United states

 

(1)	Represents the effect of the difference between the exchange rate used by our various foreign subsidiaries on the invoice date versus the exchange rate used at the period-end balance sheet date.

Risks Related to Our Business

Our business is subject to many risks and uncertainties of which you should be aware before you decide to invest in our common stock. These risks are discussed more fully under “Risk Factors” in this prospectus. Some of these risks include, but are not limited to, the following:

 

•

GE’s acquisition of LM, our largest competitor, may materially harm our business, financial condition and results of operations and may cause the price of our common stock to decline.

 

•

The results of the 2016 United States presidential and congressional elections has created regulatory uncertainty for our business and the wind energy sector, and may materially harm our business, financial condition and results of operations.

 

•

A significant portion of our business is derived from a small number of customers, and one wind blade customer in particular, therefore any loss of or reduction in purchase orders, failure of these customers to fulfill their obligations or our failure to secure long-term supply agreement renewals from these customers would materially harm our business.

 

 

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•

Defects in materials and workmanship or wind blade failures could harm our reputation, expose us to product warranty or other liability claims, decrease demand for our wind blades, or materially harm existing or prospective customer relationships.

 

•

We have experienced and could in the future experience quality or operational issues in connection with plant construction or expansion, wind blade model transition and wind blade manufacturing, which could result in losses and cause delays in our ability to complete our projects and may therefore materially harm our business, financial condition and results of operations.

 

•

Demand for our wind blades may fluctuate for a variety of reasons, including the growth of the wind industry, and decreases in demand could materially harm our business and may not be sufficient to support our growth strategy.

 

•

We may not be able to manage our future growth effectively, which may materially harm our business, operating results and financial condition.

 

•

We operate a substantial portion of our business in international markets and we may be unable to effectively manage a variety of currency, legal, regulatory, economic, social and political risks associated with our global operations and those in developing markets.

 

•

Our financial position, revenue, operating results and profitability are difficult to predict and may vary from quarter to quarter, which could cause our share price to decline significantly.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

 

•

an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting;

 

•

an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

 

•

reduced disclosure about our executive compensation arrangements; and

 

•

exemptions from the requirements to obtain a non-binding advisory vote on executive compensation or a shareholder approval of any golden parachute arrangements.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.0 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering (IPO); (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission (SEC). We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different from the information you receive from other public companies in

 

 

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which you hold stock. We have irrevocably elected to “opt out” of the exemption for the delayed adoption of certain accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Company and Other Information

We were founded in 1968 and have been providing composite wind blades since 2001. Our knowledge and experience of composite materials and manufacturing originates with our predecessor company, Tillotson Pearson Inc., a leading manufacturer of high-performance sail and powerboats along with a wide range of composite structures used in other industrial applications. Following the separation from our boat building business in 2004, we reorganized in Delaware as LCSI Holding, Inc. and then changed our corporate name to TPI Composites, Inc. in 2008. Today, we are headquartered in Scottsdale, Arizona, and we have expanded our global footprint to include domestic facilities in Newton, Iowa; Fall River, Massachusetts; Warren, Rhode Island; and Santa Teresa, New Mexico and international facilities in Dafeng, China; Taicang Port, China; Taicang City, China; Juárez, Mexico; and Izmir, Turkey. Together, as of March 31, 2017, we have approximately 3.5 million square feet of manufacturing space and nearly 8,000 employees, including materials and process engineers, manufacturing process engineers, quality assurance personnel and production workers.

Our wind blade and precision molding and assembly systems manufacturing businesses accounted for over 99% of our total net sales for each of the years ended December 31, 2016, 2015 and 2014. We also leverage our advanced composite technology and history of innovation to supply high strength, lightweight and durable composite products to the transportation market. For a further discussion regarding our wind blade and precision molding and assembly system businesses, refer to the discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” included elsewhere in this prospectus.

In July 2016, we completed an initial public offering of 7,187,500 shares of our common stock at a price of $11.00 per share, which included 937,500 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares. Certain of our existing shareholders, a non-employee director and executive officers purchased an aggregate of 1,250,000 shares of common stock in the IPO included in the total issuance above. The net proceeds from the IPO were $67.2 million after deducting underwriting discounts and offering expenses. Immediately prior to the closing of the IPO, all shares of the then-outstanding redeemable preferred shares converted into an aggregate of 21,110,204 shares of common stock and the redeemable preferred share warrants converted on a net issuance basis into 120,923 shares of common stock. In addition, concurrent with the closing of the IPO, certain subordinated convertible promissory notes in the aggregate principal and interest amount of $11.9 million were converted into 1,079,749 shares of common stock at the public offering price of $11.00 per share.

Prior to the IPO, in July 2016 we amended our amended and restated certificate of incorporation to effect a 360-for-1 forward stock split of our common stock. As a result of the stock split, we have adjusted the share amounts authorized and issuable under our share-based compensation plans. All share and per share common stock information (including those related to our share-based compensation plans) referenced throughout the consolidated financial statements and notes thereto have been retroactively adjusted to reflect this stock split. The stock split did not cause an adjustment to the par value of the authorized shares of common stock.

Our principal executive offices are located at 8501 North Scottsdale Road, Gainey Center II, Suite 100, Scottsdale, Arizona 85253 and our telephone number is [phone]. Our website address is www.tpicomposites.com . The information contained on our website or that can be accessed through our website is not part of this prospectus, and investors should not rely on any such information in deciding whether to purchase our common stock.

 

 

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This prospectus contains references to our trademarks. This prospectus contains additional trade names, trademarks and service marks of other companies. Those other trade names, trademarks and service marks are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

 

 

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THE OFFERING

 

Common stock offered by the selling stockholders

4,500,000 shares

 

Common stock to be outstanding immediately after this offering

33,736,863 shares

 

Option to purchase additional shares from the selling stockholders	The selling stockholders have granted the underwriters an option for a period of 30 days to purchase up to an additional 675,000 shares of common stock at the public offering price, less underwriting discounts.

 

Use of proceeds

The selling stockholders, which include certain of our executive officers, will receive all of the proceeds from the sale of shares in this offering. We will not receive any proceeds from the sale of shares in this offering.

 

Concentration of Ownership

Upon the completion of this offering, our executive officers and directors and stockholders holding more than 5% of our capital stock, and their affiliates, will beneficially own, in the aggregate, approximately 68% of our outstanding shares of common stock.

 

Dividend Policy

We currently intend to retain earnings, if any, to finance the development and growth of our business and do not anticipate paying cash dividends on the common stock in the future.

 

NASDAQ trading symbol

“TPIC”

 

Risk factors	You should read “Risk Factors” beginning on page 21 and other information included in this prospectus for a discussion of factors that you should consider carefully before deciding to invest in our common stock.

The number of shares of common stock to be outstanding after this offering is based on 33,736,863 shares of common stock outstanding as of March 31, 2017 and excludes:

 

•

3,309,818 shares of common stock issuable upon exercise of outstanding options as of March 31, 2017 at a weighted-average exercise price of $12.72 per share;

 

•

636,120 shares of common stock issuable upon the vesting of restricted stock units outstanding as of March 31, 2017;

 

•

160,424 shares of our common stock reserved for issuance in connection with the exercise of our outstanding warrants to purchase common stock issued on December 29, 2014 (the Common Warrants) which we issued in connection with our subordinated convertible promissory notes issued in December 2014 (the Subordinated Convertible Promissory Notes); and

 

 

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•

4,958,767 shares of our common stock reserved for future issuance under our Amended and Restated 2015 Stock Option and Incentive Plan (the 2015 Plan) and which contains provisions that automatically increase its share reserve each year.

Except as otherwise indicated, all information in this prospectus:

 

•

assumes no exercise by the underwriters of their option to purchase up to an additional 675,000 shares of common stock from the selling stockholders in this offering; and

 

•

assumes no exercise of the outstanding options described above.

 

 

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SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

We have derived the summary consolidated statements of operations data for the years ended December 31, 2016, 2015 and 2014 and the summary consolidated balance sheet data as of December 31, 2016 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. The following summary consolidated financial and other data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

 

		Year Ended December 31,
		2016				2015				2014
		(in thousands, except per share data)
Consolidated Statements of Operations Data:
Net sales		$	754,877			$	585,852			$	320,747
Cost of sales			659,745				528,247				289,528
Startup and transition costs			18,127				15,860				16,567
Total cost of goods sold			677,872				544,107				306,095
Gross profit			77,005				41,745				14,652
General and administrative expenses			33,892				14,126				9,175
Income from operations			43,113				27,619				5,477
Other income (expense):
Interest income			344				161				186
Interest expense			(17,614	)			(14,565	)			(7,236	)
Loss on extinguishment of debt			(4,487	)			—				(2,946
Realized loss on foreign currency remeasurement			(757	)			(1,802	)			(1,743	)
Miscellaneous income			238				246				539
Total other expense			(22,276	)			(15,960	)			(11,200	)
Income (loss) before income taxes			20,837				11,659				(5,723	)
Income tax benefit (provision)			(6,995	)			(3,977	)			(925
Net income (loss)			13,842				7,682				(6,648
Net income attributable to preferred shareholders (1)			5,471				9,423				13,930
Net income (loss) attributable to common shareholders		$	8,371			$	(1,741	)		$	(20,578	)
Weighted-average common shares outstanding:
Basic (2)			17,530				4,238				4,238
Diluted (2)			17,616				4,238				4,238
Net income (loss) per common share:
Basic		$	0.48			$	(0.41	)		$	(4.86	)
Diluted		$	0.48			$	(0.41	)		$	(4.86	)