Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, ~~2018,~~2019, there were ~~34,412,503~~35,153,706 shares of common stock outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities law. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

These forward-looking statements are only predictions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We have described in the “Risk Factors” section of our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (SEC) on March ~~8, 2018 (the Annual Report on Form 10-K)~~5, 2019 the principal risks and uncertainties that we believe could cause actual results to differ from these forward-looking statements. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as guarantees of future events.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly ~~Report.~~Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to update any forward-looking statement to reflect events or developments after the date on which the statement is made or to reflect the occurrence of unanticipated events except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this Quarterly Report. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

	June 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	113,995		$	148,113		$	58,664		$	85,346
Restricted cash		4,431			3,849			2,122			3,555
Accounts receivable		119,479			121,576			154,191			176,815
Contract assets		131,371			105,619			157,315			116,708
Prepaid expenses and other current assets		26,622			27,507
Prepaid expenses								15,832			9,219
Other current assets								30,908			16,819
Inventories		5,593			4,112			9,738			5,735
Total current assets		401,491			410,776			428,770			414,197
Property, plant, and equipment, net		145,348			123,480			181,416			159,423
Operating lease right of use assets								130,512			—
Other noncurrent assets		25,045			22,306			47,262			31,235
Total assets	$	571,884		$	556,562		$	787,960		$	604,855

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	167,314		$	167,175		$	239,909		$	199,078
Accrued warranty		33,979			30,419			42,834			36,765
Current maturities of long-term debt		39,528			35,506			33,780			27,058
Current operating lease liabilities								17,362			—
Contract liabilities		1,820			2,763			2,596			7,143
Total current liabilities		242,641			235,863			336,481			270,044
Long-term debt, net of debt issuance costs and current maturities		90,332			85,879			115,157			110,565
Noncurrent operating lease liabilities								119,273			—
Other noncurrent liabilities		4,818			4,938			5,017			3,289
Total liabilities		337,791			326,680			575,928			383,898
Commitments and contingencies (Note 10)
Stockholders’ equity: (Note 4)
Common shares, $0.01 par value, 100,000 shares authorized and 34,260 shares issued and 34,229 shares outstanding at June 30, 2018 and 100,000 shares authorized and 34,049 shares issued and 34,021 shares outstanding at December 31, 2017		343			340
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common shares, $0.01 par value, 100,000 shares authorized, 35,141 shares issued and 35,056 shares outstanding at June 30, 2019 and 100,000 shares authorized, 34,745 shares issued and 34,678 shares outstanding at December 31, 2018								351			347
Paid-in capital		307,324			301,543			319,428			311,771
Accumulated other comprehensive loss		(6,653	)		(558	)		(20,143	)		(14,392	)
Accumulated deficit		(66,337	)		(70,932	)		(85,257	)		(74,981	)
Treasury stock, at cost, 31 shares at June 30, 2018 and 28 shares at December 31, 2017		(584	)		(511	)
Treasury stock, at cost, 85 shares at June 30, 2019 and 67 shares at December 31, 2018								(2,347	)		(1,788	)
Total stockholders’ equity		234,093			229,882			212,032			220,957
Total liabilities and stockholders’ equity	$	571,884		$	556,562		$	787,960		$	604,855

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
	(Unaudited)												(Unaudited)
Net sales (Note 4)	$	230,610		$	239,582		$	484,591		$	448,197
Net sales													$	330,771		$	230,610		$	630,551		$	484,591
Cost of sales		198,235			199,117			409,223			381,655			285,319			198,235			568,357			409,223
Startup and transition costs		17,324			10,540			32,059			16,699			22,901			17,324			41,079			32,059
Total cost of goods sold		215,559			209,657			441,282			398,354			308,220			215,559			609,436			441,282
Gross profit		15,051			29,925			43,309			49,843			22,551			15,051			21,115			43,309
General and administrative expenses		10,989			10,752			22,152			19,058			9,208			10,989			17,193			22,152
Income from operations		4,062			19,173			21,157			30,785
Realized loss on sale of assets														4,972			—			7,207			—
Restructuring charges														3,874			—			3,874			—
Income (loss) from operations														4,497			4,062			(7,159	)		21,157
Other income (expense):
Interest income		43			11			84			30			31			43			82			84
Interest expense		(2,715	)		(2,935	)		(6,053	)		(5,961	)		(2,274	)		(2,715	)		(4,273	)		(6,053	)
Loss on extinguishment of debt		(3,397	)		—			(3,397	)		—			—			(3,397	)		—			(3,397	)
Realized loss on foreign currency remeasurement		(765	)		(1,233	)		(4,776	)		(2,614	)		(967	)		(765	)		(4,769	)		(4,776	)
Miscellaneous income		674			258			1,492			578			1,016			674			1,718			1,492
Total other expense		(6,160	)		(3,899	)		(12,650	)		(7,967	)		(2,194	)		(6,160	)		(7,242	)		(12,650	)
Income (loss) before income taxes		(2,098	)		15,274			8,507			22,818			2,303			(2,098	)		(14,401	)		8,507
Income tax provision		(1,955	)		(5,697	)		(3,912	)		(8,028	)
Income tax (provision) benefit														(475	)		(1,955	)		4,125			(3,912	)
Net income (loss)	$	(4,053	)	$	9,577		$	4,595		$	14,790		$	1,828		$	(4,053	)	$	(10,276	)	$	4,595

Weighted-average common shares outstanding:
Basic		34,164			33,737			34,107			33,737			35,033			34,164			34,970			34,107
Diluted		34,164			33,828			35,766			33,827			36,369			34,164			34,970			35,766

Net income (loss) per common share:
Basic	$	(0.12	)	$	0.28		$	0.13		$	0.44		$	0.05		$	(0.12	)	$	(0.29	)	$	0.13
Diluted	$	(0.12	)	$	0.28		$	0.13		$	0.44		$	0.05		$	(0.12	)	$	(0.29	)	$	0.13

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended					Six Months Ended					Three Months Ended						Six Months Ended
	June 30,					June 30,					June 30,						June 30,
	2018			2017		2018			2017		2019			2018			2019			2018
	(Unaudited)										(Unaudited)
Net income (loss)	$	(4,053	)	$	9,577	$	4,595		$	14,790	$	1,828		$	(4,053	)	$	(10,276	)	$	4,595
Other comprehensive income (loss):
Foreign currency translation adjustments		(8,177	)		1,300		(6,287	)		1,577		(4,203	)		(8,177	)		(2,870	)		(6,287	)
Unrealized gain on hedging derivative, net of taxes of $0 for the three months ended June 30, 2018 and $0 for the six months ended June 30, 2018		192			—		192			—
Comprehensive income (loss)	$	(12,038	)	$	10,877	$	(1,500	)	$	16,367
Unrealized gain (loss) on hedging derivatives, net of taxes of $284, $0, $765 and $0, respectively												(1,071	)		192			(2,881	)		192
Comprehensive loss											$	(3,446	)	$	(12,038	)	$	(16,027	)	$	(1,500	)

See accompanying notes to unaudited condensed consolidated financial statements.

							Accumulated
	Common				Paid-in		other comprehensive			Accumulated			Treasury stock,			Total stockholders'
	Shares		Amount		capital		loss			deficit			at cost			equity

Balance at December 31, 2018		34,745	$	347	$	311,771	$	(14,392	)	$	(74,981	)	$	(1,788	)	$	220,957
Net loss		—		—		—		—			(12,104	)		—			(12,104	)
Share-based compensation expense		—		—		821		—			—			—			821
Issuances under share-based compensation plan		355		4		4,635		—			—			—			4,639
Common stock repurchased for treasury		—		—		—		—			—			(559	)		(559	)
Other comprehensive loss		—		—		—		(477	)		—			—			(477	)
Balance at March 31, 2019		35,100		351		317,227		(14,869	)		(87,085	)		(2,347	)		213,277
Net income		—		—		—		—			1,828			—			1,828
Share-based compensation expense		—		—		2,057		—			—			—			2,057
Issuances under share-based compensation plan		41		—		144		—			—			—			144
Other comprehensive loss		—		—		—		(5,274	)		—			—			(5,274	)
Balance at June 30, 2019		35,141	$	351	$	319,428	$	(20,143	)	$	(85,257	)	$	(2,347	)	$	212,032

See accompanying notes to unaudited condensed consolidated financial statements.

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2019			2018
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net income	$	4,595		$	14,790
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(10,276	)	$	4,595
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		13,202			8,716			17,784			13,202
Loss on sale of assets								7,207			—
Restructuring charges								3,874			—
Share-based compensation expense		4,999			3,751			2,922			4,999
Loss on extinguishment of debt		3,397			—			—			3,397
Amortization of debt issuance costs		260			286			103			260
Changes in assets and liabilities:
Accounts receivable		2,098			(49,360	)		17,936			2,098
Contract assets and liabilities		(26,695	)		3,477			(46,721	)		(26,695	)
Operating lease right of use assets and operating lease liabilities								6,123			—
Inventories		(1,481	)		852			(4,102	)		(1,481	)
Prepaid expenses and other current assets		884			5,169
Prepaid expenses								(6,773	)		(440	)
Other current assets								(14,401	)		1,324
Other noncurrent assets		(4,047	)		(1,942	)		(18,419	)		(4,047	)
Accounts payable and accrued expenses		1,940			34,706			35,341			1,940
Accrued warranty		3,560			5,566			6,069			3,560
Other noncurrent liabilities		(177	)		(141	)		1,815			(177	)
Net cash provided by operating activities		2,535			25,870
Net cash provided by (used in) operating activities								(1,518	)		2,535
Cash flows from investing activities:
Purchase of property and equipment		(42,310	)		(26,727	)
Purchases of property, plant and equipment								(37,739	)		(42,310	)
Net cash used in investing activities		(42,310	)		(26,727	)		(37,739	)		(42,310	)
Cash flows from financing activities:
Proceeds from term loans		74,435			—
Repayments of term loans		(74,972	)		(1,875	)
Proceeds from revolving and term loans								6,000			74,435
Repayments of revolving and term loans								—			(74,972	)
Net proceeds from accounts receivable financing		11,924			5,182			5,062			11,924
Proceeds from working capital loans		—			6,620			2,909			—
Repayments of working capital loans		—			(11,258	)
Net proceeds from (repayments of) other debt		(5,449	)		6,253
Principal repayments of finance leases								(5,471	)		—
Net repayments of other debt								(2,211	)		(5,449	)
Debt issuance costs		(281	)		—			—			(281	)
Proceeds from exercise of stock options		1,307			—			4,716			1,307
Repurchase of common stock including shares withheld in lieu of income taxes		(272	)		—			(559	)		(272	)
Net cash provided by financing activities		6,692			4,922			10,446			6,692
Impact of foreign exchange rates on cash, cash equivalents and restricted cash		(453	)		164			696			(453	)
Net change in cash, cash equivalents and restricted cash		(33,536	)		4,229			(28,115	)		(33,536	)
Cash, cash equivalents and restricted cash, beginning of year		152,437			129,863			89,376			152,437
Cash, cash equivalents and restricted cash, end of period	$	118,901		$	134,092		$	61,261		$	118,901

Supplemental disclosures of cash flow information:
Cash paid for interest	$	5,607		$	5,866		$	4,236		$	5,607
Cash paid for income taxes, net		2,425			9,982			9,699			2,425
Supplemental disclosures of noncash investing and financing activities:
Accrued capital expenditures in accounts payable		3,670			5,002			6,690			3,670

See accompanying notes to unaudited condensed consolidated financial statements.

TPI Composites, Inc. is the holding company that conducts substantially all of its business operations through its direct and indirect subsidiaries (collectively, the Company). The Company was founded in 1968 and has been producing composite wind blades since 2001. The Company’s knowledge and experience of composite materials and manufacturing originates with its predecessor company, Tillotson Pearson Inc., a leading manufacturer of high-performance sail and powerboats along with a wide range of composite structures used in other industrial applications. Following the separation from the boat building business in 2004, the Company reorganized in Delaware as LCSI Holding, Inc. and then changed its corporate name to TPI Composites, Inc. in 2008. ~~Today, the~~The Company is headquartered in Scottsdale, Arizona and has expanded its global footprint to include domestic facilities in Newton, Iowa; Fall River, Massachusetts; Warren, Rhode Island and Santa Teresa, New Mexico and international facilities in Dafeng, China; Taicang Port, China; Taicang City, China; Yangzhou, China; Juárez, Mexico; Matamoros, Mexico; Izmir, ~~Turkey~~Turkey; Kolding, Denmark and ~~Kolding, Denmark.~~Chennai, India.

~~Public Offerings~~References to TPI Composites, Inc, the “Company,” “we,” “us” or “our” in these notes refer to TPI Composites, Inc. and ~~Stock Split~~

~~In July 2016, the Company completed an initial public offering (IPO) of 7,187,500 shares of the~~ its common stock at a price of $11.00 per share, which included 937,500 shares issued pursuant to the underwriters’ over-allotment option. Certain of the Company’s existing shareholders, a non-employee director and executive officers purchased an aggregate of 1,250,000 shares of common stock in the IPO included in the total issuance above. The net proceeds from the IPO were $67.2 million after deducting underwriting discounts and offering expenses. Immediately prior to the closing of the IPO, all shares of the then-outstanding redeemable preferred shares converted into an aggregate of 21,110,204 shares of common stock and the redeemable preferred share warrants converted on a net issuance basis into 120,923 shares of common stock. In addition, concurrent with the closing of the IPO, certain subordinated convertible promissory notes in the aggregate principal and interest amount of $11.9 million were converted into 1,079,749 shares of common stock at the public offering price of $11.00 per share.

Prior to the IPO, in July 2016 the Company amended its amended and restated certificate of incorporation to effect a 360-for-1 forward stock split of its common stock. As a result of the stock split, the Company has adjusted the share amounts authorized and issuable under the share-based compensation plans. All share and per share common stock information (including the share-based compensation plans) referenced throughout the unaudited condensed consolidated financial statements and notes thereto have been retroactively adjusted to reflect this stock split. The stock split did not cause an adjustment to the par value of the authorized shares of common stock.

In May 2017, the Company completed a secondary public offering of 5,075,000 shares of its common stock at a price of $16.35 per share, which included 575,000 shares issued pursuant to the underwriters’ option to purchase additional shares. All of the shares were sold by existing shareholders and certain of the Company’s executive officers. The selling shareholders received all of the net proceeds of $78.8 million from the secondary public offering. The Company did not sell any shares and did not receive any of the proceeds from the offering and the costs paid by the Company in connection with the offering of $0.8 million were recorded in general and administrative costs in the accompanying condensed consolidated statement of operations. subsidiaries.

~~The Company divides its~~We divide our business operations into four geographic operating segments—(1) the United States (U.S.), (2) Asia, (3) Mexico and (4) Europe, the Middle East, Africa and ~~Africa (EMEA)~~India (EMEAI) as follows:

The accompanying condensed consolidated financial statements include the accounts of TPI Composites, Inc. and all of our majority owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

The condensed consolidated financial statements included herein have been prepared by ~~the Company~~us without audit, pursuant to the rules and regulations of the SEC and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2017~~2018 included in ~~the Company’s~~our Annual Report on Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted, as permitted by the SEC, although ~~the Company believes~~we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in the opinion of our management, all normal recurring adjustments necessary to present fairly ~~the Company’s~~our financial position at June 30, ~~2018,~~2019, and the results of ~~the Company’s~~our operations, comprehensive income (loss) and cash flows for the periods presented. The Company restated the December 31, 2017 condensed consolidated balance sheet and the June 30, 2017 condensed consolidated income and cash flow statements for the effect of the adoption of Accounting Standards Update (ASU) 2014-09, ~~Revenue from Contracts with Customers, (Topic 606), see Note 13,~~ ~~Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement,~~ ~~but does not include all disclosures required under GAAP.~~ Interim results for the three and six months ended June 30, ~~2018~~2019 and ~~2017~~2018 are not necessarily indicative of the results to be expected for the full years.

~~As previously announced, effective January 1, 2018, the Company adopted the requirements of Topic 606 using the full retrospective method as further described in~~ 10

In February 2016, the Financial Accounting Standards Board (FASB) established Topic 842, Leases, by Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right of use model that requires a lessee to recognize a right of use (ROU) asset and related lease liability on the balance sheet for all leases with ~~Customers~~a term longer than 12 months. Leases are to be classified as either finance or operating, with classification affecting the pattern and ~~Note 2,~~ ~~Revenue from Contracts with Customers. All amounts~~classification of expense recognition in the income statement.

We adopted this new standard on January 1, 2019 and used the effective date as our date of initial application. Consequently, we have not provided financial information and the disclosures ~~set forth in this Quarterly Report on Form 10-Q reflect~~required under the new standard for periods before January 1, 2019.

The adoption of ~~Topic 606~~this standard had a material effect on our financial statements, the most significant of which related to the recognition of ROU assets and ~~differ from amounts previously reported~~lease liabilities on our balance sheet for ~~prior periods.~~ our real estate, equipment and auto operating leases and providing significant new disclosures about our leasing activities.

We elected the package of practical expedients, which allowed us to retain conclusions related to lease identification and classification under legacy GAAP. The new standard also provided practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. Accordingly, for those leases that qualified, we did not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. We also elected the practical expedient to not separate lease and non-lease components for all of our leases.

See Note ~~13,~~8, ~~Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement~~Leases, for further discussion of the adoption of ~~Topic 606, including~~this standard.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings stranded tax effects resulting from the Tax Reform Act. We adopted this standard on January 1, 2019 and it did not have a material impact on our ~~previously reported~~condensed consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this standard on January 1, 2019 and it did not have a material impact on our condensed consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09, Codification Improvements, which contains amendments that affect a wide variety of Topics in the Codification, including amendment to Subtopic 718-40, Compensation-Stock Compensation-Income Taxes, that clarifies the timing of when an entity should recognize excess tax benefits. We adopted this standard on January 1, 2019 and it did not have a material impact on our condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which allows for the capitalization of implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).

This standard is effective for all public business entities for annual and interim periods beginning after December 15, 2021, with early adoption permitted. We plan to adopt this standard during 2019 and do not expect it to have a material impact on our condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements in Topic 820.

This standard is effective for all public business entities for annual and interim periods beginning after December 15, 2019, with early adoption permitted. We will adopt this standard as of January 1, 2020 and we are currently evaluating the impact of the adoption of this standard on our condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test.

This standard is effective for all public business entities for annual and interim periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We plan to adopt this standard during 2019 when we perform our annual impairment tests and we are currently evaluating the impact of the adoption of this standard on our condensed consolidated financial statements.

The majority of our revenue is generated from long-term contracts associated with manufacturing of wind blades and related services. ~~The Company accounts~~We account for a long-term contract when it has the approval from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and the collectability of consideration is probable.

To determine the proper revenue recognition method for each long-term contract, ~~the Company evaluates~~we evaluate whether the original contract should be accounted for as one or more performance obligations. This evaluation requires judgment and the decisions reached could change the amount of revenue and gross profit recorded in a given period. As most of ~~the Company’s~~our contracts contain multiple performance obligations, ~~the Company allocates~~we allocate the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. ~~The Company’s~~Our manufacturing services are customer specific and involve production of items that cannot be sold to other customers due to the customers’ protected intellectual property; therefore, ~~the Company allocates~~we allocate the total transaction price under our contracts with multiple performance obligations using the contractually stated prices, as these prices represent the relative standalone selling price based on an expected cost plus margin model.

Revenue is primarily recognized over time as ~~the Company has~~we have an enforceable right to payment upon termination and ~~the Company~~we may not use or sell the product to fulfill other customers’ contracts. In addition, the customer does not have return or refund rights for items produced that conform to the specifications included in the contract. Because control transfers over time, revenue is recognized based on the extent of progress towards the completion of the performance obligation. ~~The Company uses~~We use the cost-to-cost input measure of progress for ~~its~~our contracts as this method provides the best representation of the production progress towards satisfaction of the performance obligation as the materials are distinct to the product being manufactured because of customer specifications provided

for in the contract, the costs incurred are proportional to the progress towards completion of the product, and the products do not involve significant pre-fabricated component parts. Under the cost-to-cost method, progress and the related revenue recognition is determined by a ratio of direct costs incurred to date in fulfillment of the contract to the total estimated direct costs required to complete the performance obligation.

Determining the revenue to be recognized for services performed under ~~the Company’s~~our manufacturing contracts involves significant judgments and estimates relating to the total consideration to be received and the expected total costs to complete the performance obligation. The judgments and estimates relating to the total consideration to be received include the amount of variable consideration as ~~the Company’s~~our contracts typically provide the customer with a range of production output options from guaranteed minimum volume obligations to the production capacity of the facility, and customers will provide periodic non-cancellable commitments for the number of wind blades to be produced over the term of the agreement. ~~The Company uses~~We use historical experience, customer commitments and forecasted future production based on the capacity of the plant to estimate the total revenue to be received to complete the performance obligation. In

addition, the amount of revenue per unit produced may vary based on the costs of production of the wind blades as ~~the Company~~we may be able to change the price per unit based on changes in the cost of production. Further, some of our contracts provide opportunities for ~~the Company~~us to share in labor and material cost savings as well as absorb some additional costs as an incentive for more efficient production, both of which impact the margin realized on the contract and ultimately the total amount of revenue to be recognized. Additionally, certain of our customer contracts provide for concessions by ~~the Company~~us for missed production deadlines.

~~The Company estimates~~We estimate variable consideration at the most likely amount to which ~~it expects~~we expect to be entitled. ~~The Company includes~~We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. ~~The Company’s~~Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of ~~the Company’s~~our anticipated performance and all information available to ~~the Company~~us at the time of the estimate and may materially change as additional information becomes known.

~~Contracts~~Our contracts may be modified to account for changes in specifications of products and changing requirements. If the contract modifications are for goods or services that are not distinct from the existing contract, they are accounted for as if they were part of the original contract. The effect of a contract modification on the transaction price and the measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue on a cumulative catch-up basis. If contract modifications are for goods and services that are distinct from the existing contract and increases the amount of consideration reflecting the standalone sale price of the additional goods or services, then the contract modification is accounted for as a separate contract and is evaluated for one or more performance obligations.

Each reporting period, ~~the Company evaluates~~we evaluate the progress towards satisfaction of each performance obligation based on any contract modifications that have occurred, cost incurred to date, and an estimate of the expected future revenue and costs to be incurred to complete the performance obligation. Based on this analysis, any changes in estimates of revenue, cost of sales, contract assets and liabilities and the related impact to operating income are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on ~~a performance obligation's~~the percentage of ~~completion.~~completion of the performance obligation.

Wind blade pricing is based on annual commitments of volume as established in ~~the customer’s contract~~our customer contracts and orders less than committed volume may result in a higher price per wind blade to our customers. Orders in excess of annual commitments may result in discounts to our customers from the contracted price for the committed volume. ~~Customers~~Our customers typically provide periodic purchase orders with the price per wind blade given the current cost of the bill of materials, labor requirements and volume desired. ~~The Company records~~We record an allowance for expected utilization of early payment discounts which are reported as a reduction of the related revenue.

Precision molding and assembly systems included in a customer’s contract are based upon the specific engineering requirements and design determined by the customer and are specific to the wind blade design and function desired. From the customer’s engineering specifications, a job cost estimate is developed along with a production plan, and the desired margin is applied based on the location the work is to be performed and complexity of the customer’s design. Precision molding and assembly systems are generally built to produce wind blades which may be manufactured by ~~the Company~~us in production runs specified in the customer contract.

Contract assets primarily relate to ~~the Company’s~~our rights to consideration for work completed but not billed at the reporting date on manufacturing services contracts. The contract assets are transferred to accounts receivable when the rights become unconditional, which generally occurs when customers are invoiced upon the determination that a product conforms to the contract specifications and invoices are due based on each ~~customers~~customer’s negotiated payment terms, which range from 3015 to 6590 days. ~~The Company applies~~We apply the

practical expedient that allows itus to exclude payment terms under one year from the transfer of a promised good or service from consideration of a significant financing component in its contracts. With regards to the production of precision molding and assembly systems, ~~the Company’s~~our contracts generally call for progress payments to be made in advance of production. Generally, payment is made at certain percentage of completion milestones with the final payment due upon delivery to the manufacturing facility. These progress payments are recorded within contract liabilities as current liabilities in the condensed consolidated balance sheets and are reduced as ~~the Company records~~we record revenue over time. We evaluate indications that a customer may not be able to meet the obligations under our long-term supply agreements to determine if an account receivable or contract asset may be impaired.

~~The Company’s~~Our customers may request, in situations where they do not have space available to receive products or do not want to take possession of products immediately for other reasons, that their finished products be stored by ~~the Company~~us in one of ~~its~~our facilities. Most of our contracts provide for a limited number of wind blades to be stored during the period of the contract with any additional wind blades stored subject to additional storage fees, which are included in the wind blade performance obligation revenue.

Revenue related to non-recurring engineering and freight services provided under our customer contracts is recognized at a point in time following the transfer of control of the promised services to the customer. Customers usually pay the carrier directly for the cost of shipping associated with items produced. When ~~the Company pays~~we pay the shipping costs, ~~the Company applies~~we apply the practical expedient that allows itus to account for shipping and handling as a fulfillment costs and include the revenue in the associated performance obligation and the costs are included in cost of goods sold.

Taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions, that are collected by ~~the Company~~us from a customer, are excluded from revenue.

~~The Company provides~~We provide a limited warranty for ~~its mold~~our wind blades and ~~wind blade products,~~related precision molding and assembly systems, including ~~parts~~materials and ~~labor,~~workmanship, with terms and conditions that vary depending on the product sold, generally for periods that range from two to five years. We also provide a limited warranty for our transportation products, including materials and workmanship, with terms and conditions that vary depending on the product sold, generally for a period of approximately two years. Warranty expense is recorded based upon estimates of future repairs using a probability-based methodology that considers previous warranty claims, identified quality issues and industry practices. Once the warranty period has expired, any remaining unused warranty accrual for the specific products is reversed against the current year warranty expense amount.

	2018			2019
	(in thousands)			(in thousands)
Warranty accrual at beginning of year	$	30,419		$	36,765
Accrual during the period		6,136			10,273
Cost of warranty services provided during the period		(579	)		(2,445	)
Reversal of reserves upon warranty expiration		(1,997	)		(1,759	)
Warranty accrual at end of period	$	33,979		$	42,834

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right of use assets, current operating lease liabilities, and noncurrent operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt, net of debt issuance costs and current maturities in the condensed consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. Variable payments are not included in ROU assets or lease liabilities and can vary from period to period based on asset usage or our proportionate share of common costs. The implicit rate within our leases is generally not determinable and, therefore, the incremental borrowing rate at lease commencement is utilized to determine the present value of lease payments. We estimate our incremental borrowing rate based on third-party lender quotes to obtain secured debt in a like currency for a similar asset over a timeframe similar to the term of the lease. The ROU asset also includes any lease prepayments made and any initial direct costs incurred and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have elected not to recognize ROU assets or lease liabilities for leases with a term of 12 months or less.

We have lease agreements with lease and non-lease components. We have elected to apply the practical expedient to account for these components as a single lease component for all classes of underlying assets.

Our restructuring charges consist of employee severance, one-time termination benefits and ongoing benefits related to the reduction of our workforce and other costs associated with exit activities, which may include costs related to leased facilities to be abandoned and facility and employee relocation costs. Liabilities for costs associated with a restructuring activity are measured at fair value and

are recognized when the liability is incurred, except for one-time termination benefits. One-time termination benefits are expensed at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Ongoing benefits are expensed when restructuring activities are probable and the benefit amounts are estimable.

Common stock purchased for treasury is recorded at historical cost. Transactions in treasury shares relate to share-based compensation plans and are recorded at weighted-average cost.

The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during a period. Diluted net income ~~(loss)~~ per common share is computed by dividing the net income ~~(loss)~~ by the weighted-average number of common shares outstanding plus potentially dilutive securities using the treasury stock method. The table below reflects the calculation of the weighted-average number of common shares outstanding, using the treasury stock method, used in computing basic and diluted earnings ~~(loss)~~ per common share:

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
	(in thousands)								(in thousands)
Basic weighted-average shares outstanding		34,164		33,737		34,107		33,737		35,033		34,164		34,970		34,107
Effect of dilutive stock options and warrants		—		91		1,659		90
Effect of dilutive awards										1,336		—		—		1,659
Diluted weighted-average shares outstanding		34,164		33,828		35,766		33,827		36,369		34,164		34,970		35,766

Share-based compensation awards of 19,000 shares and 97,000 shares were excluded from the computation of diluted net income per share for the three months ended June 30, 2019 and the six months ended June 30, 2018, respectively, because the effect would be anti-dilutive. ~~The Company~~Further, we had 1,455,000 and 1,851,000 potentially dilutive shares outstanding for the six months ended June 30, 2019 and the three months ended June 30, 2018, respectively, that were not included in the diluted net loss per share calculation because their ~~affect~~effect would be anti-dilutive. In addition, ~~the~~certain performance-based restricted stock units ~~(PSUs) described below~~ have been excluded from the computation of diluted ~~net income per share~~shares outstanding for ~~the six months ended June 30, 2018~~all periods presented as the performance conditions ~~have~~had not yet been met. ~~The Company did not have any potential dilutive securities which were excluded from the computation of diluted net income per share for the three and six months ended June 30, 2017.~~

We use interest rate swap contracts to mitigate ~~its~~our exposure to interest rate fluctuations associated with ~~its new~~our credit agreement (the Credit Agreement) that ~~the Company~~we entered into in April 2018. ~~The Company does~~We do not use such swap contracts for speculative or trading purposes.

To offset the variability of future interest payments on the Credit Agreement arising from changes in ~~LIBOR rates,~~the London Interbank Offered Rate (LIBOR), in April 2018, ~~the Company~~we entered into an interest rate swap agreement with a financial institution for a notional amount of $75.0 million with an expiration date of April 2023. This ~~agreement~~interest rate swap effectively hedges $75.0 ~~million of the $75.4~~ million of the future variable rate LIBOR interest expense to a fixed rate interest expense. The derivative instrument qualified for accounting as a cash flow hedge in accordance with ~~Financial Accounting Standards Board (FASB)~~FASB Accounting Standard Codification (ASC) Topic 815, Derivatives and Hedging, and ~~the Company~~we designated it as such.

The settlement value of the interest rate swap is ~~$0.2~~$2.9 million as of June 30, ~~2018~~2019 and is included in other noncurrent ~~assets~~liabilities in the condensed consolidated balance sheet. The unrealized ~~gain~~loss on the swap of ~~$0.2~~$2.3 million, net of tax, is included in the condensed consolidated statement of other comprehensive income (loss). The settlement value of the interest rate swap was $0.8 million as of December 31, 2018 and was included in other noncurrent assets in the condensed consolidated balance sheet.

We provide for cash deposits for letters of guarantee used for customs clearance related to our China locations which are reported as restricted cash in our condensed consolidated balance sheets. We also maintain a long-term deposit in interest bearing accounts, related to fully cash-collateralized letters of credit in connection with an equipment lessor in Iowa which is reported within other noncurrent assets in our condensed consolidated balance sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets which total the same such amounts in the condensed consolidated statements of cash flows:

Other current assets primarily include refundable value-added taxes and deposits. As of June 30, 2019, we had $25.7 million of refundable value-added taxes and $5.1 million of deposits. As of December 31, 2018, we had $11.2 million of refundable value-added taxes and $5.6 million of deposits.

The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In May 2014, the FASB issued Topic 606, which provides new recognition and disclosure requirements for revenue from contracts with customers that supersedes the existing revenue recognition guidance. The new recognition requirements focus on when the customer obtains control of the goods or services, rather than the current risks and rewards model of recognition. The core

principle of the new standard is that an entity will recognize revenue when it transfers goods or services to its customers in an amount that reflects the consideration an entity expects to be entitled to for those goods or services. The new disclosure requirements included in these financial statements contain information intended to communicate the nature, amount, timing and any uncertainty of revenue and cash flows from the applicable contracts, including any significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract.

~~The Company adopted Topic 606 as of January 1, 2018 with retrospective application to January 1, 2016 through December 31, 2017. See Note 2,~~ ~~Revenue from Contracts with Customers~~ ~~and Note 13,~~ ~~Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement,~~ ~~for further discussion of the adoption of this standard, including the impact on our previously reported financial statements.~~

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~, that clarifies how certain cash receipts and cash payments are presented and classified in the condensed consolidated statements of cash flows. In addition, in November 2016, the FASB issued ASU 2016-18, ~~Restricted Cash~~, that requires restricted cash and cash equivalents to be included with the amount of cash and cash equivalents that are reconciled on the condensed consolidated statements of cash flows. The Company adopted these ASUs as of January 1, 2018 with retrospective application to each period presented.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets which total the same such amounts in the condensed consolidated statements of cash flows:

~~See Note 13,~~ ~~Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement,~~ ~~for further discussion of the adoption of these standards, including the impact on our previously reported financial statements.~~

In December 2017, the SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides relief for companies that have not completed their accounting for the effects of The Tax Cuts and Jobs Act (Tax Reform Act) but can determine a reasonable estimate of those effects to allow them to include a provisional amount based on their reasonable estimate in their financial statements. The guidance in SAB 118 also allows companies to adjust the provisional amounts during a one-year “measurement period” which is similar to the measurement period used when accounting for business combinations. In the accompanying consolidated financial statements, the Company has not completed its accounting for all the tax effects associated with the enactment of the Tax Reform Act. However, the Company has, in certain cases made a reasonable estimate of the effects on its existing carryforward attributes and the one-time transition tax. See Note 9, ~~Income Taxes,~~ ~~for further discussion.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. ASU 2016-02 is a comprehensive new recognition model for leases requiring a lessee to recognize the asset and liability that arise from leases. For public companies, the amendment is effective for financial statements issued for annual periods beginning after December 16, 2018. Entities may elect to early adopt the lease standard in 2016. In adopting ASU 2016-02, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. Management is evaluating the provisions of ASU 2016-02 and has not yet selected a transition method nor determined what impact the adoption of ASU 2016-02 will have on the Company’s financial position or results of operations.

The following tables represents the disaggregation of our net sales revenue by ~~contract type~~product for each of our reportable ~~segments (in thousands):~~segments:

											Three Months Ended June 30, 2019
	Three Months Ended June 30, 2018										U.S.		Asia		Mexico		EMEAI		Total
	U.S.		Asia		Mexico		EMEA		Total		(in thousands)
Wind blade sales	$	33,696	$	67,180	$	55,595	$	49,882	$	206,353	$	26,580	$	78,413	$	87,792	$	108,979	$	301,764
Precision molding and assembly systems sales		2,359		9,729		214		—		12,302		1,222		5,726		5,971		—		12,919
Transportation sales		7,459		—		—		—		7,459		6,440		—		—		—		6,440
Other sales		1,181		1,022		544		1,749		4,496		5,616		560		1,599		1,873		9,648
Total net sales	$	44,695	$	77,931	$	56,353	$	51,631	$	230,610	$	39,858	$	84,699	$	95,362	$	110,852	$	330,771

											Three Months Ended June 30, 2018
	Six Months Ended June 30, 2018										U.S.		Asia		Mexico		EMEAI		Total
	U.S.		Asia		Mexico		EMEA		Total		(in thousands)
Wind blade sales	$	72,641	$	135,351	$	111,638	$	120,903	$	440,533	$	33,696	$	67,180	$	55,595	$	49,882	$	206,353
Precision molding and assembly systems sales		4,222		17,908		978		—		23,108		2,359		9,729		214		—		12,302
Transportation sales		11,512		—		—		—		11,512		7,459		—		—		—		7,459
Other sales		2,444		2,342		1,701		2,951		9,438		1,181		1,022		544		1,749		4,496
Total net sales	$	90,819	$	155,601	$	114,317	$	123,854	$	484,591	$	44,695	$	77,931	$	56,353	$	51,631	$	230,610

											Six Months Ended June 30, 2018
	Six Months Ended June 30, 2017										U.S.		Asia		Mexico		EMEAI		Total
	U.S.		Asia		Mexico		EMEA		Total		(in thousands)
Wind blade sales	$	84,538	$	148,979	$	93,668	$	94,273	$	421,458	$	72,641	$	135,351	$	111,638	$	120,903	$	440,533
Precision molding and assembly systems sales		4,944		7,064		789		—		12,797		4,222		17,908		978		—		23,108
Transportation sales		5,708		—		—		—		5,708		11,512		—		—		—		11,512
Other sales		392		2,737		2,959		2,146		8,234		2,444		2,342		1,701		2,951		9,438
Total net sales	$	95,582	$	158,780	$	97,416	$	96,419	$	448,197	$	90,819	$	155,601	$	114,317	$	123,854	$	484,591

In addition, most of ~~the Company’s~~our net sales are made directly to ~~the its~~our customers, primarily large multi-national wind turbine manufacturers, under our long-term contracts which are typically five years in length.

Contract assets consist of ~~unbilled amounts typically resulting from~~the amount of revenue recognized over time for ~~products~~performance obligations in production ~~and the revenue recognized exceeds the amount billed~~where control has transferred to the ~~customer.~~customer but the contract does not yet allow for the customer to be billed. Typically, customers are billed when the product finishes production and meets the technical specifications contained in the contract. The contract assets are recorded as current assets in the condensed consolidated balance sheets. Contract liabilities consist of advance payments in excess of ~~costs incurred.~~revenue earned. These amounts were historically recorded as customer deposits which ~~primarily related~~usually relate to progress payments received as precision molding and assembly systems were being manufactured. The contract liabilities are recorded as current liabilities in the condensed consolidated balance sheets and are reduced as ~~the Company records~~we record revenue over time.

11These contract assets and liabilities are reported on the condensed consolidated balance sheets net on a contract-by-contract basis at the end of each reporting period, as demonstrated in the table below.

~~These contract assets and liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.~~

Contracts assets increased by ~~$25.8~~$40.6 million from December 31, ~~2017~~2018 to June 30, ~~2018~~2019 due to incremental unbilled production induring the six months ended June 30, ~~2018.~~2019. Contracts liabilities decreased by ~~$0.9~~$4.5 million from December 31, ~~2017~~2018 to June 30, ~~2018~~2019 due to the amounts billed to customers ~~exceeded~~exceeding the ~~progress billings received~~revenue earned related to precision molding and assembly systems and wind blades being produced in the six months ended June 30, ~~2018.~~2019.

The time it takes to produce a single blade is typically between 245 to ~~36 hours.~~7 days. The time it takes to produce a mold is typically between 3 to 6 months.

For the three months ended June 30, 2019, we recognized no revenue, and for the six months ended June 30, ~~2018, the Company~~2019 we recognized ~~revenue~~$7.1 million of ~~$0.1 million and $2.8 million, respectively,~~revenue, that was included in the corresponding contract liability balance at the beginning of the period.

Remaining performance obligations represent the estimated transaction price of firm orders for which work has not been performed and excludes any unexercised contract options.

As of June 30, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligations to be satisfied in future periods was approximately $4.9 billion. We estimate that we will recognize the remaining performance obligations as revenue as follows: 16 percent in the remainder of 2019, 31 percent in 2020, 25 percent in 2021, 16 percent in 2022 and the remaining 12 percent in 2023.

For the three and six months ended June 30, ~~2018,~~2019, net revenue recognized from our performance obligations satisfied in previous periods increased by ~~$0.9~~$2.2 million and decreased by $12.5 million, respectively, as compared to an increase of $0.9 million and a decrease of $4.0 million, ~~respectively. This~~respectively, in the same periods of 2018. The current year decrease primarily ~~relates~~related to changes in certain of ~~the Company’s~~our estimated total contract values and related percentage of completion estimates.

As of June 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately $5.4 billion. The Company expects to recognize the remaining performance obligations as revenue as follows: 10 percent in the remainder of 2018, 24 percent in 2019, 25 percent in 2020, 17 percent in 2021, 14 percent in 2022 and the remaining 10 percent in 2023.

~~The Company recognizes~~We recognize an asset ~~from the~~for deferred costs incurred to fulfill a contract when those costs meet all of the following criteria: (a) the costs relate directly to a contract or to an anticipated contract that ~~the Company~~we can specifically identify; (b) the costs generate or enhance our resources ~~of the Company~~ that will be used in satisfying performance obligations in the future; and, (c) the costs are expected to be recovered. ~~The Company capitalizes~~We capitalize the costs related to training ~~its~~our workforce to execute the manufacturing services and other facility set-up costs related to preparing for ~~production. The Company factors~~production of a specific contract. We factor these costs into ~~its~~our estimated cost analysis for the overall contract. Costs capitalized are amortized over the number of units produced during the contract term. As of June 30, 2019, the cost and accumulated amortization of such assets totaled $7.1 million and $2.4 million, respectively. As of December 31, 2018, the cost and accumulated amortization of such assets totaled ~~$2.9~~$5.6 million and ~~$1.7~~$2.1 million, respectively. ~~As of December 31, 2017,~~These amounts are included in other noncurrent assets in the ~~cost~~condensed consolidated balance sheets and ~~accumulated amortization of such assets totaled $2.4 million and $1.4 million, respectively.~~

Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. These costs are included in cost of goods ~~sold.~~sold within the condensed consolidated statements of operations.

~~The Company’s~~Our revenues and receivables are earned from a small number of ~~customers. As such, the Company’s~~customers and consequently, our production levels are dependent on these customers’ orders. See Note ~~11,~~12, Concentration of ~~Customers.~~Customers. In April 2019, one of our customers, Senvion GmbH (Senvion), entered into a provisional self-administration procedure as ordered by the Local Court of Hamburg, Germany pursuant to the Insolvency Act in Germany. As a result of this event, we reevaluated the outstanding accounts receivables due from Senvion, the revenue recognized under our contract with Senvion, as well as the property, plant and equipment at our Taicang Port, China facility where we manufactured blades for Senvion. As a result of that reevaluation, we revised our estimate of consideration to be received under the contract, which reduced the revenues recorded in the six months ended June 30, 2019 by $6.7 million. We also revised the useful life of property, plant and equipment which was being used to fulfill the Senvion contract and which does not have an alternative use. The revision of the useful life for these assets resulted in the acceleration of $1.9 million of depreciation expense which was recorded in cost of goods sold in the condensed consolidated statement of operations for the six months ended June 30, 2019. Based upon the information known as of June 30, 2019, on that date we maintained outstanding accounts receivable due from Senvion totaling $10.7 million. These amounts, which we believe are realizable based on the facts known to us as of June 30, 2019, relate to completed blades we have delivered or expect to deliver. See Note 14, Subsequent Event.

~~The Company maintains its~~We have experienced construction and startup delays with respect to our new manufacturing facility in Yangzhou, China. These delays resulted in us incurring estimated liquidated damages of $4.1 million during the three months ended June 30, 2019. We expect these delays may result in us incurring additional liquidated damages during the balance of 2019 and will adversely impact our results of operations for the balance of 2019.

We also have experienced extended startup delays and challenges with respect to our Newton, Iowa transportation facility, which had an adverse impact on our results of operations for the six months ended June 30, 2019. We expect that these delays and challenges also will have an adverse impact on our results of operations for the balance of 2019.

We maintain our U.S. cash in bank deposit accounts that, at times, exceed U.S. federally insured limits. U.S. bank accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) in an amount up to $250,000 during ~~2018~~2019 and ~~2017.~~2018. At June 30, ~~2018~~2019 and December 31, ~~2017, the Company~~2018, we had ~~$81.0~~$40.2 million and ~~$98.9~~$53.7 million, respectively, of cash in deposit accounts in high quality U.S. banks, which was in excess of FDIC limits. ~~The Company has~~We have not experienced losses in any such accounts.

~~The Company~~We also ~~maintains~~maintain cash in bank deposit accounts outside the U.S. with no insurance. At June 30, ~~2018,~~2019, this ~~includes $29.9~~included $10.0 million in China, ~~$0.5~~$4.8 million in Turkey, ~~and $2.6~~$2.7 million in ~~Mexico. The Company has~~Mexico, $0.7 million in Denmark and $0.3 million in India. We have not experienced losses in these accounts. In addition, at June 30, ~~2018, the Company has~~2019, we had short-term deposits in interest bearing accounts of ~~$4.4~~$2.1 million in China, which are reported as restricted cash in ~~the Company’s~~our condensed consolidated balance sheets. At June 30, ~~2018, the Company~~2019, we also ~~has~~had long-term deposits in interest bearing accounts of $0.5 million in Iowa which are reported as restricted cash within the caption other noncurrent assets in ~~the Company’s~~our condensed consolidated balance sheets.

Related party transactions include transactions between the Company and certain of its affiliates. The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

The Company has entered into several agreements with subsidiaries of General Electric Company and its consolidated affiliates (GE) relating to the operation of its business. As a result of these agreements, GE has been a debtor, creditor and holder of both preferred and common shares. During the second quarter of 2017, GE reduced its holdings of the Company’s common shares to less than five percent of the total shares then outstanding and completely divested of the Company’s common shares during the third quarter of 2017.

The Company has entered into five separate supply agreements with GE to manufacture wind blades in Newton, Iowa; Taicang Port, China; Juárez, Mexico (2) and Izmir, Turkey. The supply agreements in Taicang Port, China and Izmir, Turkey expired on December 31, 2017 and GE did not renew or extend these two contracts. For the six months ended June 30, 2017, the Company recorded related-party sales with GE of $198.6 million. As disclosed in Note 11, ~~Concentration of Customers~~, for the three months ended June 30, 2018 and 2017, the Company recorded sales with GE of $75.0 million and $107.1 million, respectively, and for the six months ended June 30, 2018 and 2017, the Company recorded sales with GE of $162.8 million and $198.6 million, respectively. As of June 30, 2018 and December 31, 2017, the Company had accounts receivables related to sales to GE of $22.8 million and $22.2 million, respectively.

Certain of the Company’s existing stockholders, consisting of entities associated with Element Partners, Angeleno Group and Landmark Partners, each of which is an affiliate of a member of the board of directors, as well as certain executive officers and a director, purchased an aggregate of 1,250,000 shares of common stock in the IPO. In addition, all outstanding obligations and accrued interest under the Company’s subordinated convertible promissory notes held by certain existing stockholders, including Element Partners, Angeleno Group and Landmark Partners, were converted into an aggregate of 1,079,749 shares of common stock concurrent with the closing of the IPO at the public offering price of $11.00 per share.

In connection with the Company’s secondary offering in May 2017, certain entities associated with Element Partners, Angeleno Group, Landmark Partners and NGP Energy Technology Partners, L.P, as well as certain executive officers of the Company sold an aggregate of 5,075,000 shares of common stock at the public offering price of $16.35 per share.

	June 30,		December 31,		June 30,		December 31,
	2018		2017		2019		2018
	(in thousands)				(in thousands)
Trade accounts receivable	$	116,979	$	117,794	$	149,740	$	172,667
Other accounts receivable		2,500		3,782		4,451		4,148
Total accounts receivable	$	119,479	$	121,576	$	154,191	$	176,815

	June 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
	(in thousands)						(in thousands)
Machinery and equipment	$	99,564		$	100,681		$	129,432		$	119,737
Buildings		14,885			14,711			14,927			15,080
Leasehold improvements		24,149			21,853			41,443			38,747
Office equipment and software		20,622			18,664			27,501			26,363
Furniture		19,495			19,017			21,748			19,579
Vehicles		274			294			314			287
Construction in progress		34,502			10,687			33,202			17,390
Total		213,491			185,907
Total property, plant and equipment, gross								268,567			237,183
Accumulated depreciation		(68,143	)		(62,427	)		(87,151	)		(77,760	)
Property, plant and equipment, net	$	145,348		$	123,480		$	181,416		$	159,423

Total depreciation expense for the three months ended June 30, 2019 and 2018 ~~and 2017~~ was ~~$6.0~~$6.1 million and ~~$4.6~~$6.0 million, respectively, and ~~$12.8~~$16.6 million and ~~$8.4~~$12.8 million for the six months ended June 30, 2019 and 2018, respectively.

As of June 30, 2019, the cost and ~~2017,~~accumulated amortization of assets under finance leases were $45.1 million and $14.6 million, respectively.

Long-term debt, net of debt issuance costs and current maturities, consisted of the following:

June 30,

December 31,

2018

2017

(in thousands)

Senior term loan—U.S.

$
—

$
71,250

Senior revolving loan—U.S.

75,414

2,820

Accounts receivable financing—EMEA

26,024

14,100

Equipment financing—EMEA

14,409

16,901

Equipment capital lease—U.S.

34

536

Equipment capital lease—EMEA

6,784

5,058

Equipment capital lease—Mexico

8,663

12,844

Equipment loan—Mexico

47

47

Total long-term debt

131,375

123,556

Less: Debt issuance costs

(1,515
)

(2,171
)
Total long-term debt, net of debt issuance costs

129,860

121,385

Less: Current maturities of long-term debt

(39,528
)

(35,506
)
Long-term debt, net of debt issuance costs and
current maturities

$
90,332

$
85,879

	June 30,			December 31,
	2019			2018
	(in thousands)
Senior revolving loan—U.S.	$	96,414		$	90,414
Accounts receivable financing—EMEAI		19,586			14,524
Equipment financing—EMEAI		10,044			12,197
Working capital loans—Asia		2,909			—
Equipment finance lease—U.S.		316			111
Equipment finance lease—EMEAI		6,957			6,738
Equipment finance lease—Mexico		13,486			14,517
Total debt - principal		149,712			138,501
Less: Debt issuance costs		(775	)		(878	)
Total debt, net of debt issuance costs		148,937			137,623
Less: Current maturities of long-term debt		(33,780	)		(27,058	)
Long-term debt, net of debt issuance costs and current maturities	$	115,157		$	110,565

In April 2018, the Company entered into a new credit agreement (the Credit Agreement) with four lenders consisting of a multi-currency, revolving credit facility in an aggregate principal amount of $150.0 million, including a $25.0 million letter of credit sub-facility. The Company drew down $75.4 million on the revolving credit facility in connecti~~on with the closing of the transactions contemplated by the Credit Agreement and used the proceeds to pay all outstanding amounts due and payable under the Company’s senior secured credit facility, various fees and expenses and related accrued interest. All borrowings and amounts outstanding under the Credit Agreement are scheduled to mature in April 2023.~~

Interest accrues at a variable rate equal to LIBOR plus an initial margin of 1.5% (3.56% as of June 30, 2018), which may vary based on the Company’s total net leverage ratio as defined in the Credit Agreement. Interest is paid monthly and the Company is not obligated to make any principal repayments prior to the maturity date so long as the Company is not in default under the Credit Agreement. The Company may prepay borrowings without penalty under the Credit Agreement.

In April 2018, the Company also entered into an interest rate swap arrangement to fix a notional amount of $75.0 million under the Credit Agreement at an effective interest rate of 4.19% for a period of five years.

~~The Company’s~~Our Amended and Restated 2015 Stock Option and Incentive Plan (the 2015 Plan) provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights to certain employees, non-employee directors and consultants. Under the 2015 Plan, ~~the Company has~~we have granted awards of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PSUs) to certain employees and non-employee directors.

During the ~~first~~ six months ~~of 2018, the Company~~ended June 30, 2019, we issued to certain employees and non-employee directors an aggregate of ~~149,012~~196,418 timed-based RSUs, ~~121,836~~116,898 PSUs that vest upon achievement of a cumulative, three-year Adjusted EBITDA target measured from January 1, ~~2018~~2019 through December 31, ~~2020,~~2021, and ~~170,712~~165,071 PSUs that vest upon achievement of certain stock price hurdles for the period of the grant date through December 31, ~~2020. 100%~~2021. All of the time-based RSUs vest on the third anniversary date of the grant date. Each of the time-based and performance-based awards are subject to the recipient’s continued service with ~~the Company,~~us, the terms and conditions of the 2015 Plan and the applicable award agreement.

The share-based compensation expense recognized in the condensed consolidated statements of operations was as follows:

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
	(in thousands)								(in thousands)
Cost of goods sold	$	543	$	332	$	955	$	545	$	171	$	543	$	348	$	955
General and administrative expenses		2,068		1,712		4,044		3,206		1,766		2,068		2,574		4,044
Total share-based compensation expense	$	2,611	$	2,044	$	4,999	$	3,751	$	1,937	$	2,611	$	2,922	$	4,999

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
	(in thousands)								(in thousands)
RSUs	$	1,165	$	629	$	2,483	$	1,164	$	1,009	$	1,165	$	1,931	$	2,483
Stock options		1,041		1,415		2,031		2,587		294		1,041		730		2,031
PSUs		405		—		485		—		634		405		261		485
Total share-based compensation expense	$	2,611	$	2,044	$	4,999	$	3,751	$	1,937	$	2,611	$	2,922	$	4,999

15As of June 30, 2019, the unamortized cost of the outstanding RSUs and PSUs was $6.5 million and $6.2 million, respectively, which we expect to recognize in the condensed consolidated financial statements over weighted-average periods of approximately 2.1 years and 2.5 years, respectively. Additionally, the total unrecognized cost related to non-vested stock option awards was $2.0 million, which we expect to recognize in the condensed consolidated financial statements over a weighted-average period of approximately 1.7 years. Share-based compensation expense for the six months ended June 30, 2019 includes a reversal of expense related to the probability that certain PSUs will not fully vest.

				Stock Options							RSUs					PSUs
	Shares Available for Grant			Shares			Weighted- Average Exercise Price		Options Exercisable		Units			Weighted- Average Grant Date Fair Value		Units			Weighted- Average Grant Date Fair Value
Balance as of December 31, 2018		5,980,605			2,600,694		$	13.41		1,415,948		425,876		$	18.75		249,249		$	22.67
Increase in shares authorized		1,387,123			—			—				—			—		—			—
Granted		(653,478	)		175,091			23.08				196,418			26.99		281,969			29.25
Exercised/vested		—			(317,975	)		14.83				(78,747	)		24.51		—			—
Forfeited/cancelled		49,600			(29,997	)		12.96				(11,902	)		23.98		(7,701	)		24.35
Balance as of June 30, 2019		6,763,850			2,427,813			13.93		1,416,827		531,645			20.82		523,517			26.19

The grant date fair value of RSUs which vested during the six months ended June 30, 2019 was $1.9 million. In addition, during the six months ended June 30, 2019, we repurchased 18,917 shares for $0.6 million related to tax withholding requirements on vested RSU awards.

As of June 30, 2018, the unamortized cost of the outstanding RSUs and PSUs was $5.9 million and $4.4 million, respectively, which the Company expects to recognize in the condensed consolidated financial statements over weighted-average periods of approximately 1.8 years and 2.7 years, respectively. Additionally, the total unrecognized cost related to non-vested stock option awards was $3.2 million, which the Company expects to recognize in the condensed consolidated financial statements over a weighted-average period of approximately 1.6 years.

Stock Options

RSUs

PSUs

Shares
Available
for Grant

Shares

Weighted-
Average
Exercise Price

Options
Exercisable

Units

Weighted-
Average
Grant Date
Fair Value

Units

Weighted-
Average
Grant Date
Fair Value

Balance as of December 31, 2017

4,731,117

3,203,290

$
13.34

890,433

613,380

$
15.02

—

$
—

Increase in shares authorized

1,360,826

—

—

—

—

—

—

Granted

(451,212
)

9,652

22.67

149,012

23.37

292,548

22.67

Exercised/vested

—

(108,390
)

12.04

(67,396
)

20.43

—

—

Forfeited/cancelled

3,294

—

—

(2,191
)

22.98

(1,103
)

22.67

Balance as of June 30, 2018

5,644,025

3,104,552

13.42

1,164,855

692,805

16.27

291,445

22.67

The fair value of RSUs which vested during the six months ended June 30, 2018 was $1.4 million. In addition, during the six months ended June 30, 2018, the Company repurchased 13,297 shares for $0.3 million related to tax withholding requirements on vested RSU awards.

The following table summarizes the outstanding and exercisable stock option awards as of June 30, ~~2018:~~2019:

		Options Outstanding						Options Exercisable				Options Outstanding						Options Exercisable
Range of Exercise Prices:	Range of Exercise Prices:	Shares		Weighted- Average Remaining Contractual Life (in years)		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Remaining Contractual Life (in years)		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
$8.49	$8.49		22,728		1.5	$	8.49		22,728	$	8.49		16,397		1.1	$	8.49		16,397	$	8.49
$	10.87		1,896,736		6.9		10.87		742,502		10.87
$10.87													1,477,721		5.9		10.87		964,173		10.87
$11.00 to $16.53	$11.00 to $16.53		626,751		7.5		16.19		252,163		16.39		320,001		6.6		15.95		203,000		16.10
$17.68 to $18.70	$17.68 to $18.70		340,785		7.9		18.68		147,462		18.68		230,460		6.9		18.70		148,331		18.70
$18.77 to $22.67			217,552		9.2		19.92		—		—
$8.49 to $22.67			3,104,552		7.3		13.42		1,164,855		13.01
$18.77 to $29.26													383,234		9.0		21.43		84,926		20.00
$8.49 to $29.26													2,427,813		6.5		13.93		1,416,827		12.96

We have operating and finance leases for our manufacturing facilities, warehouses, offices, automobiles and certain of our machinery and equipment. Our leases have remaining lease terms of between one and 15 years, some of which may include options to extend the leases up to five years.

The ~~effective tax rates for the three and six months ended~~components of lease cost were as follows:

Future minimum lease payments under noncancelable leases as of June 30, ~~2018~~2019 were higher than for the three and six months ended June 30, 2017 primarily due to earnings mix by jurisdiction. The Company continues to maintain a full U.S. valuation allowance on its net deferred tax assets. Management will continue to reevaluate the positive and negative evidence at each reporting period. The Company expects to continue to record a full valuation allowance on its U.S. net deferred tax assets until the Company sustains an appropriate level of taxable income through an increase in overall pre-tax income to be recognized in the U.S. and the finalization of its analysis of The Tax Cuts and Jobs Act (Tax Reform Act) impact as ~~discussed below.~~follows:

In December 2017, President Trump signed into law the Tax Reform Act, which significantly revised U.S. tax law by, among other things, lowering the statutory federal corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017, eliminating certain deductions, imposing a mandatory one-time transition tax, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The Tax Reform Act also includes many new provisions, such as changes to bonus depreciation, changes to deductions for executive compensation, interest expense limitations, net operating loss deduction limitations, a tax on global intangible low-taxed income (GILTI) earned by foreign corporate subsidiaries, a base erosion anti-abuse tax (BEAT) and a deduction for foreign-derived intangible income (FDII). Many of these provisions, including the tax on GILTI, the BEAT, and the deduction for FDII, became applicable to the Company at the beginning of 2018, and the Company continues to evaluate the impact of such provisions of the Tax Reform Act.

~~Under U.S. GAAP,~~Total lease liabilities as of June 30, 2019 were as follows:

As previously disclosed in our 2018 Annual Report on Form 10-K and under the ~~Company is permitted~~previous accounting standard, future minimum lease payments under noncancelable leases as of December 31, 2018 were as follows:

As of December 31, 2018, the cost and accumulated amortization of assets under capital leases were $41.3 million and $11.7 million, respectively.

Notes to ~~make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense~~Unaudited Condensed Consolidated Financial Statements

	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2019			2019
	(in thousands)			(in thousands)
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7,849		$	15,391
Operating cash flows from finance leases		388			796
Financing cash flows from finance leases		2,542			5,471

Right of use assets obtained in exchange for new lease obligations:
Operating leases		322			12,205
Finance leases		219			4,922

	June 30,
	2019
Weighted-Average Remaining Lease Term (In Years):
Operating leases		7.7
Finance leases		3.4

Weighted-Average Discount Rate:
Operating leases		7.4	%
Finance leases		6.6	%

As of June 30, 2019, we have an additional lease related to our new manufacturing facility in ~~the year the tax is incurred as a period expense only. Given the complexity~~Chennai, India of ~~the GILTI provision, the Company is still evaluating the effects of the GILTI provisions and~~approximately $60 million which has not yet ~~made its accounting policy election. The impact~~commenced, but which we expect will commence in the first half of ~~the provisional calculations~~2020 with an initial term of ~~GILTI and other provisions of the Tax Reform Act resulted in no incremental tax expense~~ten years.

Income taxes for the three ~~and~~months ended June 30, 2019 were lower than for the three months ended June 30, 2018 primarily due to the earning mix by jurisdiction in 2019 as compared to 2018. Income taxes for the six months ended June 30, 2019 were lower than for the six months ended June 30, 2018 primarily due to the ~~net operating loss carryforwards, foreign~~benefit generated in 2019 as compared to a provision in 2018. Our annualized effective tax ~~credits and~~rate for 2019 is expected to be higher than in 2018 due to losses not benefitted in jurisdictions where a full valuation allowance ~~on U.S. net deferred tax assets. The Company will~~is recorded.

We also continue ~~to refine its calculations, which may result in changes to the expected impact for 2018. The Company continues~~ to not record a deferred tax liability related to unremitted foreign earnings as ~~it maintains its~~we maintain our assertion to ~~permanently~~indefinitely reinvest ~~its~~our unremitted foreign earnings.

An ownership change under Sections 382 and 383 of the Internal Revenue Code was deemed to occur in June 2018. In general, a Section 382 and 383 ownership change occurs if there is a cumulative change in ~~the Company’s~~our ownership by “5% shareholders” (as defined in the Internal Revenue Code of 1986, as amended) that exceeds 50 percentage points over a rolling three-year period. Since no deferred tax assets have been recognized on the Company’s balance sheet related to our NOLs and tax credits, as they are fully reserved by a valuation allowance, there was no impact to the tax provision. Based on the analysis performed, however, ~~the Company does~~we do not believe that the Section 382 and 383 annual limitation will materially impact ~~its~~our ability to utilize the tax attributes that existed as of the date of the ownership. Additional ownership changes in the future could result in additional limitations on ~~the Company’s~~our net operating loss carryforwards and credits.

No ~~other~~ changes in tax law ~~since December 31, 2017~~occurred during the quarter which have ~~had~~ a material impact on ~~the Company’s~~our income tax provision.

In May 2019, we announced plans to consolidate certain of our manufacturing facilities, including our plan to shut down the two blade lines operating in our Taicang Port facility and move our tooling operation from Taicang City to the larger Taicang Port facility, thereby expanding our tooling capacity for larger blades and reducing overall costs. We expect to substantially complete these plans by the end of 2019.

In accordance with these plans, during the three months ended June 30, 2019, we incurred total charges of $3.9 million, which included $3.3 million of severance benefits to terminated employees and $0.6 million of other charges, primarily related to exit costs. These charges are located within the caption “Restructuring charges” in the accompanying condensed consolidated statements of operations. We expect to incur additional charges under these plans of approximately $0.5 million throughout the remainder of 2019.

~~From time to time, the Company may be involved in disputes or litigation relating to claims arising out of its operations.~~

In March 2015, a complaint was filed against ~~the Company~~us in the Superior Court of the State of Arizona (Maricopa County) by a former employee, alleging that ~~the Company~~we had agreed to ~~make certain cash payments to such~~compensate the employee upon any future sale or initial public offering of the Company. ~~The Company filed a motion to dismiss the complaint in April 2015, which was denied. The Company subsequently filed an answer to the complaint in July 2015 denying the substantive allegations~~Upon completion of the complaint. The parties completed court-ordered mediation in December 2015 but were not able to reach a settlement. The Company filed a motion for summary judgment to dismiss the complaint in April 2016 andJune 2019 trial, the court ~~denied the motion~~ruled as a matter of law in August 2016. The court has postponed the trial date from August 2018 until June 2019. The Company continues to deny the substantive allegations of the complaint and intends to vigorously defend this lawsuit; however, the Company is currently unable to determine the ultimate outcome of this case.

In August 2015, the Company entered into a transition agreement with its former Senior Vice President – Asia, pursuant to which that individual transitioned out of this role at the end of 2015 and was to serve in a consulting capacity in 2016 and 2017. In January 2016, following the Company’s discovery that the individual had materially violated the terms of the transition agreement, the Company terminated the consultancy for cause. In April 2016, an arbitration claim was filed in China by the individual with the Taicang Labor and Personnel Dispute Arbitration Committee alleging that the Company improperly terminated the transition agreement. The individual is demanding that the Company honor the terms of the transition agreement and pay compensation and fees under the transition agreement, which in the aggregate totals approximately $2.6 million. In addition, the individual is also challenging the validity of the Company’s termination of an option to purchase 164,880 shares of the Company’s common stock and 77,760 restricted stock units under the 2015 Plan, which were canceled in January 2016 when the consultancy was terminated. The Taicang Labor and Personnel Dispute Arbitration Committee awarded damages to the individual of approximately $1.2 million but rejected the claims regarding the termination of the stock option and restricted stock unit awards. The Company subsequently appealed the arbitration award inour favor of the individual to the Taicang Municipal People’s Court, which affirmed the arbitration award in June 2018. The Company has appealed this judgment to an appellate level court in the Jiangsu Province and the appeal remains pending. The Company previously established a reserve for these matters and does not believe the award, if upheld on ~~appeal, will have a material impact on its operating results or financial condition.~~

~~In June 2018, Iowa OSHA, a division of the Iowa Department of Labor, issued a citation and notification of penalty to the Company alleging that~~ certain of the ~~Company’s workplace practices~~claims against us and ~~conditions at its Newton, Iowa wind blade manufacturing facility had violated~~ the ~~Iowa Occupational Safety and Health Act. Specifically,~~jury reached a verdict in our favor on the citation cited the Company for multiple alleged violations and proposed that the Company pay an aggregate penalty of approximately $0.2 million. In June 2018, the Company notified Iowa OSHA that it was contesting allremainder of the ~~alleged violations and proposed penalties. In June 2018, the Labor Commissioner~~claims against us. As a result of the ~~Iowa Department of Labor subsequently filed a complaint with the State of Iowa Employment Appeal Board, petitioning the Appeal Board~~

~~Notes~~trial, we were not obligated to ~~Unaudited Condensed Consolidated Financial Statements~~

~~to affirm the citation and notification of penalty that Iowa OSHA issued~~pay any damages or losses to the Company. In July 2018, the Company then filed a response with the Appeal Board denying the substantive allegations of the complaint. A hearing date has not yet been set and thus the matter remains pending.former employee.

From time to time, ~~the Company is~~we are party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which are covered by insurance. Upon resolution of any pending legal matters, ~~the Company~~we may incur charges in excess of presently established ~~reserves. Management~~reserves or our insurance policy limits. Our management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on ~~the Company’s~~our financial condition, results of operations or cash flows.

Revenues from certain customers in excess of 10 percent of our total consolidated ~~Company~~ revenues are as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

Customer

Revenues

% of Total

Revenues

% of Total

Revenues

% of Total

Revenues

% of Total

(dollars in thousands)

GE

$
75,007

32.5
%

$
107,060

44.7
%

$
162,835

33.6
%

$
198,588

44.3
%
Vestas

67,300

29.2

60,586

25.3

152,569

31.5

108,849

24.3

Nordex Acciona

47,359

20.5

42,530

17.7

95,560

19.7

83,162

18.6

Siemens Gamesa

26,527

11.5

26,034

10.9

50,818

10.5

51,676

11.5

Other

14,417

6.3

3,372

1.4

22,809

4.7

5,922

1.3

Total

$
230,610

100.0
%

$
239,582

100.0
%

$
484,591

100.0
%

$
448,197

100.0
%

	Three Months Ended										Six Months Ended
	June 30,										June 30,
	2019					2018					2019					2018
Customer	Revenues		% of Total			Revenues		% of Total			Revenues		% of Total			Revenues		% of Total
Vestas	$	142,101		43.0	%	$	67,300		29.2	%	$	270,715		42.9	%	$	152,569		31.5	%
GE		92,018		27.8	%		75,007		32.5	%		176,547		28.0	%		162,835		33.6	%
Nordex		53,662		16.2	%		47,359		20.5	%		108,530		17.2	%		95,560		19.7	%

Trade accounts receivable from certain customers in excess of 10 percent of our total consolidated ~~Company~~ trade accounts receivable are as follows:

	June 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
Customer	% of Total			% of Total			% of Total			% of Total
GE		19.5	%		18.9	%
Vestas		34.6	%		52.4	%		47.0	%		46.7	%
Nordex Acciona		32.2	%		19.5	%
Nordex								21.6	%		25.7	%

~~The Company’s~~Our operating segments are defined geographically as the ~~United States,~~U.S., Asia, Mexico and ~~EMEA.~~EMEAI. Financial results are aggregated into four reportable segments based on quantitative thresholds. All of ~~the Company’s~~our segments operate in their local currency, however a portion of the revenue attributable to our China and Mexico segments is derived in U.S. dollars because certain of ~~the Company’s~~our domestic subsidiaries are the contracting parties to the associated customer supply agreements.

The following tables set forth certain information regarding each of ~~the Company’s~~our segments:

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
	(in thousands)												(in thousands)
Revenues by segment:
U.S.	$	44,695		$	47,615		$	90,819		$	95,582		$	39,858		$	44,695		$	81,486		$	90,819
Asia		77,931			89,283			155,601			158,780			84,699			77,931			153,417			155,601
Mexico		56,353			50,468			114,317			97,416			95,362			56,353			180,027			114,317
EMEA		51,631			52,216			123,854			96,419
EMEAI														110,852			51,631			215,621			123,854
Total revenues	$	230,610		$	239,582		$	484,591		$	448,197		$	330,771		$	230,610		$	630,551		$	484,591
Revenues by geographic location (1):
U.S.	$	44,695		$	47,615		$	90,819		$	95,582		$	39,858		$	44,695		$	81,486		$	90,819
China		77,931			89,283			155,601			158,780			84,699			77,931			153,417			155,601
Mexico		56,353			50,468			114,317			97,416			95,362			56,353			180,027			114,317
Turkey		51,631			52,216			123,854			96,419
Turkey and India														110,852			51,631			215,621			123,854
Total revenues	$	230,610		$	239,582		$	484,591		$	448,197		$	330,771		$	230,610		$	630,551		$	484,591
Income (loss) from operations:
U.S. (2)	$	(13,293	)	$	(6,348	)	$	(22,343	)	$	(13,674	)	$	(22,222	)	$	(13,293	)	$	(36,725	)	$	(22,343	)
Asia		9,386			20,554			15,803			33,348			131			9,386			(8,669	)		15,803
Mexico		227			1,190			4,485			4,034			4,120			227			3,696			4,485
EMEA		7,742			3,777			23,212			7,077
Total income from operations	$	4,062		$	19,173		$	21,157		$	30,785
EMEAI														22,468			7,742			34,539			23,212
Total income (loss) from operations													$	4,497		$	4,062		$	(7,159	)	$	21,157

	June 30,		December 31,		June 30,		December 31,
	2018		2017		2019		2018
	(in thousands)				(in thousands)
Property, plant and equipment, net:
U.S.	$	32,407	$	24,575	$	33,453	$	34,825
Asia (China)		30,671		28,887		39,981		31,924
Mexico		53,750		39,756		80,041		65,981
EMEA (Turkey)		28,520		30,262
EMEAI (Turkey and India)						27,941		26,693
Total property, plant and equipment, net	$	145,348	$	123,480	$	181,416	$	159,423

Note ~~13. Adjustments to Previously Reported Financial Statements from the Adoption of an Accounting Pronouncement~~

~~As discussed in Note 1,~~ ~~Summary of Operations and Significant Accounting Policies~~, ~~Topic 606 and ASUs 2016-15 and 2016-18 were adopted by the~~ ~~Company as of January 1, 2018 with retrospective application to January 1, 2016 through December 31, 2017.~~

~~The following tables summarize the effects of adopting Topic 606 and ASU 2016-18 had on our previously reported financial statements.~~

December 31, 2017

As Reported

Adoption of Topic 606

As Adjusted

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$
148,113

$
—

$
148,113

Restricted cash

3,849

—

3,849

Accounts receivable

121,576

—

121,576

Contract assets

—

105,619

105,619

Inventories

67,064

(62,952
)

4,112

Inventories held for customer orders

64,858

(64,858
)

—

Prepaid expenses and other current assets

27,507

—

27,507

Total current assets

432,967

(22,191
)

410,776

Property, plant, and equipment, net

123,480

—

123,480

Goodwill

2,807

—

2,807

Intangible assets, net

150

958

1,108

Other noncurrent assets

14,130

4,261

18,391

Total assets

$
573,534

$
(16,972
)

$
556,562

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

$
166,743

$
—

$
166,743

Accrued warranty

29,163

1,256

30,419

Deferred revenue

81,048

(81,048
)

—

Customer deposits

10,134

(9,702
)

432

Current maturities of long-term debt

35,506

—

35,506

Contract liabilities

—

2,763

2,763

Total current liabilities

322,594

(86,731
)

235,863

Long-term debt, net of debt issuance costs and current maturities

85,879

—

85,879

Other noncurrent liabilities

4,444

494

4,938

Total liabilities

412,917

(86,237
)

326,680

Commitments and contingencies

Stockholders’ equity:

Common shares, $0.01 par value, 100,000 shares authorized and 34,049
shares issued and 34,021 shares outstanding at December 31, 2017

340

—

340

Paid-in capital

301,543

—

301,543

Accumulated other comprehensive loss

(558
)

—

(558
)
Accumulated deficit

(140,197
)

69,265

(70,932
)
Treasury stock, at cost, 28 shares at December 31, 2017

(511
)

—

(511
)
Total stockholders’ equity

160,617

69,265

229,882

Total liabilities and stockholders’ equity

$
573,534

$
(16,972
)

$
556,562

The primary effects of the adoption of Topic 606 on the Company’s balance sheet include 1) amounts being recognized as revenue for work performed as production takes place over time as contract assets, which differs from the prior practice of including the balances in inventory; 2) no longer reporting inventory held for customer orders or deferred revenue since revenue is now being recognized over the course of the production process, and before the product is delivered to the customer; 3) that contract liabilities are reported for amounts collected from customers in advance of the production of products, similar to our prior practice of recording customer deposits; and 4) the cumulative amount of the effect to prior periods’ net income related to the adoption of Topic 606 through December 31, 2017 is reflected in retained earnings.

Three Months Ended

June 30, 2017

As Reported

Adoption of Topic 606

As Adjusted

(Unaudited)

Net sales
$
248,186

$
(8,604
)

$
239,582

Cost of sales

203,095

(3,978
)

199,117

Startup and transition costs

10,540

—

10,540

Total cost of goods sold

213,635

(3,978
)

209,657

Gross profit

34,551

(4,626
)

29,925

General and administrative expenses

10,752

—

10,752

Income from operations

23,799

(4,626
)

19,173

Other income (expense):

Interest income

11

—

11

Interest expense

(2,935
)

—

(2,935
)
Realized loss on foreign currency remeasurement

(1,233
)

—

(1,233
)
Miscellaneous income

258

—

258

Total other expense

(3,899
)

—

(3,899
)
Income before income taxes

19,900

(4,626
)

15,274

Income tax provision

(6,042
)

345

(5,697
)
Net income
$
13,858

$
(4,281
)

$
9,577

Weighted-average common shares outstanding:

Basic

33,737

33,737

33,737

Diluted

33,828

33,828

33,828

Net income per common share:

Basic
$
0.41

$
(0.13
)

$
0.28

Diluted
$
0.41

$
(0.13
)

$
0.28

The primary effects of the adoption of Topic 606 on the Company’s condensed consolidated income statement relate to amounts being recognized as revenue for work performed as production takes place over time, which differs from the prior practice of recognizing revenue when the product was delivered to the customer.

Six Months Ended

June 30, 2017

As Reported

Adoption of Topic 606

As Adjusted

(Unaudited)

Net sales
$
439,788

$
8,409

$
448,197

Cost of sales

370,518

11,137

381,655

Startup and transition costs

16,699

—

16,699

Total cost of goods sold

387,217

11,137

398,354

Gross profit

52,571

(2,728
)

49,843

General and administrative expenses

19,058

—

19,058

Income from operations

33,513

(2,728
)

30,785

Other income (expense):

Interest income

30

—

30

Interest expense

(5,961
)

—

(5,961
)
Realized loss on foreign currency remeasurement

(2,614
)

—

(2,614
)
Miscellaneous income

578

—

578

Total other expense

(7,967
)

—

(7,967
)
Income before income taxes

25,546

(2,728
)

22,818

Income tax provision

(8,143
)

115

(8,028
)
Net income
$
17,403

$
(2,613
)

$
14,790

Weighted-average common shares outstanding:

Basic

33,737

33,737

33,737

Diluted

33,827

33,827

33,827

Net income per common share:

Basic
$
0.52

$
(0.08
)

$
0.44

Diluted
$
0.51

$
(0.08
)

$
0.44

~~The adoption of Topic 606 increased total stockholders’ equity in 2015 and 2016 by $61.2 million and $12.3 million, respectively and decreased total stockholders’ equity in 2017 by $4.2 million.~~

Six Months Ended

June 30, 2017

As Reported

Adoption of Topic 606

Adoption of ASU 2016‑18

As Adjusted

(Unaudited)

Cash flows from operating activities:

Net income

$
17,403

$
(2,613
)

$
—

$
14,790

Adjustments to reconcile net income to net cash
   provided by operating activities:

Depreciation and amortization

8,483

233

—

8,716

Share-based compensation expense

3,751

—

—

3,751

Amortization of debt issuance costs

286

—

—

286

Changes in assets and liabilities:

—

—

Accounts receivable

(49,360
)

—

—

(49,360
)
Contract assets and liabilities

—

3,477

—

3,477

Inventories

(11,324
)

12,176

—

852

Prepaid expenses and other current assets

5,170

(1
)

—

5,169

Other noncurrent assets

7,111

(990
)

(8,063
)

(1,942
)
Accounts payable and accrued expenses

34,633

6

—

34,639

Accrued warranty

5,961

(395
)

—

5,566

Customer deposits

7,273

(7,206
)

—

67

Deferred revenue

4,687

(4,687
)

—

—

Other noncurrent liabilities

(141
)

—

—

(141
)
Net cash provided by operating activities

33,933

—

(8,063
)

25,870

Cash flows from investing activities:

Purchase of property and equipment

(26,727
)

—

—

(26,727
)
Net cash used in investing activities

(26,727
)

—

—

(26,727
)
Cash flows from financing activities:

Repayments of term loan

(1,875
)

—

—

(1,875
)
Net proceeds from accounts receivable financing

5,182

—

—

5,182

Proceeds from working capital loans

6,620

—

—

6,620

Repayments of working capital loans

(11,258
)

—

—

(11,258
)
Net proceeds from other debt

6,253

—

—

6,253

Restricted cash

(524
)

—

524

—

Net cash provided by financing activities

4,398

—

524

4,922

Impact of foreign exchange rates on cash and cash
   equivalents

164

—

—

164

Net change in cash and cash equivalents

11,768

—

(7,539
)

4,229

Cash, cash equivalents and restricted cash,
   beginning of year

119,066

—

10,797

129,863

Cash, cash equivalents and restricted cash, end of
   period

$
130,834

$
—

$
3,258

$
134,092

The primary effects of the adoption of Topic 606 on the Company’s condensed consolidated statement of cash flows include 1) the establishment of contract assets and liabilities; 2) the reduction of inventory and elimination of inventory held for customer orders; and 3) the elimination of deferred revenue. For more details on these items, see the disclosure related to the effect of the adoption of Topic 606 on the Company’s condensed consolidated balance sheet. 14. Subsequent Event

As ~~part~~noted in Note 3, Significant Risks and Uncertainties, as a result of Senvion entering into a provisional self-administration procedure as ordered by the Local Court of Hamburg, Germany pursuant to the Insolvency Act in Germany, we reduced recognized revenues and the corresponding accounts receivable to the best estimate of remaining consideration to be received under the contract. Subsequent to June 30, 2019, concurrent with the termination of our ~~adoption~~previous contract with Senvion, we entered into a new agreement directly with the wind farm operator of ~~Topic 606,~~ the ~~Company has elected~~project to ~~use~~whom Senvion was supplying the ~~following practical expedients:~~

~~Notes~~wind blades we had manufactured. Under this agreement signed in July 2019, the wind farm operator agreed to ~~Unaudited Condensed Consolidated Financial Statements~~

~~The impact~~purchase from us the undelivered wind blades and pay us for the remaining accounts receivable unpaid by Senvion, totaling approximately 90% of ~~applying~~ the ~~above practical expedients may change the period of revenue recognition~~$16.2 million gross amounts invoiced and invoiceable, but not yet collected. We received $6.2 million in cash in July 2019, with the ~~total~~remaining amount to be ~~recognized under the contract; therefore, the Company believes application~~collected upon final delivery of the ~~practical expedients is not material to the comparability~~remaining wind blades via an irrevocable letter of ~~the information presented above and the accounting and financial reporting related to the adoption of Topic 606.~~ credit.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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”)~~(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, ~~and related financing,~~ 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, particularly those under “Risk Factors.”

We are the largest and only independent manufacturer of composite wind blades for the wind energy market with a global manufacturing footprint. We enable many of the industry’s leading wind turbine original equipment manufacturers (OEM), who have historically relied on in-house production, to outsource the manufacturing of some of their wind blades through our global footprint of advanced manufacturing facilities strategically located to serve large and growing wind markets in a cost-effective manner. Given the importance of wind energy capture, turbine reliability and cost to power producers, the size, quality and performance of wind blades have become highly strategic to our OEM customers. As a result, we have become a key supplier to our OEM customers in the manufacture of wind blades and related precision molding and assembly systems. We have entered into long-term supply agreements pursuant to which we dedicate capacity at our facilities to our customers in exchange for their commitment to purchase minimum annual volumes of wind blade sets, which consist of three wind blades. As of August 7, ~~2018,~~2019, our long-term wind and transportation supply agreements provide for minimum aggregate volume commitments from our customers of approximately ~~$4.5~~$3.5 billion and encourage our customers to purchase additional volume up to, in the aggregate, a total contract value of approximately ~~$6.4~~$6.2 billion through the end of 2023. This collaborative dedicated supplier model provides us with contracted volumes that generate significant revenue visibility, drive capital efficiency and allow us to produce wind blades at a lower total delivered cost, while ensuring critical dedicated capacity for our customers. Our wind blade and precision molding and assembly systems manufacturing businesses accounted for approximately 95% of our total net sales for each of the three months ended June 30, 2019 and 2018, respectively, and approximately 96% of our total net sales for ~~the three months ended June 30, 2018 and 2017, respectively, and 96% and 97%~~each of ~~our total net sales for~~ the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. We also leverage our advanced composite technology and history of innovation to supply high strength, lightweight and durable composite products to the transportation market.

We divide our business operations into four geographic operating ~~segments—~~segments - (1) the United States (U.S.), (2) Asia, (3) Mexico and (4) Europe, the Middle East, Africa and ~~Africa (EMEA)~~India (EMEAI) as follows:

~~The trend~~We expect that the number of ~~wind turbine OEMs outsourcing~~manufacturing lines in transition and start up will increase during the year ending December 30, 2020 and this increase will have an adverse impact on our profitability and results of operations for such periods.

In February 2019, our manufacturing production employees in Matamoros, Mexico, who are represented by a labor union, went on strike demanding an increase in their hourly wage rate and the payment of an annual bonus, even though our collective bargaining agreement does not provide for such incentives. During this work stoppage, production was halted at our Matamoros manufacturing facility from February 15, 2019 until March 2, 2019. Although we ultimately resolved the strike in early March 2019, this disruption, along with the loss of nearly 50% of the workforce in Matamoros because of actions taken during the strike and a slower than planned start up in 2018, had a significant impact on production during the first quarter of 2019. A material amount of production was lost during that time period and the lower production volume will likely extend into the third quarter as new associates are trained and additional manufacturing lines are ramping up. Given the heavy demand for wind blades ~~remains strong as evidenced by our signing in March 2018 of a new multiyear supply agreement with Vestas Wind Systems A/S for four manufacturing lines at a new manufacturing facility~~ in the ~~Yangzhou Economic & Technical Development Zone~~U.S. market in ~~Yangzhou, China.~~ 2019, our liquidated damages provisions with our customers are quite stringent. As a result, in addition to the impact of the lost production, we have reduced the total consideration expected to be received under a customer contract for the liquidated damages incurred in the three and six months ended June 30, 2019 by $6.2 million and $10.0 million, respectively. Although our operations at our Matamoros, Mexico facility improved and stabilized during the three months ended June 30, 2019, we expect these production delays will also impact volume in the third quarter and may result in further liquidated damage charges during the balance of 2019. We estimate that the total impact of the lost volume, liquidated damages and compensation costs related to the settlement of the strike is expected to be approximately $28 million for the twelve months ending December 31, 2019.

In ~~May 2018, we signed a new multiyear supply agreement with ENERCON GmbH for two manufacturing lines at a~~April 2019, one of our ~~manufacturing facilities~~customers, Senvion GmbH (Senvion), entered into a provisional self-administration procedure as ordered by the Local Court of Hamburg, Germany pursuant to the Insolvency Act in ~~Izmir, Turkey.~~ Germany. As a result of this development, we reevaluated the outstanding accounts receivables due from Senvion, the revenue recognized under our contract with Senvion as well as the property, plant and equipment at our Taicang Port, China facility where we manufactured blades for Senvion. As a result of that reevaluation, we revised our estimate of consideration to be received under the contract, which reduced the revenues recorded in the six months ended June 30, 2019 by $6.7 million. We also revised the useful life of property, plant and equipment which was being used to fulfill the Senvion contract which does not have an alternative use. The reevaluation had an adverse impact on our results of operations for the six months ended June 30, 2019 and the lost production from Senvion will have an adverse effect on our results of operations for the remainder of 2019.

In ~~May~~July 2019, we entered into a new agreement directly with the wind farm operator of the project to whom Senvion was supplying the wind blades we had manufactured. Under this agreement signed in July 2019, the wind farm operator agreed to purchase from us the undelivered wind blades and pay us for the remaining accounts receivable unpaid by Senvion, totaling approximately 90% of the $16.2 million gross amounts invoiced and invoiceable, but not yet collected. We received $6.2 million in cash in July ~~2018, Vestas exercised its option for a total~~2019, with the remaining amount to be collected upon final delivery of ~~four additional manufacturing lines at~~the remaining wind blades via an irrevocable letter of credit. This adjustment to revenue and accounts receivable will be recognized in third quarter of 2019. The effect of these adjustments on our loss from operations in the condensed consolidated statements of operations totaled $12.6 million in the six months ended June 30, 2019.

We have experienced construction and startup delays with respect to our new manufacturing facility in ~~Matamoros, Mexico.~~

~~Our wind turbine OEMs are experiencing pricing pressure~~Yangzhou, China. These delays resulted in ~~many geographic markets due to several factors, including an increasing prevalence~~us incurring estimated liquidated damages of ~~auction-based pricing models~~$4.1 million during the three months ended June 30, 2019. We expect these delays may result in us incurring additional liquidated damages during the balance of 2019 and will adversely impact our results of operations for ~~new wind farm projects, increasing competition from solar energy projects and market demand shifts driven by~~ the ~~current Production Tax Credit cycle in the United States. As a result~~balance of ~~these market trends, our wind turbine OEM customers are requiring an increasing number of wind blade model transitions in 2018.~~2019.

We recognize revenue from manufacturing services over time as ~~the customer controls~~our customers control the product as it is produced, and we may not use or sell the product to fulfill other customers’ contracts. Net sales include amounts billed to our customers for our products, including wind blades, precision molding and assembly systems and other products and services, as well as the progress towards the completion of the performance obligation for products in progress, which is determined on a ratio of direct costs incurred to date in fulfillment of the contract to the total estimated direct costs required to complete the performance obligation.

Cost of goods sold includes the costs we incur at our production facilities to make products saleable on both products invoiced during the period as well as products in progress towards the completion of each performance obligation. Cost of goods sold includes such items as raw materials, direct and indirect labor and facilities costs, including purchasing and receiving costs, plant management, inspection costs, production process improvement activities, product engineering and internal transfer costs. In addition, all depreciation associated with assets used in the production of our products is also included in cost of goods sold. Direct labor costs consist of salaries, benefits and other personnel related costs for employees engaged in the ~~manufacture~~manufacturing of our products and services.

Startup costs represent the unallocated overhead related to both new manufacturing facilities as well as new lines in existing manufacturing facilities. Transition costs represent the unallocated overhead related to the transition of wind blade models at the request of our customers. The startup and transition costs are primarily unallocated fixed overhead costs and underutilized direct labor costs incurred during the period production facilities are ~~under-utilized while~~ transitioning wind blade models and ramping up ~~manufacturing, which~~manufacturing. All direct labor costs are ~~not allocated~~included in the measure of progress towards completion of the relevant performance obligation when determining revenue to ~~products and are expensed as incurred.~~be recognized during the period. The cost of sales for the initial wind blades from a new model manufacturing line is generally higher than when the line is operating at optimal production volume levels due to inefficiencies during ramp-up related to labor hours per blade, cycle times per blade and raw material usage. Additionally, ~~manufacturing overhead~~these costs as a percentage of net sales isare generally higher during the period in which a facility is ramping up to full production capacity due to underutilization of the facility. Manufacturing overhead at each of our facilities includes virtually all indirect costs (including share-based compensation costs) incurred at the plants, including engineering, finance, information technology, human resources and plant management.

General and administrative expenses are primarily incurred at our corporate headquarters and our research facilities and include salaries, benefits and other personnel related costs for employees engaged in research and development, engineering, finance, internal audit, information technology, human resources, business development, global operational excellence, global supply chain, in-house legal and executive management. Other costs include outside legal and accounting fees, risk management (insurance), share-based compensation and certain other administrative and global resources costs.

The research and development expenses incurred at our Warren, Rhode Island and Fall River, Massachusetts locations as well as at our Kolding, Denmark advanced engineering center are also included in general and administrative expenses. For the three months ended June 30, ~~2018~~2019 and ~~2017~~2018 and for the six months ended June 30, 2019 and 2018, research and ~~2017, these~~development expenses totaled $0.3 million, $0.2 million, $0.5 million and $0.4 million, respectively.

Realized loss on sale of assets represents the realized losses on the sale of receivables under supply chain financing arrangements with our customers and ~~$0.8 million, respectively. Research~~realized gains and ~~development performed~~losses on the sale of other assets at our corporate and manufacturing facilities.

Restructuring charges primarily consist of employee severance, one-time termination benefits and ongoing benefits related to the reduction of our workforce and other costs associated with exit activities, which may include costs related to leased facilities ~~is included in cost of goods sold.~~to be abandoned and facility and employee relocation costs.

Other income (expense) consists primarily of interest expense on our debt borrowings and the amortization of deferred financing costs on such borrowings. Other income (expense) also includes realized gains and losses on foreign currency remeasurement, interest income, losses on extinguishment of debt and miscellaneous income and expense.

Income ~~tax provision consists~~taxes consist of federal, state, provincial, local and foreign taxes based on income in jurisdictions in which we operate, including in the ~~United States,~~U.S., China, Mexico, Turkey and ~~Turkey.~~India. The composite income tax rate, tax provisions, deferred tax assets and liabilities vary according to the jurisdiction in which the income or loss arises. Tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities, and require us to exercise judgment in determining our income tax provision, our deferred tax assets and liabilities and the valuation allowance recorded against our net deferred tax assets.

In addition to measures of financial performance presented in our condensed consolidated financial statements in accordance with GAAP, we use certain other financial measures and operating metrics to analyze ~~the performance of~~ our ~~company.~~performance. These “non-GAAP” financial measures consist of total billings, EBITDA, adjusted EBITDA, free cash flow and net cash (debt), which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance. The key operating metrics consist of wind blade sets invoiced, estimated megawatts of energy capacity for wind blade sets invoiced, utilization percentage, manufacturing lines dedicated to customers under long-term supply agreements, total manufacturing lines installed, manufacturing lines in startup and manufacturing lines in transition, which help us evaluate our operational performance. We believe that these measures are useful to investors in evaluating our performance.

	Three Months Ended					Six Months Ended						Three Months Ended					Six Months Ended
	June 30,					June 30,						June 30,					June 30,
	2018			2017		2018			2017			2019		2018			2019			2018
	(in thousands)											(in thousands)
Net sales	$	230,610		$	239,582	$	484,591		$	448,197		$	330,771	$	230,610		$	630,551		$	484,591
Total billings⁽¹⁾	$	237,355		$	231,069	$	461,056		$	442,429		$	304,469	$	237,355		$	583,940		$	461,056
Net income (loss)	$	(4,053	)	$	9,577	$	4,595		$	14,790		$	1,828	$	(4,053	)	$	(10,276	)	$	4,595
EBITDA ⁽¹⁾	$	10,101		$	22,963	$	31,075		$	37,465		$	11,671	$	10,101		$	7,574		$	31,075
Adjusted EBITDA⁽¹⁾	$	13,477		$	26,240	$	40,850		$	43,830		$	19,547	$	13,477		$	22,472		$	40,850
Capital expenditures						$	42,310		$	26,727							$	37,739		$	42,310
Free cash flow ⁽¹⁾						$	(39,775	)	$	(857	)						$	(39,257	)	$	(39,775	)

	June 30,			December 31,		June 30,			December 31,
	2018			2017		2019			2018
	(in thousands)					(in thousands)
Total debt, net of debt issuance costs	$	129,860		$	121,385	$	148,937		$	137,623
Net cash (debt) ⁽¹⁾	$	(17,380	)	$	24,557
Net debt ⁽¹⁾						$	(91,048	)	$	(53,155	)

We define total billings, a non-GAAP financial measure, as the total amounts we have invoiced our customers for products and services for which we are entitled to payment under the terms of our long-term supply agreements or other contractual agreements. We monitor total billings, and believe it is useful to present to investors as a supplement to our GAAP measures, because we believe it more directly correlates to sales activity and operations based on the timing of actual transactions with our customers, which facilitates comparison of our performance between periods and provides a more timely indication of trends in sales. Under GAAP, total net sales recognized on products in production represents the total amount that we have recognized as revenue under the cost-to-cost method for services performed during the period under our long-term supply agreements. Under our long-term supply agreements with our customers, we invoice our customers for wind blades once the blades pass certain acceptance procedures and title passes to our customers. Our customers generally pay us for the wind blades between 3015 to 6590 days after receipt of the invoice based on negotiated payment terms. However, in many cases, our customers request that we store their wind blades until they are ready to assemble wind turbines at a particular wind farm project. We have no control over when our customers decide to ship wind blades from our storage sites, and in some cases, our customers have stored large numbers of their wind blades on our sites for six months or more. However, we are contractually entitled to payment for those wind blades and, accordingly, invoice them when the blades are placed in storage.

We define EBITDA, a non-GAAP financial measure, as net income or loss plus interest expense (including losses on extinguishment of debt and net of interest income), income taxes and depreciation and amortization. We define adjusted EBITDA as EBITDA plus any share-based compensation expense, plus or minus any realized gains or losses from foreign currency ~~remeasurement.~~remeasurement, plus or minus any gains or losses from the sale of assets. Adjusted EBITDA is the primary metric used by our management and our board of directors to establish budgets and operational goals for managing our business and evaluating our performance. In addition, our credit agreement (the Credit ~~Facility~~Agreement) that we entered into in April 2018 contains minimum EBITDA (as defined in the Credit ~~Facility)~~Agreement) covenants with which we must comply. We monitor adjusted EBITDA as a supplement to our GAAP measures, and believe it is useful to present to investors, because we believe that it facilitates evaluation of our period-to-period operating performance by eliminating items that are not operational in nature, allowing comparison of our recurring core business operating results over multiple periods unaffected by differences in capital structure, capital investment cycles and fixed asset base. In addition, we believe adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and debt-service capabilities.

Our ~~uses~~use of EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.

In evaluating EBITDA and adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments noted herein. Our presentations of EBITDA and adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider EBITDA and adjusted EBITDA alongside other financial performance measures, including our net income (loss) and other GAAP measures.

We define free cash flow as net cash provided by (used in) operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding business acquisitions.

We define net cash (debt) as total unrestricted cash and cash equivalents less the total principal amount of debt outstanding. The total principal amount of debt outstanding is comprised of the long-term debt and current maturities of long-term debt as presented in our condensed consolidated balance sheets adding back any debt issuance costs and discounts. We believe that the presentation of net cash (debt) provides useful information to investors because our management reviews net cash (debt) as part of our oversight of overall liquidity, financial flexibility and leverage. Net cash (debt) is important when we consider opening new plants and expanding existing plants, as well as for capital expenditure requirements.

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

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
	(in thousands)												(in thousands)
Net sales	$	230,610		$	239,582		$	484,591		$	448,197		$	330,771		$	230,610		$	630,551		$	484,591
Change in contract assets		(1,356	)		(6,460	)		(25,752	)		(3,722	)
Change in gross contract assets														(26,691	)		(1,356	)		(43,747	)		(25,752	)
Foreign exchange impact⁽¹⁾		8,101			(2,053	)		2,217			(2,046	)		389			8,101			(2,864	)		2,217
Total billings	$	237,355		$	231,069		$	461,056		$	442,429		$	304,469		$	237,355		$	583,940		$	461,056

Net income (loss)	$	(4,053	)	$	9,577		$	4,595		$	14,790		$	1,828		$	(4,053	)	$	(10,276	)	$	4,595
Adjustments:
Depreciation and amortization		6,130			4,765			13,202			8,716			7,125			6,130			17,784			13,202
Interest expense (net of interest income)		2,672			2,924			5,969			5,931			2,243			2,672			4,191			5,969
Loss on extinguishment of debt		3,397			—			3,397			—			—			3,397			—			3,397
Income tax provision		1,955			5,697			3,912			8,028
Income tax provison (benefit)														475			1,955			(4,125	)		3,912
EBITDA		10,101			22,963			31,075			37,465			11,671			10,101			7,574			31,075
Share-based compensation expense		2,611			2,044			4,999			3,751			1,937			2,611			2,922			4,999
Realized loss on foreign currency remeasurement		765			1,233			4,776			2,614			967			765			4,769			4,776
Realized loss on sale of assets														4,972			—			7,207			—
Adjusted EBITDA	$	13,477		$	26,240		$	40,850		$	43,830		$	19,547		$	13,477		$	22,472		$	40,850

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2019			2018
	(in thousands)						(in thousands)
Net cash provided by operating activities	$	2,535		$	25,870
Net cash provided by (used in) operating activities							$	(1,518	)	$	2,535
Less capital expenditures		(42,310	)		(26,727	)		(37,739	)		(42,310	)
Free cash flow	$	(39,775	)	$	(857	)	$	(39,257	)	$	(39,775	)

	June 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
	(in thousands)						(in thousands)
Cash and cash equivalents	$	113,995		$	148,113		$	58,664		$	85,346
Less total debt, net of debt issuance costs		(129,860	)		(121,385	)		(148,937	)		(137,623	)
Less debt issuance costs		(1,515	)		(2,171	)		(775	)		(878	)
Net cash (debt)	$	(17,380	)	$	24,557
Net debt							$	(91,048	)	$	(53,155	)

	Three Months Ended				Six Months Ended				Three Months Ended						Six Months Ended
	June 30,				June 30,				June 30,						June 30,
	2018		2017		2018		2017		2019			2018			2019			2018
Sets		576		692		1,145		1,328		716			576			1,378			1,145
Estimated megawatts		1,544		1,620		3,008		3,080		2,029			1,544			3,890			3,008
Utilization										70	%		72	%		68	%		72	%
Dedicated manufacturing lines		52		46		52		46		54			52			54			52
Total manufacturing lines installed		40		39		40		39
Manufacturing lines installed										50			40			50			40
Manufacturing lines in operation										30			26			28			26
Manufacturing lines in startup		7		9		7		9		13			7			14			7
Manufacturing lines in transition		7		—		7		—		7			7			8			7

Key operating metrics consist of sets invoiced, estimated megawatts of energy capacity for wind blade sets invoiced, utilization, dedicated manufacturing lines, manufacturing lines installed, manufacturing lines in operation, manufacturing lines in startup and manufacturing lines in transition.

Sets represents the number of wind blade sets, consisting of three wind blades each, which we invoiced worldwide during the period. We monitor sets and believe that presenting sets to investors is helpful because we believe that it is the most direct measurement of our manufacturing output during the period. Sets primarily impact net sales and total billings.

Estimated megawatts are the energy capacity to be generated by wind blade sets invoiced in the period. Our estimate is based solely on name-plate capacity of the wind turbine on which ~~our~~the wind blades we manufacture are expected to be installed. We monitor estimated megawatts and believe that presenting estimated megawatts to investors is helpful because we believe that it is a commonly followed measurement of energy capacity across our industry and provides an indication of our share of the overall wind blade market.

Utilization represents the percentage of the number of wind blades invoiced during the period compared to the total potential wind blade capacity of manufacturing lines installed at the end of the period.

Dedicated manufacturing lines are the number of wind blade manufacturing lines that we have dedicated to our customers pursuant to our long-term supply agreements at the end of the period. We monitor dedicated manufacturing lines and believe that presenting this metric to investors is helpful because we believe that the number of dedicated manufacturing lines is the best indicator of demand for ~~our~~the wind blades ~~from~~we manufacture for customers under our long-term supply agreements in any given period. We believe that dedicated manufacturing lines provide an understanding of additional capacity within an existing facility. Dedicated manufacturing lines primarily impacts our net sales and total billings.

~~Total manufacturing~~Manufacturing lines installed represents the number of wind blade manufacturing lines installed and either in operation, startup or transition at the end of the period. We believe that total manufacturing lines installed provides an understanding of the number of manufacturing lines installed and either in operation, startup or transition.

Manufacturing lines in operation represents the number of wind blade manufacturing lines installed less the number of manufacturing lines in startup and in transition.

Manufacturing lines in startup is the number of ~~dedicated~~ wind blade manufacturing lines that were in a startup phase during the pre-production and production ramp up period, pursuant to the opening of a new manufacturing facility, the expansion of an existing manufacturing facility or the addition of new manufacturing lines in an existing manufacturing facility. We monitor and present this metric because we believe it helps investors to better understand the impact of the startup phase of our new manufacturing facilities on our gross profit and net income.

Manufacturing lines in transition is the number of wind blade manufacturing lines that were being transitioned to a new wind blade model during the period. We monitor and present this metric because we believe it helps investors to better understand the impact of these transitions on our gross profit and net income.

Three Months Ended June 30, ~~2018~~2019 Compared to Three Months Ended June 30, ~~2017~~2018

The following table summarizes certain information relating to our operating results and related percentage of net sales for the three months ended June 30, ~~2018~~2019 and ~~2017~~2018 that has been derived from our unaudited condensed consolidated financial statements.

	Three Months Ended										Three Months Ended
	June 30,										June 30,
	2018					2017					2019					2018
	(dollars in thousands)										(dollars in thousands)
Net sales	$	230,610		100.0	%	$	239,582		100.0	%	$	330,771		100.0	%	$	230,610		100.0	%
Cost of sales		198,235		86.0			199,117		83.1			285,319		86.3			198,235		86.0
Startup and transition costs		17,324		7.5			10,540		4.4			22,901		6.9			17,324		7.5
Total cost of goods sold		215,559		93.5			209,657		87.5			308,220		93.2			215,559		93.5
Gross profit		15,051		6.5			29,925		12.5			22,551		6.8			15,051		6.5
General and administrative expenses		10,989		4.8			10,752		4.5			9,208		2.8			10,989		4.8
Realized loss on sale of assets												4,972		1.5			—		0.0
Restructuring charges												3,874		1.2			—		0.0
Income from operations		4,062		1.7			19,173		8.0			4,497		1.3			4,062		1.7
Other expense		(6,160	)	(2.7	)		(3,899	)	(1.6	)		(2,194	)	(0.7	)		(6,160	)	(2.7	)
Income (loss) before income taxes		(2,098	)	(1.0	)		15,274		6.4			2,303		0.6			(2,098	)	(1.0	)
Income tax provision		(1,955	)	(0.8	)		(5,697	)	(2.4	)		(475	)	(0.1	)		(1,955	)	(0.8	)
Net income (loss)	$	(4,053	)	(1.8	)%	$	9,577		4.0	%	$	1,828		0.6	%	$	(4,053	)	(1.8	)%

Net sales for the three months ended June 30, ~~2018 decreased~~2019 increased by ~~$9.0~~$100.2 million or ~~3.7%~~43.4% to ~~$230.6~~$330.8 million compared to ~~$239.6~~$230.6 million in the same period in ~~2017.~~2018. Net sales of wind blades ~~decreased~~increased by ~~8.6%~~46.2% to ~~$206.4~~$301.8 million for the three months ended June 30, ~~2018~~2019 as compared to ~~$225.8~~$206.4 million in the same period in ~~2017.~~2018. The ~~decrease~~increase was primarily driven by a ~~17.3% decrease~~23% increase in the number of wind blades produced during the three months ended June 30, ~~2018~~2019 compared to the same period in ~~2017~~2018 largely as a result of ~~the~~increased production at our Turkey and Mexico facilities and an increase in ~~lines~~the year over year number of wind blades still in ~~transition,~~ the ~~lost volume from two contracts that expired~~production process at the end of ~~2017 and~~the period. This increase was also due to a ~~delayed customer startup. This was partially offset by~~ higher average sales ~~prices~~price due to the mix of wind blade models produced during the three months ended June 30, ~~2018~~2019 compared to the same period in ~~2017 and by foreign currency fluctuations.~~2018. Net sales from the manufacturing of precision molding and assembly systems during the three months ended June 30, ~~2018 increased~~2019 were $12.9 million as compared to $12.3 ~~million from $5.1~~ million in the same period in 2017. This increase was primarily the result of our customers requiring more precision molding and assembly systems from our tooling facilities during the three months ended June 30, 2018 as compared to the same period in 2017 to facilitate the transition of lines and new startup lines.2018. Additionally, there was a ~~$3.3~~$4.1 million increase in ~~non-wind related net~~transporation and other sales during the three months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017.~~2018. Total billings ~~were $237.4 million~~ for the three months ended June 30, ~~2018~~2019 increased by $67.1 million or 28.3% to $304.5 million compared to ~~$231.1~~$237.4 million in the ~~2017~~2018 period. The impact of the fluctuating U.S. dollar against the Euro atin our Turkey operations and the Chinese Renminbi atin our China operations on consolidated net sales and total billings for the three months ended June 30, ~~2018~~2019 was a net ~~increase for both categories~~decrease of ~~2.4%~~2.7% and 2.9%, respectively, as compared to ~~2017.~~2018.

Total cost of goods sold for the three months ended June 30, 2019 was $308.2 million and included $14.7 million related to 13 lines in startup in our plants in Mexico and China and the startup of new wind blade models for a customer in Turkey and $8.2 million of transition costs related to seven lines in transition during the quarter. This compares to total cost of goods sold for the three months ended June 30, 2018 ~~was~~of $215.6 million and included aggregate costs of $17.3 million related to startup costs in our new plants in Turkey and Mexico, the startup costs related to a new customer in Taicang, China and transition costs related to the seven lines in transition during the quarter. This compares to total cost of goods sold for the three months ended June 30, 2017 of $209.7 million, including aggregate costs of $10.5 million related to startup costs in our new plants in Turkey and Mexico and the startup of a new wind blade model for one of our customers in Dafeng, China. Cost of goods sold as a percentage of net sales ~~increased by six percentage points~~remained consistent during the three months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017,~~2018, driven primarily by ~~the increase in startup and transition costs and foreign currency fluctuations, partially offset by improved operating efficiencies and~~ the impact of savings in raw material costs and foreign currency fluctuations, offset by the extended startup of our Newton, Iowa transportation facility, a significant increase in underutilized labor in Matamoros, Mexico and a $5.6 million increase in startup and transition costs. The impact of the fluctuating U.S. dollar against the Euro, Turkish Lira, Chinese Renminbi and Mexican Peso ~~increased~~decreased consolidated cost of goods sold by ~~0.5%~~5.0% for three months ended June 30, ~~2018~~2019 as compared to ~~2017.~~2018.

General and administrative expenses for the three months ended June 30, ~~2018~~2019 totaled $9.2 million, or 2.8% of net sales, compared to $11.0 million, ~~as compared to $10.8 million~~or 4.8% of net sales, for the same period in ~~2017. As~~2018. The decrease was primarily driven by lower incentive compensation and a ~~percentage~~reduction in the performance assumptions related to certain of ~~net sales, general and administrative expenses were 4.8%~~our share-based plans.

Realized loss on sale of assets for the three months ended June 30, ~~2018, up 4.5% in~~2019 totaled $5.0 million, comprised of $3.1 million of realized losses on the sale of assets at our corporate and manufacturing facilities and $1.9 million of realized losses on the sale of receivables under supply chain financing arrangements with our customers. There were no corresponding charges for the same period in ~~2017.~~2018.

Restructuring charges, primarily relating to the closing of our Taicang City, China manufacturing facility, for the three months ended June 30, 2019 totaled $3.9 million with no corresponding charges for the same period in 2018. These charges included $3.3 million of severance benefits to terminated employees and $0.6 million of other charges, primarily related to exit costs.

Other expense totaled ~~$6.2~~$2.2 million for the three months ended June 30, ~~2018~~2019 as compared to ~~$3.9~~$6.2 million for the same period in ~~2017.~~2018. The ~~amount for the three months ended June 30, 2018~~decrease was primarily ~~comprised of~~due to a $3.8 million decrease in interest expense of $2.7 million, a loss on extinguishment of debt of $3.4 million and realized losses on foreign currency remeasurement of $0.8 million, partially offset by miscellaneous income of $0.7 million. This compares to interest expense of $2.9 million and realized losses on foreign currency remeasurement of $1.2 million, partially offset by miscellaneous income of $0.3 million in the three months ended June 30, ~~2017.~~ 2019 as compared to the same period in 2018 primarily related to the loss on the extinguishment of debt of $3.4 million in the 2018 period.

Income ~~tax~~taxes reflected a provision ~~decreased to $2.0~~of $0.5 million for the three months ended June 30, ~~2018 from $5.7~~2019 as compared to a provision of $2.0 million for the same period in ~~2017.~~2018. The decrease was primarily due to the earnings mix by jurisdiction in the three months ended June 30, 2019 as compared to the same period in 2018. Our annualized effective tax rate for the 2019 period is higher than in the comparable 2018 period ~~was significantly higher than the 2017 comparable period rate primarily~~ due to ~~earnings mix by jurisdiction.~~losses not benefited in jurisdictions where a full valuation allowance is recorded.

Net ~~loss~~income for the three months ended June 30, ~~2018~~2019 was ~~$4.1~~$1.8 million as compared to a net ~~income~~loss of ~~$9.6~~$4.1 million in the same period in ~~2017.~~2018. The ~~decrease~~increase was primarily due to the reasons set forth above. ~~Diluted~~The diluted earnings per share was $0.05 for the three months ended June 30, 2019, compared to a net loss per share ~~was~~of $0.12 for the three months ended June 30, ~~2018, compared to diluted earnings per share of $0.28 for the three months ended June 30, 2017.~~2018.

The following table summarizes our net sales and income (loss) from operations by our four geographic operating segments for the three months ended June 30, ~~2018~~2019 and ~~2017~~2018 that has been derived from our unaudited condensed consolidated financial statements.

	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2018		2017		2019		2018
Net Sales	(in thousands)				(in thousands)
U.S.	$	44,695	$	47,615	$	39,858	$	44,695
Asia		77,931		89,283		84,699		77,931
Mexico		56,353		50,468		95,362		56,353
EMEA		51,631		52,216
EMEAI						110,852		51,631
Total net sales	$	230,610	$	239,582	$	330,771	$	230,610

	Three Months Ended						Three Months Ended
	June 30,						June 30,
	2018			2017			2019			2018
Income (Loss) from Operations	(in thousands)						(in thousands)
U.S. (1)	$	(13,293	)	$	(6,348	)	$	(22,222	)	$	(13,293	)
Asia		9,386			20,554			131			9,386
Mexico		227			1,190			4,120			227
EMEA		7,742			3,777
EMEAI								22,468			7,742
Total income from operations	$	4,062		$	19,173		$	4,497		$	4,062

Net sales infor the three months ended June 30, ~~2018~~2019 decreased by $4.8 million or 10.8% to ~~$44.7~~$39.9 million compared to ~~$47.6~~$44.7 million in the same period in ~~2017.~~2018. Net sales of wind blades decreased to ~~$33.7~~$26.6 million during the three months ended June 30, ~~2018~~2019 as compared to ~~$42.6~~$33.7 million in the same period of ~~2017.~~2018. The decrease was primarily due to a ~~7.1%~~29% reduction in the number of wind blades produced in the three months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017~~2018 because of wind blade model transitions and a decline in the average sales prices of the same wind blade models delivered in both periods as a result of savings in raw material costs, a portion of which we share with our ~~customers.~~customer. Net sales from the manufacturing of precision molding and assembly systems during the three months ended June 30, ~~2018~~2019 were ~~$2.4~~$1.2 million compared to ~~$1.6~~$2.4 million during the same period in ~~2017.~~2018. Additionally, there was a ~~$5.2~~$3.4 million increase in ~~non-wind related net~~transportation and other sales during the three months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017.~~2018.

The loss from operations in the U.S. segment for the three months ended June 30, ~~2018~~2019 was ~~$13.3~~$22.2 million as compared to a loss of ~~$6.3~~$13.3 million in the same period in ~~2017. These~~2018. As previously discussed, the loss amounts include corporate general and administrative costs of ~~$11.0~~$9.2 million and ~~$10.8~~$11.0 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The 2019 operating results were also unfavorably impacted by the extended startup at our Newton, Iowa transportation facility and by the lower wind blade volume discussed ~~above during~~above.

Net sales for the three months ended June 30, ~~2018 as compared to the 2017 period notwithstanding higher tooling and non-wind related net sales.~~

~~Net sales in the three months ended June 30, 2018 decreased~~2019 increased by ~~$11.4~~$6.8 million or ~~12.7%~~8.7% to ~~$77.9~~$84.7 million compared to ~~$89.3~~$77.9 million in the same period in ~~2017.~~2018. Net sales of wind blades were ~~$67.2~~$78.4 million in the three months ended June 30, ~~2018~~2019 compared to ~~$83.7~~$67.2 million in the same period of ~~2017.~~2018. This ~~decrease~~increase was primarily due to an increase in the year over year number of wind blades still in the production process at the end of the period, primarily in Yangzhou, China, notwithstanding a ~~30.0%~~5% decrease year over year in the number of wind blades ~~produced in the three months ended June 30, 2018 as compared to the same period in 2017 primarily the result of lost volume from a contract that expired at the end of 2017.~~produced. This decrease was ~~partially offset~~driven by the reduced production in Taicang, China as a ~~higher~~result of our customer entering into a provisional self-administration procedure concerning its assets as ordered by the Local Court of Hamburg, Germany pursuant to the Insolvency Act in Germany as well as a slightly lower average sales ~~prices~~price due to the mix of wind blade models

produced during the three months ended June 30, ~~2018~~2019 compared to the same period in ~~2017.~~2018. Net sales from the manufacturing of precision molding and assembly systems totaled ~~$9.7 million during the 2018 compared to $3.4~~$5.7 million during the three months ended June 30, ~~2017.~~2019 compared to $9.7 million during the same period in 2018. The impact of the fluctuating U.S. dollar against the Chinese Renminbi had ~~a favorable~~an unfavorable impact of ~~1.9%~~2.8% on net sales during the three months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017.~~2018.

~~Income~~The income from operations in the Asia segment for the three months ended June 30, ~~2018~~2019 was ~~$9.4~~$0.1 million as compared to ~~$20.6~~income from operations of $9.4 million in the same period in ~~2017.~~2018. This decrease was driven by ~~lower wind blade volume discussed~~the insolvency of a customer as noted above and the resultant revenue reduction relating to our contract with that customer and the related restructuring charges in Taicang as well as the startup costs ~~incurred at our Taicang Port plant for a new customer. The~~in Yangzhou, China. This was partially offset by the fluctuating U.S. dollar against the Chinese Renminbi which had ~~an unfavorable~~a favorable impact of ~~2.5%~~4.0% on cost of goods sold for the three months ended June 30, ~~2018~~2019 as compared to the ~~2017~~2018 period.

Net sales in the three months ended June 30, ~~2018~~2019 increased by ~~$5.9~~$39.0 million or ~~11.7%~~69.2% to ~~$56.4~~$95.4 million compared to ~~$50.5~~$56.4 million in the same period in ~~2017.~~2018. The increase reflects a ~~15.1%~~38% net increase in overall wind blade volume ~~driven by greater volume at our second~~ and ~~third Mexico plants, partially offset by a decrease in wind blade volume at our first Mexico plant. These increases were also impacted by~~ an increase in the average sales ~~prices~~price of wind blades due to a change in the mix of wind blades between the two periods. Net sales from the manufacturing of precision molding and assembly systems during the three months ended June 30, 2019 were $6.0 million compared to $0.2 million during the same period in 2018.

~~Income~~The income from operations in the Mexico segment for the three months ended June 30, ~~2018~~2019 was ~~$0.2~~$4.1 million as compared to ~~$1.2~~income from operations of $0.2 million in the same period in ~~2017.~~2018. The ~~decrease in income from operations~~increase was due primarily to ~~higher startup costs related to our new facility in Matamoros, Mexico, partially offset by~~ the overall increase in wind blade volume noted above as well as from savings in raw material costs, ~~and production efficiencies. The decrease was also~~ partially offset by ~~the favorable impact of the~~increased startup and transition costs. The fluctuating U.S. dollar relative to the Mexican Peso did not have a significant impact on cost of goods sold ~~of 0.9%~~for the three months ended June 30, 2019 as compared to ~~2017.~~2018.

Net sales during the three months ended June 30, ~~2018 decreased~~2019 increased by ~~$0.6~~$59.2 million or ~~1.1%~~114.7% to ~~$51.6~~$110.9 million compared to ~~$52.2~~$51.6 million in the same period in ~~2017.~~2018. The ~~decrease~~increase was driven by ~~a 47.3% decrease~~an 111% increase in wind blade volume at our ~~first~~two Turkey ~~plant as a result of the December 31, 2017 conclusion of our supply agreement with GE, mostly~~plants. This increase was partially offset by a 33.3% increase in wind blade production in our second Turkey plant. We accelerated production for GE in 2017 and completed 100% of GE volume by the end of June 2017 to enable us to accelerate the transition of those manufacturing lines to two new manufacturing lines for another customerdecrease in the ~~second half of 2017. Other items having a favorable impact on net sales include overall higher~~ average sales ~~prices~~price of wind blades delivered in the comparative ~~periods due to the beginning of wind blade production in our second Turkey plant, the mix of wind blades sold during the period as well as the impact of the~~periods. The fluctuating U.S. dollar relative to the Euro had an unfavorable impact of ~~8.0%~~5.8% on net sales during the three months ended June 30, 2019 as compared to ~~2017.~~2018.

~~Income~~The income from operations in the ~~EMEA~~EMEAI segment for the three months ended June 30, ~~2018~~2019 was ~~$7.7~~$22.5 million as compared to ~~$3.8~~$7.7 million in the same period in ~~2017.~~2018. The increase was primarily driven by the increased wind blade production ~~in our second Turkey plant, improved operating efficiency~~ at our ~~first~~two Turkey ~~plant, savings in raw materials,~~plants, lower startup costs and the favorable impact on cost of goods sold of the fluctuation of the U.S. dollar relative to the Turkish Lira and Euro of ~~0.4% in~~13.7% for the three months ended June 30, ~~2018~~2019 as compared to ~~2017.~~2018, partially offset by higher material costs related to a new product at our second Turkey plant.

Six Months Ended June 30, ~~2018~~2019 Compared to Six Months Ended June 30, ~~2017~~2018

The following table summarizes certain information relating to our operating results and related percentage of net sales for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 that has been derived from our unaudited condensed consolidated financial statements.

	Six Months Ended										Six Months Ended
	June 30,										June 30,
	2018					2017					2019					2018
	(dollars in thousands)										(dollars in thousands)
Net sales	$	484,591		100.0	%	$	448,197		100.0	%	$	630,551		100.0	%	$	484,591		100.0	%
Cost of sales		409,223		84.5			381,655		85.2			568,357		90.2			409,223		84.5
Startup and transition costs		32,059		6.6			16,699		3.7			41,079		6.5			32,059		6.6
Total cost of goods sold		441,282		91.1			398,354		88.9			609,436		96.7			441,282		91.1
Gross profit		43,309		8.9			49,843		11.1			21,115		3.3			43,309		8.9
General and administrative expenses		22,152		4.6			19,058		4.3			17,193		2.7			22,152		4.6
Income from operations		21,157		4.3			30,785		6.8
Realized loss on sale of assets												7,207		1.1			—		0.0
Restructuring charges												3,874		0.6			—		0.0
Income (loss) from operations												(7,159	)	(1.1	)		21,157		4.3
Other expense		(12,650	)	(2.6	)		(7,967	)	(1.7	)		(7,242	)	(1.2	)		(12,650	)	(2.6	)
Income before income taxes		8,507		1.7			22,818		5.1
Income tax provision		(3,912	)	(0.8	)		(8,028	)	(1.8	)
Net income	$	4,595		0.9	%	$	14,790		3.3	%
Income (loss) before income taxes												(14,401	)	(2.3	)		8,507		1.7
Income tax benefit (provision)												4,125		0.7			(3,912	)	(0.8	)
Net income (loss)											$	(10,276	)	(1.6	)%	$	4,595		0.9	%

Net sales for the six months ended June 30, ~~2018~~2019 increased by ~~$36.4~~$146.0 million or ~~8.1%~~30.1% to ~~$484.6~~$630.6 million compared to ~~$448.2~~$484.6 million in the same period in ~~2017.~~2018. Net sales of wind blades increased by ~~4.5%~~31.4% to ~~$440.5~~$578.7 million for the six months ended June 30, ~~2018~~2019 as compared to ~~$421.5~~$440.5 million in the same period in ~~2017.~~2018. The increase was primarily driven by a 19% increase in the number of wind blades produced during the six months ended June 30, 2019 compared to the same period in 2018 largely as a result of increased production at our Turkey and Mexico facilities and an increase in the year over year number of wind blades still in the production process at the end of the period. The increase was also due to a higher average sales prices due to the mix of wind blade models produced during the six months ended June 30, ~~2018~~2019 compared to the same period in 2017 and by foreign currency fluctuations. This increase was partially offset by a 13.6% decrease in the number of wind blades produced during the six months ended June 30, 2018 compared to the same period in 2017 due to the number of transitions during the period as well as the loss of volume from two contracts that expired at the end of 2017.2018. Net sales from the manufacturing of precision molding and assembly systems during the six months ended June 30, ~~2018 increased~~2019 were $24.1 million as compared to $23.1 ~~million from $12.8~~ million in the same period in 2017. This increase was primarily the result of our customers requiring more precision molding and assembly systems from our tooling facilities during the six months ended June 30, 2018 as compared to the same period in 2017 as a result of the blade transitions and startups during the first half of 2018. Additionally, there was a ~~$7.0~~$6.8 million increase in ~~non-wind related net~~transporation and other sales during the six months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017.~~2018. Total billings for the six months ended June 30, ~~2018~~2019 increased by ~~$18.6~~$122.9 million or ~~4.2%~~26.7% to ~~$461.1~~$583.9 million compared to ~~$442.4~~$461.1 million in the same period in ~~2017.~~2018. The impact of the fluctuating U.S. dollar against the Euro atin our Turkey operations and the Chinese Renminbi atin our China operations on consolidated net sales and total billings for the six months ended June 30, ~~2018~~2019 was a ~~favorable increase~~net decrease of ~~2.9%~~3.1% and ~~3.0%~~3.3%, respectively, as compared to ~~2017.~~2018.

Total cost of goods sold for the six months ended June 30, 2019 was $609.4 million and included $30.8 million related to 14 lines in startup in our plants in Mexico and China and the startup of new wind blade models for a customer in Turkey and $10.3 million of transition costs related to the eight lines in transition during the period. This compares to total cost of goods sold for the six months ended June 30, 2018 ~~was~~of $441.3 million and included aggregate costs of $32.1 million related to startup costs in our new plants in Turkey and Mexico, the startup costs related to a new customer in Taicang, China and the transition of seven lines. This compares to total cost of goods sold for the six months ended June 30, 2017 of $398.4 million, including aggregate costs of $16.7 million related to startup costs in our new plants in Turkey and Mexico and the startup of a new wind blade model for one of our customers in Dafeng, China. Cost of goods sold as a percentage of net sales increased by ~~two~~six percentage points during the six months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017,~~2018, driven primarily by the extended startup of our Newton, Iowa transportation facility, a significant increase in underutilized labor in Matamoros, Mexico and a $9.0 million increase in startup and transition costs, ~~and foreign currency fluctuations,~~ partially offset by ~~improved operating efficiencies and~~ the impact of savings in raw material ~~costs.~~costs and foreign currency fluctuations. The impact of the fluctuating U.S. dollar against the Euro, Turkish Lira, Chinese Renminbi and Mexican Peso ~~increased~~decreased consolidated cost of goods sold by ~~1.8%~~5.7% for the six months ended June 30, ~~2018~~2019 as compared to ~~2017.~~2018.

General and administrative expenses for the six months ended June 30, ~~2018~~2019 totaled $17.2 million, or 2.7% of net sales, compared to $22.2 million, ~~as compared to $19.1 million~~or 4.6% of net sales, for the same period in ~~2017. As~~2018. The decrease was primarily driven by lower incentive compensation and a ~~percentage~~reduction in the performance assumptions related to certain of ~~net sales, general and administrative expenses were 4.6%~~our share-based plans.

Realized loss on sale of assets for the six months ended June 30, ~~2018, up slightly from 4.3% in~~2019 totaled $7.2 million, comprised of $4.1 million of realized losses on the sale of assets at our corporate and manufacturing facilities and $3.1 million of realized losses on the sale of receivables under supply chain financing arrangements with our customers. There were no corresponding charges for the same period in ~~2017. The increase~~2018.

Restructuring charges, primarily relating to the closing of our Taicang City, China manufacturing facility, for the six months ended June 30, 2019 totaled $3.9 million with no corresponding charges for the same period in ~~expenses was~~2018. These charges included $3.3 million of severance benefits to terminated employees and $0.6 million of other charges, primarily ~~driven by additional costs incurred~~ related to ~~the implementation of ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ exit costs.(Topic 606), costs related to our work related to the Sarbanes-Oxley Act, costs related to our advanced engineering center, increased personnel costs from filling our key global positions to support our growth and diversification strategy and additional depreciation expense related to our enhanced corporate infrastructure. These increases were mostly offset by a $1.2 million decrease in share-based compensation expense.

Other expense totaled ~~$12.7~~$7.2 million for the six months ended June 30, ~~2018~~2019 as compared to ~~$8.0~~$12.7 million for the same period in ~~2017.~~2018. The ~~amount for the six months ended June 30, 2018~~decrease was primarily ~~comprised of~~due to a $5.2 million decrease in interest expense ~~of $6.0 million, realized losses on foreign currency remeasurement of $4.8 million and a loss on extinguishment of debt of $3.4 million, partially offset by miscellaneous~~

income of $1.5 million. This compares to interest expense of $6.0 million and realized losses on foreign currency remeasurement of $2.6 million, partially offset by miscellaneous income of $0.6 million in the six months ended June 30, ~~2017.~~

2019 as compared to the same period in 2018 primarily related to the loss on the extinguishment of debt of $3.4 million in the 2018 period.

Income ~~tax provision decreased to $3.9~~taxes reflected a benefit of $4.1 million for the six months ended June 30, ~~2018 from $8.0~~2019 as compared to a provision of $3.9 million for the same period in ~~2017.~~

2018. The decrease in taxes was primarily due to the pretax loss in 2019 as compared to pretax income in 2018. Our annualized effective tax rate for the 2019 period is higher than in the comparable 2018 period ~~was significantly higher than the 2017 comparable period rate primarily~~ due to ~~earnings mix by jurisdiction.~~losses not benefited in jurisdictions where a full valuation allowance is recorded.

Net ~~income~~loss for the six months ended June 30, ~~2018~~2019 was ~~$4.6~~$10.3 million as compared to ~~$14.8~~net income of $4.6 million in the same period in ~~2017.~~2018. The decrease was primarily due to the reasons set forth above. ~~Diluted~~The net loss per share was $0.29 for the six months ended June 30, 2019, compared to diluted earnings per share ~~was~~of $0.13 for the six months ended June 30, ~~2018, compared to $0.44 for the six months ended June 30, 2017.~~2018.

The following table summarizes our net sales and income (loss) from operations by our four geographic operating segments for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 that has been derived from our unaudited condensed consolidated financial statements.

	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2019		2018
Net Sales	(in thousands)				(in thousands)
U.S.	$	90,819	$	95,582	$	81,486	$	90,819
Asia		155,601		158,780		153,417		155,601
Mexico		114,317		97,416		180,027		114,317
EMEA		123,854		96,419
EMEAI						215,621		123,854
Total net sales	$	484,591	$	448,197	$	630,551	$	484,591

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2019			2018
Income (loss) from Operations	(in thousands)						(in thousands)
U.S. (1)	$	(22,343	)	$	(13,674	)	$	(36,725	)	$	(22,343	)
Asia		15,803			33,348			(8,669	)		15,803
Mexico		4,485			4,034			3,696			4,485
EMEA		23,212			7,077
Total income from operations	$	21,157		$	30,785
EMEAI								34,539			23,212
Total income (loss) from operations							$	(7,159	)	$	21,157

Net sales in the six months ended June 30, ~~2018~~2019 decreased by ~~$4.8~~$9.3 million or ~~5.0%~~10.3% to ~~$90.8~~$81.5 million compared to ~~$95.6~~$90.8 million in the same period in ~~2017.~~2018. Net sales of wind blades decreased to ~~$72.6~~$58.5 million during the six months ended June 30, ~~2018~~2019 from ~~$84.5~~$72.6 million in the same period of ~~2017.~~2018. The decrease was primarily due to a ~~5.6%~~19% reduction in the number of wind blades produced in the six months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017~~2018 because of wind blade model transitions and a decline in the average sales prices of the same wind blade models delivered in both periods as a result of savings in raw material costs, a portion of which we share with our ~~customers.~~customer. Net sales from the manufacturing of precision molding and assembly systems during the six months ended June 30, ~~2018~~2019 were ~~$4.2~~$1.4 million compared to ~~$4.9~~$4.2 million during the same period in ~~2017.~~2018. Additionally, there was a ~~$7.9~~$7.7 million increase in ~~non-wind related net~~transportation and other sales during the six months ended June 30, ~~2018~~2019 as compared to ~~2017.~~the same period in 2018.

The loss from operations in the U.S. segment for the six months ended June 30, ~~2018~~2019 was ~~$22.3~~$36.7 million as compared to a loss of ~~$13.7~~$22.3 million in the same period in ~~2017. These~~2018. As previously discussed, the loss amounts include corporate general and administrative costs of $17.2 million and $22.2 million for the six months ended June 30, 2019 and 2018, ~~compared to $19.1 million for the six months ended June 30, 2017.~~respectively. The increase in the corporate general and administrative costs was primarily driven by additional costs incurred related to the implementation of Topic 606, costs related to our work related to the Sarbanes-Oxley Act, increased personnel costs from filling our key global positions to support our growth and diversification strategy, costs related to our advanced engineering center and additional depreciation expense related to our enhanced corporate infrastructure. These increases were mostly offset by a $1.2 million decrease in share-based compensation expense. The2019 operating results were ~~also~~ unfavorably impacted by the extended startup at our Newton, Iowa transportation facility and by the lower wind blade volume discussed ~~above during the six months ended June 30, 2018 as compared to the 2017 period.~~

Net sales in the six months ended June 30, ~~2018~~2019 decreased by ~~$3.2~~$2.2 million or ~~2.0%~~1.4% to ~~$155.6~~$153.4 million compared to ~~$158.8~~$155.6 million in the same period in ~~2017.~~2018. Net sales of wind blades were ~~$135.4~~$140.5 million in the six months ended June 30, ~~2018~~2019 as compared to ~~$149.0~~$135.4 million in the same period of ~~2017.~~2018. The ~~decrease~~increase in the net sales of wind blades was primarily due to an increase in the year over year number of wind blades still in the production process at the end of the period, primarily in Yangzhou, China, notwithstanding a ~~24.5%~~7% decrease year over year in the number of wind blades produced ~~during~~driven by the ~~six months ended June 30, 2018 compared to the same period~~reduced production in ~~2017 primarily due to the expiration~~Taicang, China as a result of a contract at the end of 2017 and the delayed startup of a new customer in 2018. This decrease was partially offset by a higher average sales prices due to the mix of wind blade models produced during the six months ended June 30, 2018 compared to the same period in 2017.Senvion’s insolvency. Net sales from the manufacturing of precision molding and assembly systems totaled ~~$17.9~~$11.9 million during the ~~2018~~2019 period compared to ~~$7.1~~$17.9 million during the six months ended June 30, ~~2017.~~2018. The impact of the fluctuating U.S. dollar against the Chinese Renminbi had a ~~favorable~~unfavorable impact of ~~1.8%~~2.8% on net sales during the six months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017.~~2018.

~~Income~~The loss from operations in the Asia segment for the six months ended June 30, ~~2018~~2019 was ~~$15.8~~$8.7 million as compared to ~~$33.3~~income from operations of $15.8 million in the same period in ~~2017.~~2018. This decrease was driven by the insolvency of a customer as noted above and the resultant revenue reduction relating to our contract with that customer and the related restructuring charges in Taicang as well as the startup costs ~~incurred at our Taicang Port plant for a new customer and lower wind blade volume discussed above. The~~in Yangzhou, China. This was partially offset by the fluctuating U.S. dollar against the Chinese Renminbi which had ~~an unfavorable~~a favorable impact of ~~3.0%~~4.4% on cost of goods sold for the six months ended June 30, ~~2018~~2019 as compared to the ~~comparable 2017~~2018 period.

Net sales in the six months ended June 30, ~~2018~~2019 increased by ~~$16.9~~$65.7 million or ~~17.3%~~57.5% to ~~$114.3~~$180.0 million compared to ~~$97.4~~$114.3 million in the same period in ~~2017.~~2018. The increase reflects ~~an 8.2%~~a 31% net increase in overall wind blade volume, ~~driven by greater volume at our second and third Mexico plants, partially offset by a decrease in wind blade volume at our first Mexico plant. These increases were also impacted by~~ an increase in the average sales ~~prices~~price of wind blades due to a change in the mix of wind blades between ~~periods.~~the two periods and an increase in the year over year number of wind blades still in the production process at the end of the period, primarily in Matamoros, Mexico. Net sales from the manufacturing of precision molding and assembly systems during the six months ended June 30, 2019 were $10.8 million compared to $1.0 million during the same period in 2018.

~~Income~~The income from operations in the Mexico segment for the six months ended June 30, ~~2018~~2019 was ~~$4.5~~$3.7 million as compared to ~~$4.0~~$4.5 million in the same period in ~~2017.~~2018. The ~~increase~~decrease was driven by increased startup and transition costs, partially offset by the overall increase in wind blade volume noted above as well as from savings in raw material costs and production efficiencies. The fluctuating U.S. dollar relative to the Mexican Peso had an unfavorable impact of 0.3% on cost of goods sold for the six months ended June 30, 2018 compared to the same period in 2017.costs.

Net sales during the six months ended June 30, ~~2018~~2019 increased by ~~$27.4~~$91.8 million or ~~28.5%~~74.1% to ~~$123.9~~$215.6 million compared to ~~$96.4~~$123.9 million in the same period in ~~2017.~~2018. The increase was driven by a ~~94.0%~~91% increase in wind blade production inat our ~~second~~two Turkey ~~plant,~~plants. This increase was partially offset by a ~~45.2%~~ decrease in ~~wind blade volume at our first Turkey plant as a result of~~ the December 31, 2017 conclusion of our supply agreement with GE. We accelerated production for GE in 2017 and completed 100% of GE volume by the end of June 2017 to enable us to accelerate the transition of those manufacturing lines to two new manufacturing lines for another customer in the second half of 2017. Other items having a favorable impact on net sales include overall higher average sales ~~prices~~price of wind blades delivered in the comparative ~~periods due to the beginning of wind blade production in our second Turkey plant, the mix of wind blades sold during the period as well as the impact of the~~periods. The fluctuating U.S. dollar relative to the Euro had an unfavorable impact of ~~9.0% as compared to 2017.~~6.9% on net sales during the six months ended June 30, 2019.

~~Income~~The income from operations in the ~~EMEA~~EMEAI segment for the six months ended June 30, ~~2018~~2019 was ~~$23.2~~$34.5 million as compared to ~~$7.1~~$23.2 million in the same period in ~~2017.~~2018. The increase was primarily driven by the increased wind blade production ~~in our second Turkey plant, improved operating efficiency~~ at our ~~first~~two Turkey ~~plant~~plants, lower startup costs and ~~savings in raw materials. The~~the favorable impact on cost of goods sold of the fluctuation of the U.S. dollar relative to the Turkish Lira and Euro ~~had an 3.2% unfavorable impact on cost~~ of ~~goods sold in~~15.0% for the six months ended June 30, ~~2018~~2019 as compared to ~~2017.~~ 2018, partially offset by higher material costs related to a new product at our second Turkey plant.

Our primary needs for liquidity have been, and in the future will continue to be, capital expenditures, new facility startup costs, ~~transition costs,~~the impact of transitions, working capital and debt service costs. Our capital expenditures have been primarily related to machinery and equipment for new facilities or facility expansions. 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 borrowings on financing arrangements of ~~$5.9~~$6.3 million for the six months ended June 30, ~~2018~~2019 as compared to net borrowings on financing arrangements of ~~$4.9~~$5.9 million in the comparable period of ~~2017.~~2018. As of June 30, 2019 and December 31, 2018, we had ~~$131.4~~$149.7 million and $138.5 million in outstanding indebtedness, excluding debt issuance ~~costs.~~costs, respectively. As of June 30, ~~2018, as a result of the April 2018 refinancing of our prior senior secured credit facility,~~2019, we had an aggregate of ~~$100.0~~$79.2 million of remaining capacity and ~~$84.1~~$77.3 million of remaining availability under our various credit facilities. Working capital requirements have increased as a result of our overall growth and the need to fund higher accounts receivable and

inventory levels as our business volumes have ~~increased.~~increased as well as the increased level of transitions. Based upon current and anticipated levels of operations, we believe that cash on hand, available credit facilities and cash flow 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, ~~2018~~2019 and December 31, ~~2017,~~2018, we had unrestricted cash, cash equivalents and short-term investments totaling ~~$114.0~~$58.7 million and ~~$148.1~~$85.3 million, respectively. The June 30, ~~2018~~2019 balance includes ~~$33.0~~$18.5 million of cash located outside of the United States, including ~~$29.9~~$10.0 million in China, ~~$0.5~~$4.8 million in Turkey, ~~and $2.6~~$2.7 million in ~~Mexico.~~Mexico, $0.7 million in Denmark and $0.3 million in India. Our ability to repatriate funds from China to the United States is subject to a number of restrictions imposed by the Chinese government. We repatriate funds through several technology license and corporate/administrative service agreements. We are compensated quarterly based on agreed upon royalty rates for such ~~technology~~intellectual property licenses and quarterly fees for ~~corporate/administrative~~those services. Certain of our subsidiaries are limited in their ability to declare dividends without first meeting statutory restrictions of the People’s Republic of China, including retained earnings as determined under Chinese-statutory accounting requirements. Until 50% ($~~11.6 million)~~21.6 million as of December 31, 2018) of registered capital is contributed to a surplus reserve, our Chinese 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 Chinese operations can pay dividends equal to 100% of after-tax profit assuming other conditions are met. At December 31, ~~2017,~~2018, the amount of the surplus reserve fund was ~~$5.6~~$6.5 million.

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2019			2018
	(in thousands)						(in thousands)
Net income	$	4,595		$	14,790
Net income (loss)							$	(10,276	)	$	4,595
Depreciation and amortization		13,202			8,716			17,784			13,202
Realized loss on sale of assets								7,207			—
Restructuring charges								3,874			—
Share-based compensation expense		4,999			3,751			2,922			4,999
Loss on extinguishment of debt		3,397			—			—			3,397
Other non-cash items		260			286			103			260
Changes in assets and liabilities		(23,918	)		(1,673	)		(23,132	)		(23,918	)
Net cash provided by operating activities	$	2,535		$	25,870
Net cash provided by (used in) operating activities							$	(1,518	)	$	2,535

Net cash used in operating activities totaled $1.5 million for the six months ended June 30, 2019 and was primarily the result of a $23.1 million net increase in working capital and a $10.3 million net loss, partially offset by $17.8 million of depreciation and amortization, $7.2 million realized loss on sale of assets, a $3.9 million restructuring charge and $2.9 million of share-based compensation expense. The key components of the net increase in working capital include a $46.7 million increase in contract assets and liabilities, a $18.4 million increase in other noncurrent assets, a $14.4 million increase in other current assets, a $6.8 million increase in prepaid expenses, and a $4.1 million increase in inventories. These increases were partially offset by a $35.3 million increase in accounts payable and accrued expenses, a $17.9 million decrease in accounts receivable, a $6.1 million decrease in operating lease right of use assets and operating lease liabilities and a $6.1 million increase in accrued warranty. The changes in contract assets and liabilities, accounts receivable, accounts payable and accrued expenses and accrued warranty are primarily the result of the timing of production in the period.

Net cash provided by operating activities totaled $2.5 million for the six months ended June 30, 2018 and was primarily the result of $4.6 million of net income, $13.2 million of depreciation and amortization, $5.0 million of share-based compensation expense and a $3.4 million loss on the extinguishment of debt, mostly offset by a net increase of $23.9 million in working capital. The key components of the net increase in working capital include a $26.7 million increase in contract assets and liabilities, a $4.0 million increase in other noncurrent assets and a $1.5 million increase in inventory. These increases were partially offset by a $3.6 million increase in accrued warranty, a $2.1 million decrease in accounts receivable and a $1.9 million increase in accounts payable and accrued expenses. The working capital changes in contract assets and liabilities, accounts receivable, accounts payable and accrued expenses and accrued warranty are primarily the result of the timing of production in the period.

Net cash ~~provided by operating~~used in investing activities totaled ~~$25.9~~$37.7 million and $42.3 million for the six months ended June 30, ~~2017~~2019 and was primarily the result of $14.8 million of net income, $8.7 million of depreciation and amortization, $3.8 million of share-based compensation costs, partially offset by a $1.7 million net increase in working capital. The key components of the net increase in working capital include a $49.4 million increase in accounts receivable and a $1.9 million increase in other noncurrent assets. These increases were mostly offset by a $34.7 million increase in accounts payable and accrued expenses, a $5.6 million increase in accrued warranty, a $5.2 million decrease in prepaid expenses and other current assets and a $3.5 million decrease in contract assets and liabilities. The working capital changes in contract assets and liabilities, accounts receivable, accounts payable and accrued expenses and accrued warranty are primarily the result of the timing of production in the period.

~~Net cash used in investing activities totaled $42.3 million and $26.7 million for the six months ended June 30,~~ 2018, ~~and 2017,~~ respectively, driven primarily by capital expenditures for new facilities and expansion or improvements at existing facilities. The capital expenditures for the six months ended June 30, 2019 primarily related to our new manufacturing facility in Yangzhou, China, our second manufacturing facility in Turkey, our new tooling facility and the expansion of one of our blade manufacturing facilities in Juárez, Mexico and ~~costs to enhance~~continued investments in our ~~information technology systems.~~other existing facilities. The capital expenditures for the six months ended June 30, 2018 primarily related to ~~the~~ our new wind blade plant in Matamoros, Mexico, the expansion and improvements at our Taicang, China facility and second wind blade plant in Turkey, and costs to enhance our information technology systems. The capital expenditures for the six months ended June 30, 2017 primarily related to our new wind blade plants in Mexico and Turkey as well as the expansion of our wind blade facility in Dafeng, China.

We anticipate fiscal year ~~2018~~2019 capital expenditures of between ~~$85~~$95 million to ~~$90 million. We~~$100 million and we estimate that the cost that we will incur after June 30, ~~2018~~2019 to complete our current projects in process iswill be approximately ~~$9.2~~$31.7 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. These~~undertaken, which include new manufacturing facilities in ~~Matamoros, Mexico; Newton, Iowa~~Chennai, India, Yangzhou, China and ~~Yangzhou, China;~~our tooling facility in Juárez, Mexico and the continued investment in our existing China, Mexico and Turkey wind blade ~~facilities and costs to enhance our information technology systems.~~facilities.

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2019			2018
	(in thousands)						(in thousands)
Proceeds from term loans		74,435			—
Repayments of term loans		(74,972	)		(1,875	)
Proceeds from revolving and term loans								6,000			74,435
Repayments of revolving and term loans								—			(74,972	)
Net proceeds from accounts receivable financing		11,924			5,182			5,062			11,924
Proceeds from working capital loans		—			6,620			2,909			—
Repayments of working capital loans		—			(11,258	)
Net proceeds from (repayments of) other debt		(5,449	)		6,253
Principal repayments of finance leases								(5,471	)		—
Net repayments of other debt								(2,211	)		(5,449	)
Debt issuance costs		(281	)		—			—			(281	)
Proceeds from exercise of stock options		1,307			—			4,716			1,307
Repurchase of common stock including shares withheld in lieu of income taxes		(272	)		—			(559	)		(272	)
Net cash provided by financing activities	$	6,692		$	4,922		$	10,446		$	6,692

The net cash provided by financing activities totaled ~~$6.7~~$10.4 million for the six months ended June 30, ~~2018~~2019 compared ~~$4.9~~to $6.7 million of net cash provided by financing activities in the comparable period of ~~2017.~~2018. Net cash provided by financing activities for the six months ended June 30, 2019 primarily reflects the net proceeds from revolving loans and accounts receivable financing, proceeds from the exercise of stock options and proceeds from working capital loans, partially offset by principal repayments of finance leases and other growth-related debt. Net cash provided by financing activities for the six months ended June 30, 2018 primarily reflects the net proceeds from term loans, accounts receivable financing and ~~from~~ the exercise of stock options, partially offset by net repayments of term loans and other growth-related debt. Net cash provided by financing activities for the six months ended June 30, 2017 primarily reflects the proceeds from working capital loans, accounts receivable financing and other growth-related debt, partially offset by repayments of working capital loans and term loans.

During the six months ended June 30, ~~2018,~~2019, we repurchased ~~13,297~~18,917 shares of our common stock for ~~$0.3~~$0.6 million related to tax withholding requirements on restricted stock units which vested during the period.

In December ~~2016,~~2017, we amended ~~and restated the~~our previous credit facility (the ~~Restated~~ Credit Facility). The previous $100.0 million of available principal was replaced with a $75.0 million term loan and a $25.0 million revolving credit facility, which originally included a $15.0 million letter of credit sub-facility, which was increased to $20.0 million in April 2017. The borrowings under the Restated Credit Facility bore interest at a variable rate through maturity at the London Interbank Offered Rate (LIBOR), with a 1.0% floor, plus 5.75%. The Restated Credit Facility required us to make quarterly principal payments in the amount of $0.9 million of the outstanding principal loan balance commencing in March 2017, with the remaining outstanding balance to be repaid on or before December 30, 2020. The Restated Credit Facility contained customary affirmative covenants, negative covenants and events of default. The obligations under the Restated Credit Facility were secured by a lien on substantially all of our tangible and intangible property and by a pledge of 65% of the equity of our direct foreign subsidiaries, subject to customary exceptions and exclusions from collateral.

If we prepaid any of the outstanding principal loan balance prior to December 30, 2017, we would have been required to pay the lenders a premium equal to the amount of interest that otherwise would have been payable from the date of prepayment until December 30, 2017 plus 3.0% of the amount of the principal loan balance that was prepaid. If we prepaid any of the outstanding principal loan balance after December 30, 2017 through December 30, 2018, we would have been required to pay the lenders 2.0% of the principal loan balance that was prepaid, and if we were to have prepaid any of the outstanding loan balance after December 30, 2018 through December 30, 2019, we would have been required to pay a premium of 1.5% of the amount of the principal loan balance that was prepaid.

In connection with the Restated Credit Facility, in December 2016, we repaid the previous credit facility balance of $74.4 million, plus accrued interest, closing fees, a prepayment penalty and the reimbursement of certain lenders expenses incurred. In addition, we incurred debt issuance costs related to the Restated Credit Facility totaling $2.2 million which were being amortized to interest expense over the remaining term of the credit facility (48 months) using the effective interest method.

~~In December 2017, we amended the Restated Credit Facility~~ to consent to the restructuring of our parent and subsidiaries, decreased the variable interest rate to LIBOR, with a 1.0% floor, plus 5.25% and the amendment of certain capital expenditure and other financial covenants. In connection with this amendment, the amendment fee of $0.4 million was recorded as a debt issuance cost and was being amortized to interest expense over the remaining term of the ~~credit facility~~Credit Facility (36 months) using the effective interest method. As of December 31, 2017, the aggregate outstanding balance under the ~~Restated~~ Credit Facility was $74.1 million.

OnIn April 6, 2018, we entered into a new credit agreement (the Credit Agreement) with four lenders consisting of a multi-currency, revolving credit facility in an aggregate principal amount of $150.0 million, including a $25.0 million letter of credit sub-facility. On the closing date we drew down $75.4 million on the revolving credit facility in connection with the closing of the transactions contemplated by the Credit Agreement and used the proceeds to pay all outstanding amounts due and payable under the ~~Restated~~ Credit Facility, various fees and expenses and accrued interest. All borrowings and amounts outstanding under the Credit Agreement are scheduled to mature in April 2023.

In May 2019, the Credit Agreement was further amended to revise the definition of Consolidated EBITDA as utilized in certain of the financial covenants of the Credit Agreement.

In connection with the Credit Agreement, in the second quarter of 2018 we expensed $2.0 million of deferred financing costs associated with the ~~Restated~~ Credit Facility and a $1.4 million prepayment penalty within the caption “Loss on extinguishment of debt” in the ~~accompanying~~ condensed consolidated ~~statements of operations.~~income statements. In addition, ~~the Company~~we incurred debt issuance costs related to the Credit Agreement totaling ~~$1.2~~$1.0 million which will be amortized to interest expense over the five-year term of the Credit Agreement using the effective interest method.

Interest accrues at a variable rate equal to LIBOR plus ~~an initial~~a margin of ~~1.5% (3.56%~~1.0% (4.4% as of June 30, ~~2018)~~2019), which may vary based on our total net leverage ratio as defined in the Credit Agreement. Interest is paid monthly and we are not obligated to make any principal repayments prior to the maturity date ~~as long as~~provided we are not in default under the Credit Agreement. We may prepay ~~borrowing~~the borrowings under the Credit Agreement without penalty.

In April 2018, we also entered into an interest rate swap arrangement to fix a notional amount of $75.0 million of the Credit Agreement at an effective interest rate of ~~4.19%~~4.2% for a period of five years. As of June 30, 2019 and December 31, 2018, there was ~~$75.4~~$96.4 million and $90.4 million outstanding under the Credit ~~Agreement.~~Agreement, respectively.

Due to the revolving credit facility’s variable interest rate of LIBOR plus a competitive spread, we estimate that fair-value approximates the face value of these notes.

~~EMEA~~EMEAI: During 2014, we renewed a general credit agreement, as amended, with a financial institution in Turkey to provide up to 21.0 million Euro ~~or approximately $24.5 million as of June 30, 2018)~~ of short-term collateralized financing on invoiced accounts receivable of one of our customers in Turkey. Interest accrues annually at a ~~variable~~fixed rate of ~~the annual Euro Interbank Offered Rate (EURIBOR) plus 5.5% (5.5% as of June 30, 2018)~~9.1% and is paid quarterly. In December 2014, and later amended, we obtained an additional $5.0 million of unsecured financing in Turkey under the credit agreement, increasing the total facility. All credit agreement terms remained the same. The credit agreement does not have a maturity date, however the limits are reviewed in September of each year. ~~Amounts outstanding under this~~During the fourth quarter of 2018, we replaced the accounts receivable financing facility with the accounts receivable assignment agreement asdiscussed below. As of June 30, ~~2018~~2019 and December 31, ~~2017 include $14.8 million and $6.8 million, respectively, of accounts receivable financing and~~2018, there were no amounts outstanding under the unsecured financing ~~in either period.~~facility.

In ~~December~~ 2014, we entered into a credit agreement with a Turkish financial institution to provide up to $16.0 million of short-term financing of which $10.0 million is collateralized financing on invoiced accounts receivable of one of our customers in Turkey, $5.0 million is unsecured financing and $1.0 million is related to letters of guarantee. Interest accrues at a variable rate of the three month ~~EURIBOR~~Euro Interbank Offered Rate (EURIBOR) plus 6.5%. During the first quarter of 2018, the collateralized financing on invoiced accounts receivables and unsecured financing facilities were retired and the letters of guarantee limit was ~~decreased~~adjusted, later amended to ~~$0.6 million.~~1.4 million Euro (approximately $1.6 million as of June 30, 2019). No amounts were outstanding under this agreement as of June 30, ~~2018 or~~2019 and December 31, ~~2017.~~2018.

In ~~March~~ 2016, we entered into a general credit agreement, as amended, with a Turkish financial institution to provide up to ~~31.0~~39.0 million Euro (approximately ~~$36.1~~$44.3 million as of June 30, ~~2018)~~2019) of short-term financing of which ~~15.0~~28.0 million Euro (approximately ~~$17.5~~$31.8 million as of June 30, ~~2018)~~2019) is collateralized financing based on invoiced accounts receivables of two of ~~the EMEA segment’s~~our customers ~~15.0~~in Turkey, 10.0 million Euro (approximately ~~$17.5~~$11.4 million as of June 30, ~~2018)~~2019) for the collateralized financing of capital expenditures and 1.0 million Euro (approximately $1.1 million as of June 30, ~~2018)~~2019) related to letters of guarantee. Interest on the collateralized

financing based on invoiced accounts receivables of two of ~~its~~our customers in Turkey accrues at ~~the one month EURIBOR plus 5.75% (5.75%~~a fixed rate of 7.5% as of June 30, ~~2018) and the one month EURIBOR plus 6.25% (6.25% as of June 30, 2018)~~2019 and is paid quarterly with a maturity date equal to four months from the applicable invoice date. Interest on the collateralized capital expenditures financing accrues at the one month EURIBOR plus 6.75% (6.75% as of June 30, ~~2018)~~2019) with monthly principal repayments beginning in October 2017 with a final maturity date of December 2021. Interest on the letters of guarantee accrues at 2.00% annually with an amended final maturity date of ~~December 2018.~~July 2020. As of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, there was ~~$14.4~~$10.0 million and ~~$16.9~~$12.2 million outstanding under the collateralized financing of capital expenditures line, respectively. Additionally, as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, there was ~~$11.2~~$19.6 million and ~~$7.3~~$14.5 million, respectively, outstanding under the collateralized financing based on invoiced accounts ~~receivables, respectively.~~receivables.

In the fourth quarter of 2018, we entered into a credit agreement, as amended, with a Turkish financial institution to provide up to 118.6 million Turkish Lira (approximately $20.6 million as of June 30, 2019) of collateralized financing on invoiced accounts receivable of one of our customers in Turkey. Interest accrues at a fixed rate of 3.9% and is paid quarterly. The credit agreement does not have a maturity date, however the limit will be reviewed in October of each year. No amounts were outstanding under this agreement as of June 30, 2019 and December 31, 2018.

Due to the short-term nature of the unsecured financings in the EMEAI segment, we estimate that fair-value approximates the face value of the notes.

Asia:In February 2017, we entered into a credit agreement, as amended, with a Chinese financial institution to provide an unsecured credit line of up to 210.0 million Renminbi (approximately ~~$31.7~~$30.5 million as of June 30, ~~2018)~~2019) which can be used for the purpose of domestic and foreign currency loans, issuing customs letters of guarantee or other transactions approved by the lender. Interest on the credit line accrues at the ~~LIBOR~~Chinese central bank interest rate plus an applicable margin (4.8% as of June 30, 2019) and can be paid monthly, quarterly or at the time of the debt’s maturity (extended to January ~~2019)~~2020). As of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, there were ~~190.8~~77.8 million Renminbi (approximately ~~$28.8 million as of June 30, 2018)~~$11.3 million) and ~~127.0~~92.8 million Renminbi (approximately ~~$19.5 million as of December 31, 2017)~~$13.5 million) of letters of guarantee used for customs clearance outstanding, respectively. As of June 30, 2019, there was 20.0 million Renminbi (approximately $2.9 million) of working capital loans outstanding. As of December 31, 2018, there were no working capital loan amounts outstanding.

In March 2018, we entered into a credit agreement, as amended, with a Chinese financial institution to provide an unsecured credit line of up to 100.0 million Renminbi (approximately ~~$15.1~~$14.5 million as of June 30, ~~2018) of~~2019) which ~~70.0 million Renminbi (approximately $10.6 million as of June 30, 2018)~~ can be used as customs letters of ~~guarantee and 30.0 million Renminbi (approximately $4.5 million as of June 30, 2018can be used for working capital.~~guarantee. Interest on the credit line accrues at the ~~LIBOR~~Chinese central bank interest rate plus an applicable margin (4.8% at June 30, 2019) and can be paid monthly, quarterly or at the time of the debt’s maturity (in March 2023). As of June 30, 2019, there were 71.9 million Renminbi (approximately $10.5 million) of letters of guarantee used for customs clearance outstanding. As of December 31, 2018, there were no amounts outstanding under this credit agreement.

Equipment Leases and Other Arrangements: We have entered into certain ~~capital~~finance lease, sale-leaseback and equipment financing arrangements in the ~~United States,~~U.S., Mexico and ~~EMEA~~EMEAI for equipment used in our operations as well as for office use. These leases bear interest at rates ranging from 3.0% to 9.0% annually, and principal and interest are payable monthly. As of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, there was an aggregate total of ~~$15.5~~$20.8 million and ~~$18.5~~$21.4 million outstanding under these arrangements, respectively.

Operating Leases: We lease various facilities and equipment under non-cancelable operating lease agreements. As of June 30, ~~2018,~~2019, we leased a total of approximately ~~5.2~~6.2 million square feet in Dafeng, China; Taicang City, China; Yangzhou, China; Chennai, India; Izmir, Turkey; Kolding, Denmark; Newton, Iowa; Juárez, Mexico; Matamoros, Mexico; Santa Teresa, New Mexico; Warren, Rhode Island; Fall River, Massachusetts, as well as our corporate office in Scottsdale, Arizona. The terms of these leases range from 12 months to 120 months with annual payments approximating ~~$21~~$28 million for the full year ~~2018.~~2019.

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 operating lease arrangements and the accounts receivable assignment ~~agreement~~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 condensed consolidated financial statements and related notes.

~~In 2014, our~~Our Mexico segment ~~entered into~~has an existing accounts receivable assignment agreement with a financial ~~institution. Under this agreement,~~institution under which the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to one of our Mexico segment’s customers at a discount calculated based on an effective annual rate of LIBOR plus 2.75%.

In September 2018, our U.S. and Mexico segments entered into an accounts receivable assignment agreement, as amended, with a financial institution. Under this agreement, the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to one of our U.S. (Iowa location) and Mexico segment’s customers at a discount calculated based on LIBOR plus 1.25%.

In the fourth quarter of 2018, our EMEAI segment entered into an accounts receivable assignment agreement with a financial institution. Under this agreement, the financial institution may buy, on a non-recourse basis, up to 15.0 million Euro (approximately $17.1 million as of June 30, 2019) of the accounts receivable amounts related to one of our EMEAI segment’s customers at a discount calculated based on EURIBOR plus 2.65%.

In the fourth quarter of 2018, our EMEAI segment entered into an accounts receivable assignment agreement with a financial institution. Under this agreement, the financial institution buys, on a non-recourse basis, the accounts receivable amounts related to one of our EMEAI segment’s customers at a discount calculated based on EURIBOR plus 0.75%.

In the first quarter of 2019, our Asia and Mexico segments entered into separate accounts receivable purchase agreements with a financial institution. Under these agreements, the financial institution may buy, on a non-recourse basis, and hold outstanding at any time up to $30.0 million of a customer’s accounts receivable amounts in each of our Asia and Mexico segments (up to a combined total of $60.0 million) at a discount calculated based on the three month LIBOR plus 1.0% and the number of days from the date of purchase to maturity.

As ~~these~~the receivables are purchased by the financial ~~institution, they are~~institutions under the agreements as described in the preceding paragraphs, the receivables were removed from ~~the Mexico segment’s~~our balance sheet. During the three and six months ~~ending~~ended June 30, ~~2018, $23.0~~2019, $147.7 million and ~~$34.4~~$280.2 million of receivables were sold tounder the ~~financial institution,~~accounts receivable assignment agreements described above, respectively.

~~Effective January 1, 2018, we adopted the requirements of Topic 606 using the full retrospective method as further described in Note 1,~~ ~~Recently Issued Accounting Pronouncements - Revenue from Contracts with Customers~~ ~~and Note 2,~~ ~~Revenue from Contracts with Customers~~ to our condensed consolidated financial statements. We believe that the resulting accounting policy related to revenue recognition is a critical accounting policy because of the significance of revenue, the complexity of estimates when utilizing the percentage-of-completion method and the significant degree of judgment in evaluating recognition criteria.

~~Except as noted above, there~~There have been no other significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K.

For a discussion of recent accounting pronouncements, see Note 1, Recently Issued Accounting Pronouncements to our condensed consolidated financial statements.

During the six months ended June 30, ~~2018,~~2019, there have been no material changes to the contractual obligations reported in our Annual Report on Form 10-K, other than in the ordinary course of business.

We are exposed to market risk in the ordinary course of our business. These market risks are principally limited to changes in foreign currency exchange rates and commodity prices. We currently do not hedge our exposure to these risks.

Foreign Currency Risk. We conduct international operations in China, Mexico, Turkey and ~~Turkey.~~India. Our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the local currency of the transacting entity. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant domestic currency and then translated into U.S. dollars for inclusion in our condensed consolidated financial statements. In recent years, exchange rates between these foreign currencies and the U.S. dollar have fluctuated significantly and may do so in the future. A hypothetical change of 10% in the exchange rates for the countries above would have resulted in a change to income from operations of approximately ~~$1.6~~$5.4 million and ~~$4.1~~$1.6 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

Commodity Price Risk. We are subject to commodity price risk under agreements for the supply of our raw materials. We have not hedged ~~nor do we intend to hedge,~~ our commodity price exposure. We generally lock in pricing for our key raw materials for 12 months which protects us from price increases within that period. As many of our raw material supply agreements have meet or release clauses, if raw materials prices go down, we are able to benefit from the reductions in price. We believe that this adequately protects us from increases in raw material prices and also enables us to take full advantage of decreases.

Resin and resin systems are the ~~only~~primary commodities for which we do not have fixed pricing. Approximately 30% of the resin and resin systems we use is purchased under contracts controlled by two of our customers and therefore they receive/bear 100% of any increase or decrease in resin costs further limiting our exposure to price fluctuations. We believe that a 10% change in the price of resin and resin systems for the customers in which we are exposed to fluctuating prices would have had an impact to income from operations of approximately ~~$3.7~~$3.8 million and ~~$6.6~~$3.7 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Furthermore, this amount does not include the portion of any increase or decrease that would be shared with our customers under our long-term supply agreements, which is generally 70%.

Interest Rate Risk. As of June 30, ~~2018,~~2019, our ~~EMEA~~EMEAI segment has ~~three~~one general credit ~~agreements~~agreement with a Turkish financial ~~institutions~~institution which ~~are~~is tied to EURIBOR. ~~Each of the agreements contains collateralized financing on invoiced customer receivables, with two of the agreements also containing unsecured financing and the third~~This agreement ~~also containing collateralized financing of capital expenditures. As of June 30, 2018, there was $26.0 million of collateralized financing on invoiced customer receivables and $14.4 million of~~had collateralized financing of capital expenditures ~~outstanding.~~outstanding as of June 30, 2019 of $10.0 million. In addition, as of June 30, 2019, our Credit Agreement includes interest on the unhedged principal amount of $21.4 million which is tied to LIBOR. Also, as of June 30, 2019, our Asia segment has one credit agreement with a Chinese financial institution which is tied to the Chinese central bank interest rate. This agreement had working capital loans outstanding totaling $2.9 million. The ~~three EMEA general~~EMEAI and Asia credit agreements and our Credit Agreement noted above are the only variable rate debt that we had outstanding as of June 30, ~~2018~~2019 as all remaining working capital loans, accounts receivable financing and capital lease obligations are fixed rate instruments and are not subject to fluctuations in interest rates. ~~In addition, our new Credit Agreement includes interest on the unhedged principal amount of $0.4 million which is tied to LIBOR.~~ Due to the relatively low LIBOR and EURIBOR rates in effect as of June 30, ~~2018,~~2019, a 10% change in the LIBOR or EURIBOR rate would not have had a material impact on our future earnings, fair values or cash flows.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and operating effectiveness as of June 30, ~~2018~~2019 of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, ~~2018.~~2019.

As a result of the adoption of Topic 606, we have re-evaluated and established new internal controls related to revenue recognition. We are also currently updating our enterprise risk planning systems to accommodate Topic 606 and will continue to evaluate such internal controls.

~~Except as noted above, there have not been any other~~There were no changes in our internal control over financial reporting during the three months ended June 30, ~~2018,~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~From time to time, we may be involved in disputes or litigation relating to claims arising out of our operations.~~

In March 2015, a complaint was filed against us in the Superior Court of the State of Arizona (Maricopa County) by a former employee, alleging that we had agreed to ~~make certain cash payments to such~~compensate the employee upon any future sale or initial public offering of the Company. ~~We filed~~Upon completion of the June 2019 trial, the court ruled as a ~~motion~~matter of law in our favor on certain of the claims against us and the jury reached a verdict in our favor on the remainder of the claims against us. As a result of the trial, we were not obligated to ~~dismiss the complaint in April 2015, which was denied. We subsequently filed an answer~~pay any damages or losses to the complaint in July 2015 denying the substantive allegations of the complaint. The parties completed court-ordered mediation in December 2015 but were not able to reach a settlement. We filed a motion for summary judgment to dismiss the complaint in April 2016 and the court denied the motion in August 2016. The court recently postponed the trial date from August 2018 until June 2019. We continue to deny the substantive allegations of the complaint and intend to vigorously defend this lawsuit; however, we are currently unable to determine the ultimate outcome of this case.

~~In August 2015, we entered into a transition agreement with our~~ former Senior Vice President – Asia, pursuant to which that individual transitioned out of this role at the end of 2015 and was to serve in a consulting capacity in 2016 and 2017. In January 2016, following our discovery that the individual had materially violated the terms of the transition agreement, we terminated the consultancy for cause. In April 2016, an arbitration claim was filed in China by the individual with the Taicang Labor and Personnel Dispute Arbitration Committee alleging that we improperly terminated the transition agreement. The individual is demanding that we honor the terms of the transition agreement and pay compensation and fees under the transition agreement, which in the aggregate totals approximately $2.6 million. In addition, the individual is also challenging the validity of our termination of an option to purchase 164,880 shares of our common stock and 77,760 restricted stock units awarded under the 2015 Plan, which were canceled in January 2016 when the consultancy was terminated. The Taicang Labor and Personnel Dispute Arbitration Committee awarded damages to the individual of approximately $1.2 million but rejected the claims regarding the termination of the stock option and restricted stock unit awards. We subsequently appealed the arbitration award in favor of the individual to the Taicang Municipal People’s Court, which affirmed the arbitration award in June 2018. We have appealed this judgment to an appellate level court in the Jiangsu Province and the appeal remains pending. We previously established a reserve for these matters and do not believe the award, if upheld on appeal, will have a material impact on our operating results or financial condition.

In June 2018, Iowa OSHA, a division of the Iowa Department of Labor, issued a citation and notification of penalty to us alleging that certain of our workplace practices and conditions at our Newton, Iowa wind blade manufacturing facility had violated the Iowa Occupational Safety and Health Act. Specifically, the citation cited us for multiple alleged violations and proposed that we pay an aggregate penalty of $0.2 million. In June 2018, we notified Iowa OSHA that we were contesting all of the alleged violations and proposed penalties. In June 2018, the Labor Commissioner of the Iowa Department of Labor subsequently filed a complaint with the State of Iowa Employment Appeal Board, petitioning the appeal board to affirm the citation and notification of penalty that Iowa OSHA issued to us. In July 2018, we then filed a response with the appeal board denying the substantive allegations of the complaint. A hearing date has not yet been set and thus the matter remains pending.employee.

From time to time, we are party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which are covered by insurance. Upon resolution of any pending legal matters, we may incur charges in excess of presently established ~~reserves.~~reserves or our insurance policy limits. Our management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.

There have been no material changes to the Risk Factors (Part I, Item 1A) in our Annual Report on Form 10-K, which could materially affect ~~the Company’s~~our business, financial condition, and/or future results.

On July 21, 2016, our Registration Statement on Form S-1 (File No. 333-212093) was declared effective by the SEC for our IPO whereby we registered an aggregate of 7,187,500 shares of our common stock, including 937,500 shares of our common stock registered for sale by us upon the full exercise of the underwriters’ option to purchase additional shares. On July 27, 2016, we completed our IPO and sold 7,187,500 shares of our common stock at a price to the public of $11.00 per share. J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC acted as the managing underwriters. The total gross proceeds from the offering to us were $79.1Not applicable.

million. After deducting underwriting discounts and commissions of $4.6 million and offering expenses of $7.3 million, we received $67.2 million in net proceeds. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on July 22, 2016 pursuant to Rule 424(b) of the Securities Act. We continue to invest the remaining funds received in registered money market funds.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	TPIC	NASDAQ Global Market

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
Emerging growth company ☒

		Page

PART I. FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	5

	Condensed Consolidated Balance Sheets as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018	15

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, ~~2018~~2019 and ~~2017~~2018	26

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, ~~2018~~2019 and ~~2017~~2018	37

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2019	8

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2018~~2019 and ~~2017~~2018	49

	Notes to Unaudited Condensed Consolidated Financial Statements	510

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	4344

ITEM 4.	Controls and Procedures	4445

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	4546

ITEM 1A.	Risk Factors	4546

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4546

ITEM 3.	Defaults Upon Senior Securities	46

ITEM 4.	Mine Safety Disclosures	46

ITEM 5.	Other Information	46

ITEM 6.	Exhibits	47

SIGNATURES		48

	June 30,			December 31,
	2019			2018			$ Change
	(in thousands)
Gross contract liabilities	$	16,596		$	18,003		$	(1,407	)
Less: reclassification to contract assets		(14,000	)		(10,860	)		(3,140	)
Contract liabilities	$	2,596		$	7,143		$	(4,547	)

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019		2019
	(in thousands)		(in thousands)
Operating lease cost	$	8,184	$	15,937

Finance lease cost
Amortization of assets under finance leases	$	1,707	$	3,221
Interest on finance leases		388		796
Total finance lease cost	$	2,095	$	4,017

	Six Months Ended June 30, 2019
	U.S.		Asia		Mexico		EMEAI		Total
	(in thousands)
Wind blade sales	$	58,471	$	140,541	$	166,830	$	212,872	$	578,714
Precision molding and assembly systems sales		1,366		11,941		10,820		—		24,127
Transportation sales		12,656		—		—		—		12,656
Other sales		8,993		935		2,377		2,749		15,054
Total net sales	$	81,486	$	153,417	$	180,027	$	215,621	$	630,551

	Three Months Ended June 30, 2017
	U.S.		Asia		Mexico		EMEA		Total
Wind blade sales	$	42,568	$	83,713	$	48,469	$	51,003	$	225,753
Precision molding and assembly systems sales		1,608		3,400		134		—		5,142
Transportation sales		3,130		—		—		—		3,130
Other sales		309		2,170		1,865		1,213		5,557
Total net sales	$	47,615	$	89,283	$	50,468	$	52,216	$	239,582

	Operating			Finance
	Leases			Leases
	(in thousands)
Year Ending December 31,
2019	$	13,085		$	4,261
2020		26,228			6,418
2021		22,703			6,195
2022		21,659			5,426
2023		21,077			581
Thereafter		79,107			3
Total future minimum lease payments		183,859			22,884
Less: interest		(47,224	)		(2,125	)
Total lease liabilities	$	136,635		$	20,759

	December 31, 2017
	As Reported			Adoption of Topic 606			As Adjusted
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	148,113		$	—		$	148,113
Restricted cash		3,849			—			3,849
Accounts receivable		121,576			—			121,576
Contract assets		—			105,619			105,619
Inventories		67,064			(62,952	)		4,112
Inventories held for customer orders		64,858			(64,858	)		—
Prepaid expenses and other current assets		27,507			—			27,507
Total current assets		432,967			(22,191	)		410,776
Property, plant, and equipment, net		123,480			—			123,480
Goodwill		2,807			—			2,807
Intangible assets, net		150			958			1,108
Other noncurrent assets		14,130			4,261			18,391
Total assets	$	573,534		$	(16,972	)	$	556,562

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	166,743		$	—		$	166,743
Accrued warranty		29,163			1,256			30,419
Deferred revenue		81,048			(81,048	)		—
Customer deposits		10,134			(9,702	)		432
Current maturities of long-term debt		35,506			—			35,506
Contract liabilities		—			2,763			2,763
Total current liabilities		322,594			(86,731	)		235,863
Long-term debt, net of debt issuance costs and current maturities		85,879			—			85,879
Other noncurrent liabilities		4,444			494			4,938
Total liabilities		412,917			(86,237	)		326,680
Commitments and contingencies
Stockholders’ equity:
Common shares, $0.01 par value, 100,000 shares authorized and 34,049 shares issued and 34,021 shares outstanding at December 31, 2017		340			—			340
Paid-in capital		301,543			—			301,543
Accumulated other comprehensive loss		(558	)		—			(558	)
Accumulated deficit		(140,197	)		69,265			(70,932	)
Treasury stock, at cost, 28 shares at December 31, 2017		(511	)		—			(511	)
Total stockholders’ equity		160,617			69,265			229,882
Total liabilities and stockholders’ equity	$	573,534		$	(16,972	)	$	556,562

	Three Months Ended
	June 30, 2017
	As Reported			Adoption of Topic 606			As Adjusted
	(Unaudited)
Net sales	$	248,186		$	(8,604	)	$	239,582
Cost of sales		203,095			(3,978	)		199,117
Startup and transition costs		10,540			—			10,540
Total cost of goods sold		213,635			(3,978	)		209,657
Gross profit		34,551			(4,626	)		29,925
General and administrative expenses		10,752			—			10,752
Income from operations		23,799			(4,626	)		19,173
Other income (expense):
Interest income		11			—			11
Interest expense		(2,935	)		—			(2,935	)
Realized loss on foreign currency remeasurement		(1,233	)		—			(1,233	)
Miscellaneous income		258			—			258
Total other expense		(3,899	)		—			(3,899	)
Income before income taxes		19,900			(4,626	)		15,274
Income tax provision		(6,042	)		345			(5,697	)
Net income	$	13,858		$	(4,281	)	$	9,577

Weighted-average common shares outstanding:
Basic		33,737			33,737			33,737
Diluted		33,828			33,828			33,828

Net income per common share:
Basic	$	0.41		$	(0.13	)	$	0.28
Diluted	$	0.41		$	(0.13	)	$	0.28

	Common				Paid-in		Accumulated other comprehensive			Accumulated			Treasury stock,			Total stockholders'
	Shares		Amount		capital		loss			deficit			at cost			equity
	(Unaudited)
Balance at December 31, 2017 - as reported		34,049	$	340	$	301,543	$	(558	)	$	(140,197	)	$	(511	)	$	160,617
Cumulative effect of the adoption of Topic 606		—		—		—		—			69,265			—			69,265
Balance at December 31, 2017 - as adjusted		34,049	$	340	$	301,543	$	(558	)	$	(70,932	)	$	(511	)	$	229,882

Exhibit Number		Exhibit Description

10.1		Amendment No. 1 dated as of May 24, 2019 to Credit Agreement, dated as of April 6, 2018, among Registrant, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lender parties thereto

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Date: August 7, ~~2018~~2019	By:	/s/ ~~William E. Siwek~~Bryan Schumaker
		~~William E. Siwek~~Bryan Schumaker
		Chief Financial Officer
		(Principal Financial and Accounting Officer)