act's Auction Resilience Guidelines are encouraging steps, their slow adoption and inconsistent implementation across member countries remain impediments to the broader wind industry, creating uncertainty about their short-term impact on TPI. Overall, the various economic challenges presented in the markets where we operate, as discussed above, continue to create uncertainty in the industry's near-term outlook and continue to challenge our operations. In the near term, we are continuing to focus on maximizing value and ensuring we have sufficient liquidity to operate. On May 8, 2025, our Board of Directors formed a committee to, among other things, assist with conducting a strategic review of our business and evaluation of potential strategic alternatives focused on optimizing our capital structure for the current environment. To assist in leading the strategic review, we appointed two new independent directors to our board, Tim Pohl and Neil Goldman. Both Tim and Neil have significant experience as strategic advisors and representing companies in strategic planning, negotiating complex transactions, M&A, capital raising, valuation, corporate governance, and liability management. With their assistance, we are in the process of assessing approaches to enhance our capital structure while maintaining sufficient liquidity. No timetable has been established for the conclusion of this review, and no decisions related to any further actions or potential strategic alternatives have been made at this time. In addition, as reported in a Form 8K on May 8, On May 2, 2025, the company received a notification letter from NASDAQ notifying the company that it is not in compliance with the minimum bid price requirement for continued listing on NASDAQ. The notification letter does not impact the company's listing on NASDAQ at this time, as we have 180 calendar days or until October 29, 2025, to regain compliance with NASDAQ's listing rules. To regain compliance, the bid price of the company's common stock must have a closing bid price of at least a dollar per share for a minimum of 10 consecutive business days. We intend to consider all available options to regain compliance with the minimum bid price requirement, including in connection with the ongoing review of strategic alternatives I previously mentioned. With that, I'll turn the call over to Ryan to review our financial results.