TPI COMPOSITES, INC MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

You should read the following discussion and analysis of our financial condition
and results of operations together with our condensed consolidated financial
statements and the related notes and other financial information appearing
elsewhere in this Quarterly Report on Form 10-Q (Form 10-Q). Some of the
information contained in this discussion and analysis or set forth elsewhere in
this Form 10-Q, including information with respect to plans and strategy for our
business, includes forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those described
in or implied by these forward-looking statements as a result of various
factors, including those discussed below and elsewhere in this Form 10-Q or in
our previously filed Annual Report on Form 10-K for the year ended December 31,
2021, particularly those under the heading "Risk Factors."

OVERVIEW

Our company

We are the only independent manufacturer of composite wind blades for the wind
energy market with a global manufacturing footprint. We deliver high-quality,
cost-effective composite solutions through long term relationships with leading
original equipment manufacturers (OEM) in the wind market. We also provide field
service inspection and repair services to our OEM customers and wind farm owners
and operators, and supply high strength, lightweight and durable composite
products to the transportation market. We are headquartered in Scottsdale,
Arizona and operate factories throughout the United States (U.S)., China,
Mexico, Turkey, and India. We operate additional engineering development centers
in Denmark and Germany and a service facility in Spain.

Our business operations are defined geographically into five geographic
operating segments-(1) the United States (U.S.), (2) Asia, (3) Mexico, (4)
Europe, the Middle East and Africa (EMEA) and (5) India. See Note 16, Segment
Reporting, to our condensed consolidated financial statements for more details
about our operating segments.

KEY TRENDS AND RECENT DEVELOPMENTS AFFECTING OUR BUSINESS

During the three and six months ended June 30, 2022, there have been both price
increases and supply constraints as compared to the same prior year comparative
periods, for key raw materials that we use to manufacture our products, as well
as increases in logistics costs to obtain raw materials. Carbon fiber and resin
prices have increased primarily due to the cost of raw material inputs and
petroleum-based feedstocks as well as increased global demand across multiple
industries. We expect that the price of resin and carbon fiber will remain at
elevated levels for the remainder of 2022 and into 2023. Approximately 60% of
the resin and resin systems, and approximately 90% of the carbon fiber we use is
purchased under contracts either controlled or borne by two of our customers,
and therefore these customers receive/bear 100% of any decrease or increase in
resin and/or carbon fiber prices. With respect to our other customer supply
agreements, our customers typically receive/bear 70% of any raw material price
decreases or increases. If the supply of resin feedstocks and carbon fiber
continue to be constrained for an extended period of time, such shortages could
impact our ability to meet our customers' forecasted demand for our products for
the remainder of 2022 and 2023 and could have a material adverse impact on our
results of operations for the remainder of 2022 and 2023.

Although all of our manufacturing facilities currently are operating without any
COVID-19 impacts or restrictions, we may be required to reinstate temporary
production suspensions or volume reductions at our manufacturing facilities to
the extent there are new resurgences of COVID-19 cases in the regions where we
operate or there is an outbreak of positive COVID-19 cases in any of our
manufacturing facilities. While our global supply chain was adversely affected
by the COVID-19 pandemic in 2021, our supply chain has not been materially
impacted by the COVID-19 pandemic in the first half of 2022. Our results of
operations for 2022 have been adversely impacted by increased raw material and
logistics costs arising from a variety of factors, including the current
geopolitical climate, rising energy costs, curtailed energy supply in Europe and
continued interruptions in logistics with global logistics strikes and labor
negotiations in the U.S.. In addition, certain of our customers source certain
key raw materials and components, including resin and carbon fiber. If these
customers have challenges procuring adequate supplies of resin and carbon fiber,
it may have an adverse impact on our production volumes and results of
operations and could adversely impact our business in the second half of 2022 if
such challenges occur.

We expect decreased demand for our wind blades from our customers during the
remainder of 2022 and 2023. We believe this decrease in demand is due to the
continued global renewable energy regulatory and policy uncertainty and the raw
material and logistics cost increases mentioned above. We believe that
uncertainty around potential legislation in the U.S. to extend the Production
Tax Credit (PTC) is causing developers to delay project timelines in
anticipation of being able to build projects at higher PTC levels if such an
extension is implemented. We are, however, encouraged by the proposed Inflation
Reduction Act of 2022 and the stability the act could provide in the U.S. market
as well as the impact this could have on demand should it ultimately get signed
into law.

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Furthermore, we are encouraged by the long-term prospects of the European wind
market after the announcement of the European Commission's REPowerEU plan in May
2022.

We plan to hire a total of approximately $1.6 million restructuring charges in the second half of 2022 related to aligning our global footprint and consolidating our China and North America
operations.

Effective January 1, 2022, the functional currency for our operations in Turkey
changed from Turkish Lira to Euros. The Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC) Topic 830 (ASC 830), "Foreign
Currency Matters," requires a change in functional currency to be reported as of
the date it is determined there has been a change, and it is generally accepted
practice that the change is made at the start of the most recent period that
approximates the date of the change.

While the change of the functional currency was based on a factual assessment,
the determination of the date of the change required management's judgement
given the change over time in the primary economic and business environment in
which we operate.

Based on the analysis of the Turkish domestic renewable energy demand through
2021 and anticipated future demand, management concluded that Turkish domestic
sales will not grow as previously envisioned and most of the future growth will
continue to be predominately export sales to the eurozone, which are primarily
denominated in Euros. See Footnote 1, Significant Accounting Policies, for more
details.


KEY INDICATORS USED BY MANAGEMENT TO MEASURE PERFORMANCE

For a detailed discussion of our key financial measures and our key operating
metrics, refer to the discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Key Metrics Used By Management
To Measure Performance" included in Part II, Item 7 of our Annual Report on Form
10-K for the year ended December 31, 2021.

MAIN FINANCIAL MEASURES

                         Three Months Ended           Six Months Ended
                              June 30,                    June 30,
                         2022          2021          2022          2021
                                         (in thousands)
Net sales              $ 452,368     $ 458,841     $ 837,238     $ 863,521
Net loss                  (5,510 )     (39,797 )     (21,310 )     (41,594 )
EBITDA (1)                13,853         4,285        13,519         9,699
Adjusted EBITDA (1)       10,288        17,361        16,405        30,456
Capital expenditures                                   8,010        27,059
Free cash flow (1)                                   (67,171 )     (30,314 )




               June 30,       December 31,
                 2022             2021
                      (in thousands)
Total debt     $  62,306     $       74,646
Net cash (1)      92,714            167,519





(1)
See below for a reconciliation of earnings before interest, taxes, depreciation
and amortization (EBITDA), adjusted EBITDA, free cash flow and net cash to net
loss attributable to common stockholders, net cash provided by (used in)
operating activities and cash and cash equivalents, respectively, the most
directly comparable financial measures calculated and presented in accordance
with accounting principles generally accepted in the U.S. (GAAP).

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The following tables reconcile our key non-GAAP financial measures to the most directly comparable GAAP measures:

EBITDA and Adjusted EBITDA are reconciled as follows:

                                       Three Months Ended              Six Months Ended
                                            June 30,                       June 30,
                                      2022           2021            2022            2021
                                                         (in thousands)
Net loss attributable to common
stockholders                       $  (20,060 )   $   (39,797 )   $   (49,992 )   $   (41,594 )
    Preferred stock dividends
and accretion                          14,550               -          28,682               -
Net loss                               (5,510 )       (39,797 )       (21,310 )       (41,594 )
Adjustments:
Depreciation and amortization          11,696          12,501          23,449          24,110
Interest expense, net                     913           2,691           1,682           5,395
Income tax provision                    6,754          28,890           9,698          21,788
EBITDA                                 13,853           4,285          13,519           9,699
Share-based compensation expense        3,748           2,925           7,057           5,324

Foreign exchange loss (income) (9,886 ) 6,504 (10,096 ) 10,231 Loss on sale of assets and assets

 impairments                            2,563           1,451           3,522           2,748
Restructuring charges, net                 10           2,196           2,403           2,454
Adjusted EBITDA                    $   10,288     $    17,361     $    16,405     $    30,456


Free cash flow is reconciled as follows:

                                           Six Months Ended
                                               June 30,
                                          2022          2021
                                            (in thousands)
Net cash used in operating activities   $ (59,161 )   $  (3,255 )
Less capital expenditures                  (8,010 )     (27,059 )
Free cash flow                          $ (67,171 )   $ (30,314 )


Net cash is reconciled as follows:

                            June 30,       December 31,
                              2022             2021
                                   (in thousands)
Cash and cash equivalents   $ 155,020     $      242,165
Less total debt               (62,306 )          (74,646 )
Net cash                    $  92,714     $      167,519


KEY OPERATING METRICS

                                  Three Months Ended          Six Months Ended
                                       June 30,                   June 30,
                                   2022          2021         2022         2021
Sets                                   783          843         1,385       1,657
Estimated megawatts                  3,410        3,303         6,054       6,375
Utilization                             84 %         82 %          75 %        80 %
Dedicated manufacturing lines           43           50            43       

50

Manufacturing lines installed           43           51            43          52





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RESULTS OF OPERATIONS

The following table summarizes our operating results as a percentage of net sales for the three and six months ended June 30, 2022 and 2021 which were taken from our condensed consolidated statements of earnings:

                                            Three Months Ended                Six Months Ended
                                                 June 30,                         June 30,
                                          2022              2021            2022             2021
Net sales                                      100 %            100 %            100 %           100 %
Cost of sales                                 97.5             96.0             97.0            95.4
Startup and transition costs                   2.2              2.2              3.1             2.8
Total cost of goods sold                      99.7             98.2            100.1            98.2
Gross profit (loss)                            0.3              1.8             (0.1 )           1.8
General and administrative expenses            1.5              1.5              1.7             1.8
Loss on sale of assets and asset
impairments                                    0.6              0.3              0.4             0.3
Restructuring charges, net                     0.0              0.5              0.3             0.3
Loss from operations                          (1.8 )           (0.5 )           (2.5 )          (0.6 )
Total other income (expense)                   2.1             (1.9 )            1.1            (1.7 )
Income (loss) before income taxes              0.3             (2.4 )           (1.4 )          (2.3 )
Income tax provision                          (1.5 )           (6.3 )           (1.2 )          (2.5 )
Net loss                                      (1.2 %)          (8.7 %)          (2.6 %)         (4.8 %)




Net sales

Consolidated discussion

The following table summarizes our net sales by product/service for the three and six months ended June 30, 2022 and 2021:

                     Three Months Ended                                        Six Months Ended
                          June 30,                     Change                      June 30,                     Change
                     2022          2021            $             %            2022          2021            $             %
                              (in thousands)                                           (in thousands)

Sale of wind blades $414,036 $418,704 ($4,668) (1.1)% $768,617 $797,883 ($29,266) (3.7)% Investment casting and

Assembly

system sales 2,834 13,603 (10,769) (79.2)

6,840 22,530 (15,690 ) (69.6 ) Transportation sales

                 10,660        14,915        (4,255 )       (28.5 )       23,517        23,046           471           2.0
Field service,
inspection and

repair

sales of services 15,036 8,286 6,750 81.5

24,886 12,601 12,285 97.5 Other sales

            9,802         3,333         6,469         194.1      

13,378 7,461 5,917 79.3 Total net sales $452,368 $458,841 ($6,473) (1.4)% $837,238 $863,521 ($26,283) (3.0)%



The decrease in net sales of wind blades during the three and six months ended
June 30, 2022, as compared to the same periods in 2021, was primarily driven by
a 7% and 16% decrease in the number of wind blades produced, respectively, due
to a reduction in manufacturing lines, transitions of existing lines and
currency fluctuations, which were partially offset by a higher average sales
price due to the mix of wind blade models produced. Net sales from the
manufacturing of precision molding and assembly systems decreased during the
three and six months ended June 30, 2022, as compared to the same periods in
2021 primarily due to a decrease in volume of molds produced. Additionally,
there was an increase in our field service, inspection and repair service sales
during the three and six months ended June 30, 2022, as compared to the same
periods in 2021, due to an increase in demand for such services. The decrease in
transportation sales for the three months ended June 30, 2022, as compared to
the same period in 2021, was primarily due to a cumulative catch-up adjustment
in the prior comparative period as a result of a previous contract modification
under one of our supply agreements. Transportation sales have remained
consistent for the six months ended June 30, 2022, as compared to the same
period in 2021. The increase in other sales for the three and six months ended
June 30, 2022, as compared to the same periods in 2021, is primarily due to an
increase in volume of ancillary wind-related sales and services. The fluctuating
U.S. dollar against the Euro in our operations in Turkey had an unfavorable
impact of 3.1% and 2.8% on consolidated net sales for the three and six months
ended June 30, 2022, respectively, as compared to the same periods in 2021.

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Sector discussion

The following table summarizes our net sales by our five geographic operating segments for the three and six months ended June 30, 2022 and 2021:

                    Three Months Ended                                      

Semester completed

                         June 30,                     Change                      June 30,                     Change
                    2022          2021            $             %            2022          2021            $             %
                             (in thousands)                                           (in thousands)
U.S.              $  20,657     $  59,449     $ (38,792 )       (65.3 )%   $  42,214     $ 110,442     $ (68,228 )       (61.8 )%
Asia                 59,865        91,106       (31,241 )       (34.3 )      101,211       168,034       (66,823 )       (39.8 )
Mexico              191,985       140,482        51,503          36.7        322,381       257,234        65,147          25.3
EMEA                129,610       105,350        24,260          23.0        279,295       217,716        61,579          28.3
India                50,251        62,454       (12,203 )       (19.5 )    

92,137 110,095 (17,958) (16.3) Total net sales $452,368 $458,841 ($6,473) (1.4)% $837,238 $863,521 ($26,283) (3.0)%


U.S. Segment

The following table summarizes our net sales by product/service for the WE
segment for the three and six months ended June 30, 2022 and 2021:

                    Three Months Ended                                        Six Months Ended
                         June 30,                     Change                      June 30,                    Change
                     2022          2021           $             %            2022         2021            $             %
                             (in thousands)                                           (in thousands)
Wind blade
sales             $        -     $ 39,427     $ (39,427 )          NM      $      -     $  79,054     $ (79,054 )          NM
Transportation
sales                 10,660       14,915        (4,255 )       (28.5 )      23,517        23,046           471           2.0
Field service,
inspection and
  repair
services sales         9,930        5,071         4,859          95.8        18,531         8,065        10,466         129.8
Other sales               67           36            31          86.1           166           277          (111 )       (40.1 )

Total net sales $20,657 $59,449 ($38,792) (65.3)% $42,214 $110,442 ($68,228) (61.8)%


NM - not meaningful

The decrease in the U.S. segment's net sales of wind blades during the three and
six months ended June 30, 2022, as compared to the same periods in 2021, was due
to the shutdown of production at our Newton, Iowa manufacturing facility at the
end of the fourth quarter of 2021. The increase in the U.S. segment's field
service, inspection and repair services sales was primarily due to increases in
overall volume and demand for such services during the three and six months
ended June 30, 2022, as compared to the same periods in 2021. The decrease in
transportation sales for the three months ended June 30, 2022, as compared to
the same period in 2021, was primarily due to cumulative catch-up adjustments in
the prior comparative period as a result of a previous contract modification
under one of our supply agreements. Transportation sales have remained
consistent for the six months ended June 30, 2022 as compared to the same period
in 2021.

Asia Segment

The following table summarizes our net sales by product/service for the Asia
segment for the three and six months ended June 30, 2022 and 2021:

                    Three Months Ended                                      

Semester completed

                         June 30,                     Change                      June 30,                     Change
                     2022          2021           $             %            2022          2021            $             %
                             (in thousands)                                           (in thousands)
Wind blade
sales             $   56,232     $ 82,491     $ (26,259 )       (31.8 )%   $  92,631     $ 154,994     $ (62,363 )       (40.2 )%
Precision
molding and

Assembly

system sales 2,607 7,634 (5,027) (65.9)

   6,466        11,598        (5,132 )       (44.2 )
Field service,
inspection and
  repair
services sales           812          981          (169 )       (17.2 )        1,780         1,289           491          38.1
Other sales              214            -           214            NM            334           153           181         118.3

Total net sales $59,865 $91,106 ($31,241) (34.3)% $101,211 $168,034 ($66,823) (39.8)%




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The decrease in the Asia segment's net sales of wind blades during the three and
six months ended June 30, 2022, as compared to the same periods in 2021, was
primarily due to a 43% and 56% decrease in the number of wind blades produced,
respectively, due to a reduction of contracted manufacturing lines in China and
the startup of additional lines in 2022. The net sales decrease during the three
and six months ended June 30, 2022 was partially offset by an increase in the
average sales price of wind blades due to a change in the mix of wind blades
produced in the comparative periods.

Mexico Segment

The following table summarizes our net sales by product/service for the Mexico
segment for the three and six months ended June 30, 2022 and 2021:

                   Three Months Ended                                     Six Months Ended
                        June 30,                    Change                    June 30,                     Change
                   2022          2021           $            %           2022          2021            $            %
                            (in thousands)                                        (in thousands)
Wind blade
sales            $ 181,273     $ 131,188     $ 50,085         38.2 %   $ 310,879     $ 239,630     $  71,249         29.7 %
Precision
molding and
  assembly
systems sales          227         5,969       (5,742 )      (96.2 )         374        10,932       (10,558 )      (96.6 )
Field service,
inspection and
  repair
services sales       3,015           962        2,053           NM         3,015           962         2,053           NM
Other sales          7,470         2,363        5,107           NM         8,113         5,710         2,403         42.1
Total net
sales            $ 191,985     $ 140,482     $ 51,503         36.7 %   $ 322,381     $ 257,234     $  65,147         25.3 %




The increase in the Mexico segment's net sales of wind blades during the three
and six months ended June 30, 2022, as compared to the same periods in 2021, is
primarily due to the commencement of production at our second manufacturing
facility in Matamoros, Mexico that we took over from Nordex in July 2021, and
also reflects an increase in the average sales price of wind blades due to the
mix of wind blades produced in the comparative periods. This increase was
partially offset by the stop of production in one of our Juarez, Mexico
facilities at the end of the fourth quarter of 2021. The decrease in net sales
from the manufacturing of precision molding and assembly systems is primarily
due to a decrease in volume in the comparative periods. The increase in other
sales for the three and six months ended June 30, 2022, as compared to the same
periods in 2021, is primarily due to an increase in volume of ancillary
wind-related sales and services.

EMEA Segment

The following table summarizes our net sales by product/service for the EMEA segment for the three and six months ended June 30, 2022 and 2021:

                   Three Months Ended                                      Six Months Ended
                        June 30,                     Change                    June 30,                     Change
                   2022          2021           $             %           2022          2021           $             %
                            (in thousands)                                         (in thousands)
Wind blade
sales            $ 126,438     $ 103,201     $ 23,237          22.5 %   $ 273,287     $ 214,228     $ 59,059          27.6 %
Field service,
inspection and
  repair
services sales       1,277         1,272            5           0.4         1,558         2,285         (727 )       (31.8 )
Other sales          1,895           877        1,018         116.1         4,450         1,203        3,247            NM
Total net
sales            $ 129,610     $ 105,350     $ 24,260          23.0 %   $ 279,295     $ 217,716     $ 61,579          28.3 %




The increase in the EMEA segment's net sales of wind blades during the three and
six months ended June 30, 2022, as compared to the same periods in 2021, was
primarily driven by a 29% and 26% increase in wind blade production at our two
Turkey plants. These net sales increases were partially offset by currency
fluctuations. The fluctuating U.S. dollar relative to the Euro had an
unfavorable impact of 10.9% and 8.4% on net sales, respectively, during the
three and six months ended June 30, 2022, as compared to the same periods in
2021.

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India Segment

The following table summarizes our net sales by product/service for the India
segment for the three and six months ended June 30, 2022 and 2021:

                   Three Months Ended                                        Six Months Ended
                        June 30,                     Change                      June 30,                    Change
                    2022          2021           $             %            2022         2021            $             %
                            (in thousands)                                           (in thousands)
Wind blade
sales            $   50,093     $ 62,397     $ (12,304 )       (19.7 )%   $ 91,820     $ 109,977     $ (18,157 )       (16.5 )%
Field service,
inspection and
  repair
services sales            2            -             2            NM             2             -             2            NM
Other sales             156           57            99         173.7           315           118           197         166.9
Total net
sales            $   50,251     $ 62,454     $ (12,203 )       (19.5 )%   $
92,137     $ 110,095     $ (17,958 )       (16.3 )%




The decrease in the India segment's net sales of wind blades during the three
and six months ended June 30, 2022, as compared to the same periods in 2021, was
primarily driven by a decrease in the average sales price of wind blades, a
decrease in the year over year number of wind blades still in the production
process at the end of the period and the transition of two of our manufacturing
lines from one type of wind blade to a new type of wind blade in 2022.


Total cost of goods sold

The following table summarizes the total cost of goods sold for the three and six months ended June 30, 2022 and 2021:


                   Three Months Ended                                      

Semester completed

                        June 30,                     Change                    June 30,                     Change
                   2022          2021           $             %           2022          2021            $            %
                            (in thousands)                                 

(in thousands)

 Cost of sales   $ 441,098     $ 440,416     $    682           0.2 %   $ 

812 052 $823,472 ($11,420) (1.4)%

Start-up costs 2,527 4,504 (1,977 ) (43.9 ) 7,994 9,056 (1,062 ) (11.7 )

Transition

costs                7,520         5,595        1,925          34.4        

17,596 15,397 2,199 14.3

 Total startup
and transition
  costs             10,047        10,099          (52 )        (0.5 )      

25,590 24,453 1,137 4.7

 Total cost of
goods sold       $ 451,145     $ 450,515     $    630           0.1     $ 

837 642 $847,925 ($10,283) (1.2 )

 % of net
sales                 99.7 %        98.2 %                      1.5 %       100.0 %        98.2 %                      1.8 %




Total cost of goods sold as a percentage of net sales increased by approximately
1.5% and 1.8% during the three and six months ended June 30, 2022, respectively,
as compared to the same periods in 2021, primarily driven by an increase in
direct material costs. The fluctuating U.S. dollar against the Turkish Lira,
Euro, Chinese Renminbi and Mexican Peso had a favorable impact of 5.8% and 5.4%
on consolidated cost of goods sold, respectively, for the three and six months
ended June 30, 2022 as compared to the 2021 periods. Included in the cost of
sales for the three and six months ended June 30, 2022, is approximately $8.0
million and $15.1 million, respectively, in non-restructuring related operating
costs that were associated with certain manufacturing facilities in Newton,
Iowa; Dafeng, China; and Juarez, Mexico, where production has stopped.

General and administrative expenses

The following table summarizes our general and administrative expenses for the three and six months ended June 30, 2022 and 2021:

                     Three Months Ended                                     Six Months Ended
                          June 30,                    Change                    June 30,                   Change
                      2022          2021          $            %            2022         2021          $            %
                              (in thousands)                                        (in thousands)
 General and
  administrative
expenses           $    6,688      $ 6,712     $    (24 )       (0.4 )%   $ 14,548     $ 15,634     $ (1,086 )       (6.9 )%
 % of net sales           1.5          1.5                       0.0           1.7          1.8                      (0.1 )




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General and administrative expenses as a percentage of net sales for the three
and six months ended June 30, 2022, remained consistent as compared to the same
periods in 2021.

Restructuring costs, net

The following table summarizes our restructuring costs, net for the quarters and six months ended June 30, 2022 and 2021:

                   Three Months Ended                                    Six Months Ended
                        June 30,                    Change                   June 30,                   Change
                   2022           2021          $            %           2022         2021          $            %
                            (in thousands)                                       (in thousands)
 Restructuring
charges, net     $     10       $  2,196     $ (2,186 )     (99.5 )%   $   2,403     $ 2,454     $    (51 )       (2.1 )%
 % of net
sales                 0.0            0.5                     (0.5 )          0.3         0.3                         -




The decrease in restructuring costs, net for the three and six months ended June
30, 2022, as compared to the same periods in 2021, was primarily due to a
decrease in severance costs. The restructuring is associated with the
optimization of our global footprint, comprised primarily of severance benefits
to terminated employees as a result of the closure of our Newton, Iowa; Dafeng,
China and Taicang, China manufacturing facilities.

Operating income (loss)

Sector discussion

The following table summarizes our income (loss) from operations by our five
geographic operating segments for the three and six months ended June 30, 2022
and 2021:

                    Three Months Ended                                          Six Months Ended
                         June 30,                      Change                       June 30,                     Change
                    2022          2021            $              %             2022          2021            $             %
                             (in thousands)                                             (in thousands)
U.S.              $ (16,643 )   $   2,836     $ (19,479 )            NM      $ (23,177 )   $  (7,077 )   $ (16,100 )          NM
Asia                   (156 )       8,105        (8,261 )        (101.9 )       (6,265 )      10,814       (17,079 )      (157.9 )
Mexico              (14,268 )     (27,944 )      13,676            48.9        (37,972 )     (33,675 )      (4,297 )       (12.8 )
EMEA                 20,102        10,782         9,320            86.4         43,719        20,570        23,149         112.5
India                 2,927         4,188        (1,261 )         (30.1 )  

2,818 4,128 (1,310) (31.7) Total operating loss ($8,038) ($2,033) ($6,005)

            NM     

($20,877) ($5,240) ($15,637) NM

 % of net sales        -1.8 %        -0.4 %                        (1.4 )%        -2.5 %        -0.6 %                      (1.9 )%




U.S. Segment

The increase in the loss from operations in the U.S. segment for the three and
six months ended June 30, 2022, as compared to the same periods in 2021, was
primarily due to the decrease in wind blade volume due to the shutdown of
production at our Newton, Iowa manufacturing facility, a decrease in
transportation sales, and increased labor costs for our field services,
inspection and repair services.

Asia Segment

The decrease in the income from operations in the Asia segment for the three and
six months ended June 30, 2022, as compared to the same periods in 2021, was
primarily due to the decrease in the net sales of wind blades, restructuring
charges incurred at our Taicang City, China and Dafeng, China manufacturing
facilities and foreign currency fluctuations. This was partially offset by the
fluctuating U.S. dollar against the Chinese Renminbi which had a favorable
impact of 1.7% and 0.5% on cost of goods sold, respectively, for the three and
six months ended June 30, 2022, respectively, as compared to the 2021 periods.

Mexico Segment

The decrease in the loss from operations in the Mexico segment for the three
months ended June 30, 2022, as compared to the same period in 2021, was
primarily due to an increase in average sales price and wind blade volume,
partially offset by increased direct material and startup and transition costs
at our Mexico manufacturing facilities. The increase in the loss from operations
for the six

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months ended June 30, 2022compared to the same period in 2021, was primarily attributable to direct material and start-up and transition costs related to the
Matamoros, Mexico establishment that we have taken over Nordex in July 2021.

EMEA Segment

The increase in the income from operations in the EMEA segment for the three and
six months ended June 30, 2022, as compared to the same periods in 2021, was
primarily driven by increased wind blade production at our two Turkey
manufacturing facilities and a decrease in startup and transition costs,
partially offset by an increase in direct material costs as compared to the same
periods in 2021. The fluctuating U.S. dollar relative to the Turkish Lira and
Euro had a favorable impact of 22.4% and 19.4% on cost of goods sold,
respectively, for the three and six months ended June 30, 2022, respectively, as
compared to the same periods in 2021.

India Segment

The decrease in the income from operations in the India segment for the three
and six months ended June 30, 2022, as compared to the same periods in 2021, was
primarily driven by a decrease in the average sales price of wind blades, a
decrease in volume due to the transition of two of our manufacturing lines from
one type of wind blade to a new type of wind blade and the continued expansion
of our India manufacturing facility, resulting in an increase in manufacturing
overhead costs.

Other income (expense)

The following table summarizes our total other income (expenses) for the three and six months ended June 30, 2022 and 2021:

                   Three Months Ended                                     Six Months Ended
                        June 30,                    Change                    June 30,                   Change
                   2022           2021          $            %           2022         2021           $            %
                            (in thousands)                                       (in thousands)

Interest

expense, net     $    (913 )    $ (2,691 )   $  1,778         66.1 %   $ (1,682 )   $  (5,395 )   $  3,713         68.8 %
 Foreign
currency
income
 (loss)              9,886        (6,504 )     16,390           NM       10,096       (10,231 )     20,327        198.7

Various

income                 309           321          (12 )       (3.7 )        

851 1060 (209) (19.7)

 Total other
income
  (expense)      $   9,282      $ (8,874 )   $ 18,156           NM     $  9,265     $ (14,566 )   $ 23,831        163.6 %




The change in the total other income (expense) for the three and six months
ended June 30, 2022, as compared to the same periods in 2021, was primarily due
to favorable foreign currency fluctuations, as well as a decrease in interest
expense due to the repayment of the outstanding senior revolving credit facility
in the prior year.

Income taxes

The following table summarizes our income taxes for the three and six months ended June 30, 2022 and 2021:

                        Three Months Ended                                     Six Months Ended
                             June 30,                    Change                    June 30,                   Change
                        2022          2021           $            %           2022         2021           $            %
                                 (in thousands)                            

(in thousands)

Tax benefit

(arrangement) ($6,754) ($28,890) $22,136 76.6% ($9,698) ($21,788) $12,090 55.5%

 Effective tax rate       542.9 %      -264.9 %                             

-83.5% -110.0%



See Note 11, Income Taxes, to our condensed consolidated financial statements
for more details about our income taxes for the three and six months ended June
30, 2022 and 2021.


CASH AND CAPITAL RESOURCES

Our primary needs for liquidity have been, and in the future will continue to
be, capital expenditures, new facility startup costs, the impact of transitions,
raw materials purchases, working capital, debt service costs, warranty costs and
restructuring costs associated with the optimization of our global footprint.
Our capital expenditures have been primarily related to machinery and equipment
at our

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new facilities and expansion and improvements at our existing facilities.
Historically, we have funded our working capital needs through cash flows from
operations, the proceeds received from our credit facilities and from proceeds
received from the issuance of stock. We had net repayments under our financing
arrangements of $12.4 million for the six months ended June 30, 2022 as compared
to net proceeds under our financing arrangements of $19.0 million in the
comparable period of 2021. As of June 30, 2022 and December 31, 2021, we had
$62.3 million and $74.6 million in outstanding indebtedness, respectively. As of
June 30, 2022, we had an aggregate of $88.9 million of remaining capacity for
cash and non-cash financing, including $64.5 million of remaining availability
for cash borrowing under our various credit facilities. In addition, we also may
elect, at our option through November 2023, to require the holders of our Series
A Preferred Stock to purchase an additional $50.0 million of Series A Preferred
Stock on the same terms and conditions as the initial issuance of the Series A
Preferred Stock. Based upon current and anticipated levels of operations, we
believe that cash on hand, available credit facilities, and cash flows from
operations will be adequate to fund our working capital and capital expenditure
requirements and to make required payments of principal and interest on our
indebtedness over the next twelve months.

We anticipate that any new facilities and future facility expansions will be
funded through cash flows from operations, the incurrence of other indebtedness
and other potential sources of liquidity. At June 30, 2022 and December 31,
2021, we had unrestricted cash, cash equivalents and short-term investments
totaling $155.0 million and $242.2 million, respectively. The June 30, 2022
balance includes $59.8 million of cash located outside of the United States,
including $12.5 million in China, $39.3 million in Turkey, $4.9 million in
India, $2.4 million in Mexico and $0.7 million in other countries.

Our ability to repatriate funds from China is subject to a number of
restrictions imposed by the Chinese government. We repatriate funds through
several technology license and corporate/administrative service agreements. We
are compensated quarterly based on agreed upon royalty rates for such
intellectual property licenses and quarterly fees for those services. Certain of
our subsidiaries are limited in their ability to declare dividends without first
meeting statutory restrictions of China, including retained earnings as
determined under Chinese-statutory accounting requirements. Until 50% ($26.6
million and $26.7 million, respectively, as of June 30, 2022 and December 31,
2021) of registered capital is contributed to a surplus reserve, our China
operations can only pay dividends equal to 90% of after-tax profits (10% must be
contributed to the surplus reserve). Once the surplus reserve fund requirement
is met, our China operations can pay dividends equal to 100% of after-tax profit
assuming other conditions are met. At June 30, 2022 and December 31, 2021, the
amount of the surplus reserve fund was $9.5 million and $10.0 million,
respectively. In July 2021, China paid a dividend of approximately $19.5
million, net of withholding taxes, to our subsidiary in Switzerland.

Financing facilities

Our total principal amount of debt outstanding as of June 30, 2022 was $62.3
million, including our secured and unsecured financing, working capital and term
loan agreements and equipment finance leases. See Note 6, Long-Term Debt, Net of
Current Maturities, to our condensed consolidated financial statements for more
details on our debt balances.

Cash flow discussion

The following table summarizes our principal cash flow activities for the six months ended June 30, 2022 and 2021:

                                                    Six Months Ended
                                                        June 30,
                                                   2022           2021         $ Change
                                                             (in thousands)
Net cash used in operating activities           $  (59,161 )   $   (3,255 )   $   (55,906 )
Net cash used in investing activities               (8,010 )      (27,059 ) 

19,049

Net cash provided by (used in) financing
activities                                         (12,726 )       23,702         (36,428 )
Impact of foreign exchange rates on cash,
cash equivalents
  and restricted cash                               (8,649 )         (323 )        (8,326 )
Net change in cash, cash equivalents and
restricted cash                                 $  (88,546 )   $   (6,935 )   $   (81,611 )


Operating Cash Flows

Net cash used in operating activities increased by $55.9 million for the six
months ended June 30, 2022, as compared to the same period in 2021, as a result
of working capital usage, primarily related to an increase in accounts
receivable, and a decrease in accounts payable. In addition, the increase in net
cash used in operating activities for the six months ended June 30, 2022, as
compared to the same period in 2021, is due to an increase in contract assets,
which was the result of increased procurement of customer specific

                                       33
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materials to minimize the risk of potential production disruptions that may arise given the recent impacts of COVID-19 in China and geopolitical uncertainties with the continuation Russia and Ukraine war.

Cash flow investment

Net cash used in investing activities decreased by $19.0 million for the six
months ended June 30, 2022, as compared to the same period in 2021, as a result
of a decrease in capital expenditures.

We anticipate fiscal year 2022 capital expenditures of approximately $17 million
and we estimate that the cost that we will incur after June 30, 2022 to complete
our current projects in process will be approximately $6.8 million. We have
used, and will continue to use, cash flows from operations, the proceeds
received from our credit facilities and the proceeds received from the issuance
of stock for major projects currently being undertaken, which include the
expansion of our manufacturing facility in Chennai, India and the continued
investment in our existing facilities in Turkey and Mexico.

Cash flow financing

Net cash provided by financing activities decreased by $36.4 million for the six
months ended June 30, 2022, as compared to the same period in 2021, primarily as
a result of increased repayments of outstanding borrowings.

We are not presently involved in any off-balance sheet arrangements, including
transactions with unconsolidated special-purpose or other entities that would
materially affect our financial position, results of operations, liquidity or
capital resources, other than our accounts receivable assignment agreements
described below. Furthermore, we do not have any relationships with
special-purpose or other entities that provide off-balance sheet financing;
liquidity, market risk or credit risk support; or engage in leasing or other
services that may expose us to liability or risks of loss that are not reflected
in the condensed consolidated financial statements and related notes.

Our segments enter into accounts receivable assignment agreements with various
financial institutions. Under these agreements, the financial institution buys,
on a non-recourse basis, the accounts receivable amounts related to our
segments' customers at an agreed-upon discount rate.

The following table summarizes certain key details of each of the customer account assignment agreements in place at June 30, 2022:

Year Of Initial Agreement   Segment(s) Related To   Current Annual Discount Rate
2014                         Mexico                  LIBOR plus 0.75%
2018                         Mexico                  LIBOR plus 1.25%
2018                         EMEA                    EURIBOR plus 0.75%
2019                         Asia and Mexico         LIBOR plus 1.00%
2019                         Asia                    Fixed rate of 3.85%
2020                         EMEA                    EURIBOR plus 1.95%
2020                         India                   LIBOR plus 1.00%
2020                         U.S.                    SOFR plus 0.16%
2021                         Mexico                  SOFR plus 0.16%
2022                         EMEA                    EURIBOR plus 1.97%



As the receivables are purchased by the financial institutions under the
agreements noted above, the receivables are removed from our condensed
consolidated balance sheet. During the three and six months ended June 30, 2022,
$321.0 million and $541.1 million, respectively, of receivables were sold under
the accounts receivable assignment agreements described above as compared to
$360.8 million and $654.9 million, respectively, in the comparative prior year
periods.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2, Basis of Presentation, under the heading "Accounting Pronouncements"
to our condensed consolidated financial statements for a discussion of recent
accounting pronouncements.

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