TPI Composites announces restructuring plan, to reduce global headcount by 18%

In a regulatory filing, the company stated, "On December 2, TPI Composites committed to a restructuring plan in order to rebalance the organization and optimize its global manufacturing footprint. In connection with the plan, and as previously announced on November 3, 2022 in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, the company intends to cease production at its Yangzhou, China manufacturing facility. The company will reduce its global headcount by approximately 18%, primarily in geographies most impacted by demand. The company will take action under the restructuring plan beginning in December 2022. The company currently estimates that it will recognize pre-tax charges to its 2022 financial results of approximately $45 to $60 million, consisting primarily of costs to shut down the Yangzhou manufacturing facility, severance and other one-time termination benefits, real estate-related charges, contract-related asset impairments and other costs. These charges are expected to include cash charges ranging from $24 to $27 million and will be primarily paid in 2023. The company also expects to incur a total of approximately $45 million of contract related costs in excess of the estimated remaining revenue to complete a contract through June 2024. The company expects to recognize approximately $30 million of these costs in 2023 and $15 million in 2024. These excess costs relate to a supply agreement we entered into in July 2021, pursuant to which we took over the production at a customer’s existing manufacturing facility in Matamoros, Mexico. As part of our restructuring plan, we have committed to complete the supply agreement through June 2024, at which time the facility will revert back to the customer. However, we will continue to explore opportunities and options, including potentially amending the contract, to reduce or minimize the impact on our results of operations. The company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the implementation of the restructuring plan. The company intends to exclude the charges associated with the restructuring plan from its non-GAAP financial measures."