VWDRY - TPI Composites crushed as quality problems spark downside guidance

2023-07-27 12:42:01 ET

TPI Composites ( NASDAQ: TPIC ) -32.6% to all-time lows in Thursday's trading after the wind turbine maker issued results for preliminary Q2 adjusted EBITDA and net sales that missed expectations .

TPI Composites ( TPIC ) said Q2 net sales totaled ~$380M, well below the $406M analyst consensus estimate, with an adjusted EBITDA loss of $36M-$41M, compared to an expected $7.7M gain, which it attributed largely to a $30M-$35M warranty claim charge.

The company said the warranty claim stems from two plants in Mexico where blade deliveries are being delayed due to inspection and repair activities, with the delays serving as a headwind to revenues.

BTIG Research's Gregory Lewis downgraded TPI Composites ( TPIC ) to Neutral from Buy, given the company's execution challenges during the last two years and the challenges facing the broader wind industry.

MKM Roth also cut the stock to Neutral with a $10 price target on the potential for further inspection costs related to additional warranty claims from current and former customers, as it appears the high pace of product introductions in recent years has caused quality problems across the industry.

Morgan Stanley's Andrew Percoco maintained his Equal Weight rating, expecting quality related issues will remain an ongoing overhang on the stock despite the strong demand trends being reported by key customers.

Siemens Energy ( OTCPK:SMEGF ) ( OTCPK:SIEGY ) has been slammed by deeper than expected quality flaws at its wind turbine unit that could drive an additional €1B in costs .

Vestas Wind ( OTCPK:VWDRY ) -4.2% in Thursday's trading.

More on TPI Composites:

• Financial and valuation comparison to sector peers
• Analysis: TPI Composite: A Sppon Is Dear When Lunchtime Is Near
• Stock price return: Down 18% YTD, down 32% in the past 12 months

For further details see: