TPI Composites : Green Convertible Notes Report

TPI Composites, Inc.

Green Convertible

NOTES REPORT

June 2024

Green Bond Summary (1)

Issuer: TPI Composites

Issue Date: March 3, 2023

Issued Amount: $132.5 million

Cap Call & Issuance Fees: $23.4 million

Net Proceeds: $109.1 million

Allocated Amount: $109.1 million

Allocated Percentage: 100%

Interest Rate: 5.25%

Maturity Date: March 15th, 2028

INTRODUCTION

At TPI Composites, Inc. (TPI), sustainability isn't just a buzzword; it's woven into the very fabric of who we are. As a global leader in both wind blade manufacturing and high-performance composite parts for the automotive industry, we recognize the crucial role we play in driving positive environmental and social change.

From harnessing the power of wind energy to reducing vehicle emissions through light weight composite applications, our products stand as tangible representations of our environmental stewardship. But our commitment goes beyond the end-product. We strive for operational excellence, minimizing our environmental footprint through responsible sourcing, energy efficiency initiatives, and innovative recycling programs. Additionally, we believe in fostering a diverse and inclusive work environment where employee well-being and community engagement are paramount.

In March of 2023, TPI issued its first Green Convertible Notes. This is the first publication of a Green Convertible Notes Report, and it is aligned with TPI's Green Financing Framework and allocation of the proceeds are managed by the Green Portfolio's Executive Steering Team which is responsible for managing the Green Convertible Notes Register.

UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS ADDRESSED

ABOUT TPI

We are a global company focused on innovative and sustainable solutions to decarbonize and electrify the world. In 2023, we produced wind blades for approximately 33% of all onshore wind turbine installations on a megawatt (MW) basis globally, excluding China. We also achieved $1.46 billion in net sales from continuing operations and produced 7,752 wind blades.

We are enabling many of the industry's leading wind turbine original equipment manufacturers (OEMs) to outsource the manufacturing of a larger portion of their wind blades, thus expanding their global wind blade capacity. We manufacture advanced composite products to our customers' exact specifications in facilities designed, built, and strategically located either near our customers' target markets or in low-cost,world-class locations, to minimize total delivered cost. We have leveraged our global footprint and thousands of capable associates to build a growing global team of experienced technicians to provide best-in-class wind blade service capabilities including preventative services, inspections, repairs, and improvements.

We also apply our advanced composite technology and innovation to supply unique, high-strength, lightweight, and durable composite product solutions for automotive markets, including passenger automotive, bus, truck, and delivery vehicle applications.(2)

1. For further information on the Green Convertible Notes see note 12, Debt, to the Consolidated Financial Statements in Part II, Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2023.
2. Note the company is in the process of exploring strategic alternatives to ensure the automotive business is sufficiently funded to execute its growth strategies. We expect this process to be completed no later than June 30, 2024.

TPI'S GREEN CONVERTIBLE NOTES REPORT

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GREEN CONVERTIBLE NOTES FRAMEWORK

Launched in March 2023, TPI's Green Convertible Notes Framework aligns with the 2021 International Capital Market Association (ICMA) Green Bond Principles, outlining clear guidelines for its Green Bond issuances. These principles cover four key areas:

•	Use of Proceeds	•	Management of Proceeds
•	Process for Project Evaluation & Selection	•	Reporting

As outlined in our Green Convertible Notes Framework, we will annually publish a "Use of Proceeds" report until all funds are allocated. This report details the total amount spent, the portion used for financing versus refinancing, the remaining unallocated balances, and anticipated impact metrics (where available). Eligible Green Projects are investments and expenditures made by TPI or any of its subsidiaries beginning with the issuance date of any Green Financing or in the 24 months prior to any such issuance.

DNV, a leading independent assurance and risk management expert with extensive environmental and social expertise, provided an independent opinion on the Framework's alignment with the Green Bond Principles. DNV also reviewed this report and confirmed its adherence to those principles. This Green Convertible Notes Report further details the allocation of proceeds, environmental impact, and examples of invested projects.

2021-2023 ALLOCATION OF PROCEEDS

Key Elements:

Wind - Renewable Energy; $65 million Green Notes Allocation

Our wind project expenditures encompass funding for new blade type development and implementation, maintaining and replacing existing manufacturing equipment, and IT investments. Additionally, a portion of these funds was allocated to acquiring two wind turbines in Türkiye.

Automotive - Clean Transportation; $44 million Green Notes Allocation

The Automotive business saw investments in machinery and equipment to advance our manufacturing processes and capabilities. We also continued investments in key enabling technologies and customer base expansion.

WIND BLADE SETS	ESTIMATED MWS OF WIND	ESTIMATED CO2
PRODUCED (3)	BLADES PRODUCED (3)	REDUCTION (4)

2021 2022 2023

2,674 2,441 2,584

(IN MILLIONS OF METRIC TONS)

2021	2022	2023	2021	2022
		11,382	2023
10,607	10,736		422	410
				346

1. For further information on the definitions of Wind Blade Sets Produced & Estimated MWs of Wind Blades Produced from continuing operations see Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2023.
2. TPI produced Estimated MWs x 1,000 x Total Lifetime Hours x Estimated Turbine Capacity Factor (DOE/IRENA) x IEA emissions factor of 475g CO2/KW. 2021 & 2022 includes our Asia reporting segment, which is reported as discontinued operations. For further information on our discontinued operations see note 1 to the Consolidated Financial Statements in Part II, Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2023.

TPI'S GREEN CONVERTIBLE NOTES REPORT

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SEGMENT

SPEND TYPE

SDG

ALLOCATED

PERCENT

SPEND (USD)

ALLOCATED

Wind

Wind Turbines

$17 Million

16%

Wind

Machinery &

$14 Million

13%

Maintenance

Wind

Startups &

$13 Million

12%

Transitions

Wind

Other

$21 Million

19%

Auto

Expansion &

$35 Million

32%

Development

Auto

Machinery &

$9 Million

8%

Maintenance

TPI'S GREEN CONVERTIBLE NOTES REPORT

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PROJECT EXAMPLES

Türkiye Wind Turbines

TPI made significant progress in 2023 towards our goal of carbon neutrality by 2030. As part of this commitment, we purchased and contracted for the installation of two wind turbines in Türkiye. Once operational in 2024, these turbines will generate enough renewable energy to power one of the plants and contribute to a meaningful reduction in our global greenhouse gas emissions. Total cost for the two turbines was $16.8M; by 2030 we anticipate this investment to positively contribute to our EBITDA (5) through decreased electricity cost and the sale of excess capacity to the grid.

India Facility Expansion

TPI's India operations underwent a significant expansion between 2021 and 2023. An $8 million investment added two new production lines specifically designed to support Nordex SE, boosting annual production capacity by approximately 180 sets. This strategic move not only increased output but also involved a substantial workforce increase. TPI India added more than 750 direct laborers and over 100 indirect labor staff, solidifying its commitment to job creation and bolstering its manufacturing capabilities in the region. This initiative highlights TPI's dedication to growth and its strong partnership with Nordex SE.

Juarez Re-Opening

The Inflation Reduction Act of 2022 stands as the biggest ever investment in clean energy for the U.S. This legislation funnels billions of dollars towards renewable energy development, aiming to significantly reduce reliance on fossil fuels. With surging clean energy demand expected in the United States, TPI and GE Vernova signed an agreement to begin production at TPI's Juarez campus with four new production lines in a previously idled facility. The 360,000 sq ft facility will manufacture GE Vernova's "workhorse" wind turbine blade to support the US market. When fully operational in Q4 2024, we expect the facility to employ 1,500 associates and have annual blade production generating greater than 700 MWs.

5 For further information on the definitions of Non-GAAP financial information see Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2023.

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Automotive Technology & Product Advancement

TPI has over 50 years of experience in developing composite products. This expertise has allowed us to create innovative technologies in-house, including vehicle technologies for low to mid-volume commercial vehicles, molding technologies for high-performance structural parts, and assembly technologies that are both flexible and cost-effective. These advancements have given TPI unique material and process advantages, enabling us to deliver superior value to customers compared to traditional metallic alternatives. During the last three years the company produced more than 500 bus bodies and over 200,000 auto components. When in full production these products will support the electrification of the world's vehicle fleet and contribute to the reduction of Green House Gas (GHG) emissions.

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INDEPENDENT ASSURANCE

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