TPI Composites, Inc.(Pending:TPIC) filed its S-1 with the Securities and Exchange Commission on June 17, 2016, and an S-1/A on July 11, 2016, for its upcoming IPO. The company hopes to raise $141,737,500 with its offer of 7.25 million shares of common stock. The company also has an overallotment option of an additional 1,087,500 shares. The expected price range is $15 to $17 per share. The lead underwriters for the IPO include Canaccord Genuity, Cowen and Company, J.P. Morgan, Morgan Stanley and Raymond James.
Business summary
According to its filings, TPI Composites is the largest independent manufacturer of composite wind blades in the United States. The company has manufacturing facilities located strategically to serve growing wind markets. TPI Composites allows large manufacturers of wind turbine engines to outsource some of their wind blade manufacturing. The company's OEM customers include: Vestas Wind Systems, General Electric International, Inc., Nordex SE and Gamesa Wind US LLC. The company has contracts in place with values of more than $3 billion through 2021. The company is headquartered in Scottsdale, Arizona, and was founded in 1968.
Executive management team overview
CEO, director and president of TPI Composites, Steven C. Lockard has served in his roles since 2004. He joined the company in 1999. Prior to that, Lockard served as a vice president for several companies as well as in numerous management roles for a variety of companies. Lockard is a member of the board of directors of the American Wind Energy Association. He holds a Bachelor of Science in engineering from Arizona State University.
COO Mark R. McFeely joined TPI Composites in in 2015. Prior to that, he served as the COO and the senior vice president for Remy International, Inc. McFeely has more than 20 years of experience in business operations. He graduated with his Bachelor's degree from Colorado State University and holds a Master of Business Administration from Pennsylvania State University.
Financial highlights and risks
TPI Composites has customers around the world, including in China, Turkey, the U.S. and Mexico. In addition to wind blades, the company creates many other composite parts and whole vehicles. In 2015, TPI reported revenues of $586 million with a gross profit of $42 million. Its net profit for the year was $7.7 million. The company has demonstrated impressive growth, with an increase in net sales of 83% from the company's net sales of $321 million in 2014. The company says it expects to report net sales of between $193.5 million and $194.5 million for the 3-month period that ended on June 30, 2016.
Among its risks, the company indicates that a substantial portion of its business comes from a small customer base, with one customer representing a significant portion of its business sales. The company also indicates that fluctuations in demand could occur with the growth of the wind industry.
Conclusion: Consider A Modest Allocation
Due to the expansion in the worldwide market for composites, TPI already has some substantial contracts in place through 2021. We believe the company has potential; however, we hear the deal is not as popular as others this week, such as PTHN and PI (which we covered in our IPO preview last week). We suggest a modest allocation at most.
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