US wind turbine blade maker TPI Composites has reported a net loss of $31m for the three months ended 30 September 2021 compared to a net income of $42m for the same period in 2020.
It also reported a decrease in adjusted earnings before interest, depreciation and amortisation (EBITDA) to $0.2m for the three months ended 30 September 2021, compared to $49.1m during the same period in 2020.
Adjusted EBITDA margin decreased to zero as compared to 10.4% during the same period in 2020.
TPI stated that as of 30 September 2021 it was not in compliance with its Total Net Leverage Ratio financial covenant (as defined in its credit agreement) and as a result the lender would have the right to request immediate payment of the senior revolving loan.
Liquidity and capital resources were adversely affected by certain events that occurred during the three months ended 30 September, TPI said.
The company stated: “We experienced significant production delays that occurred at the Matamoros, Mexico manufacturing facility that we took over from Nordex in July 2021, as well as significant production delays in one of our Juarez, Mexico manufacturing facilities in connection with the ongoing transition to an innovative new blade for one of our customers.
“Although we expect that production will be stabilized in both of these manufacturing facilities by the end of the year, we expect that these transitions will continue to have an adverse impact on our liquidity for the remainder of the year.
“We also expect decreased demand for our wind blades from our customers during the remainder of 2021 and 2022.
“We believe this decrease in demand is due to the continued global renewable energy regulatory and policy uncertainty and raw material cost increases and constraints. We believe this decreased demand will also adversely impact our profitability and liquidity for the remainder of 2021 and 2022.”
In response to these conditions, TPI has entered into a $400m Series A Preferred Stock Purchase Agreement with funds managed by Oaktree Capital Management.
The company intends to use the net proceeds from the sale of the Series A Preferred Stock to pay off all outstanding indebtedness under its senior credit facility and the balance for general corporate purposes.