TPIC - Earnings call transcript Q2 2020

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Operator

Good afternoon, and welcome to TPI Composites Second Quarter 2020 Earnings Conference Call. Today’s call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I’d like to turn the conference over to Christian Edin, Investor Relations for TPI Composites. Thank you.

You may begin.

Christian Edin

operator. you, Thank welcome Earnings to TPI Second Composites I’d everyone XXXX Call. Quarter like to

be during assumptions filings today’s to with comments found our references and forward-looking and the includes We on We to also forward-looking any during discussed latest each any materially making Commission, any will call this on statements in undertake Today’s to statements forward-looking duty because and www.tpicomposites.com. be Securities in Actual or could the if non-GAAP which of made of from uncertainties. conference factors our current website, do can our this financial release Exchange assumptions, are not incorrect and presentation earnings statements. update subject key news and reports which our risks measures. of results differ are expectations based call other

information refer measures. Composites’ the presentation and to TPI definitional President information to should accompanying the Bill call slides and GAAP You historical to today’s the me in Siwek, turn for that, measures let comparable of contained reconciliations over the CEO. non-GAAP With financial

Bill Siwek

Christian, afternoon, and you Thank joining call. Thanks, everyone. our for good

QX status up our as they pandemic, Schumaker, world and financial we then March live believe of In safety and enabled global an activity, on which delivered our sales energy top joined review early of in Please impact million. our I’m a and under to by CFO. on and and XX% the of our Q&A. quarter, to brief with revenue estimated blade including Bryan In our the the market. were had in the of and in chain; will adjusted response over we quarter business our primarily the associates. second results of us well quarter associates in we facilities; of in operations on a of To supply wind to for detail. XXXX, our and today do we the of around was communities which impact practices and up EBITDA operational review protocols the supply start, the in finish safety our families we during manufacturing to wind adjusted and put second million to EBITDA to place call $X.X remains X. have the health sets The net And priority, Slide of their all as $XX million, update on that the will open addition to increase will and COVID-XX I pandemic overview agreements, produce manage provide COVID-XX the taking then but $XXX.X the respectively, our the briefly second Bryan the and related Christian, results discuss update quarter million, forecasted the our development an facilities is so. $XX current status TPI impact of unable turn effectively

that we today one two Mexico through Juàrez, through GE: an in in Iowa extend On announced one extended to Newton, business, and the with XXXX. XXXX; agreements our of option side through supply wind we with XXXX

technologies production line We to for in we an turbine will also be announced adding blades America. GE’s North that additional wind provide in Mexico

in of multiyear of agreement date start India with We with XXXX. manufacturing a also for Chennai, announced in the today that our lines Nordex facility we two first signed a production quarter planned

we and lines manufacturing added approximately potential value. $XXX With contract million contract these of extensions, new

Finally, with respect Wind. to

million. So totaling far global this agreements year, we’ve also service new $XX signed approximately

to by remainder we of produce XXXX, multiple meet transportation our as our to for activities Most of he Workhorse’s on producing the quarter background recently, throughout TPI. for to vehicle commercial GE was division tooling requirements responsible enable the of Jim production of and with Jim business, held of quarter creating the a opportunities leader talked continue volume with we appointed platform a role in ramp and continue and P&L diverse Chief to at commercial of GE volume at for a vehicles commercial relates expect XXXX of us as Commercial for make our experience And Wabtec company Commercial programs. ramp and and it Transportation leadership the begun beyond. from expect Corporation. delivery We’ve new As Chief volume the passenger brings merged both Workhorse to that $X transportation over we side the to XXXX XXX for integration North during production in Hilderhoff the last end XXXX. several needs and year Jim progress XX has electric the merger. responsible of the We existing about Officer, Corporation new Fortune February with parts commercial billion commercial to meet all to years Wabtec The within Jim GE. Officer revenue. America platforms. associated

Technology. appointed mitigate to with as volume Corporate Adan as accounting up over committed lost working while as remains in prior Corporation. Veritiv impacts as of and much remain our and our Accounting to locations Accounting years recently customer experience leadership the Gossar each to Adan And operating by customers for our strong. our We served to XX make Chief possible as we business the COVID-XX finance safely to demand of Controller of suppliers of turn X. Chief partnering to very Slide most TPI. served NASDAQ-listed as Finally, Officer. that, brings Officer of Please Adan Adan Reef

and progress imperatives of beginning the drive our the making COVID-XX. to to the costs outlined created very operational continue reduce improve year globally challenges at are also on the notwithstanding and imperatives, operations we those We by good

Finally, and times. ensure liquidity unpredictable as continuity secure these the we remain dynamic of to long-term TPI on our and focused business navigate we viability

during and $XXX.X and costs our And focusing at to capital amended million. support nonessential for and provide by the stood to we liquidity and quarter, reducing planned continue CapEx, COVID-XX expenditures other it our our on we cycle. initiatives manage end, To pandemic end, cash quarter that and credit XXXX of growth our XXXX. to As additional controlling the during conversion agreement flexibility deferring

Turning to you the world quick and update now around us I’ll take of give X. Slide operations. a our

the During our operations continued of second quarter, with in normal all we China facilities.

transition. volume a to continue more of to We a deliver the expect result plan, in pushing XXXX our part, than planned customer out original

May are India’s due We most of to the the our reduced a we manufacturing India April and curfew. in for Chennai, phase months of facility, start-up in with workforce and of imposed government operated the

quarter core now of in speed manufacturing as response This, of a on the COVID-XX, our We however, a June. reduced at orders May, we we production. Mexico shortage and normal levels. ahead during of middle facility operated capacity to of have in reduce facilities stay-at-home blade start-up operations, the Matamoros, as primarily slightly that which to government-mandated down to Since In to our full and production couple model, during normal been XX% April facility. in to We for our We shut moving at approximately the the back operated Turkey be running back production was July. weeks all of due mid-April, demands reduced resulted well Because of impacted. half restarted April, production second at levels blade we of we were of up to capacity first are capacity second during Izmir, ramped end and to caused temporarily operated our one QX, our from blade union related XXX% production the at impacted. in June, negatively production quarter Turkey by

shut factories the remainder the to Juàrez We approximately shut expect to fourth for down four be emergency weeks the down for of COVID-XX, approximately factory of transitions. weeks. capacity of near were for no three three the operating planned created our with the while year six early at April May, or by and at end sanitary in Due was

were impacted, production voluntarily volumes end negatively surrounding our office XXX% our until back been to and volume with negatively to to counties. get third back late facility negatively quarter manufacturing be impacted the QX On closely an to QX COVID-XX production was as paused did of duration We production levels Newton, slightly July. have restarted April capacity increase working May our governor’s volumes plant. well we XX, after in of of Iowa XXXX, will normal the due not to reopen due officials six since we in at impacted health the we and as the but Iowa levels our production on pause, production Our May.

Rhode our the Island not have pandemic. during impacted in operations materially been Finally,

update an on chain. Now supply

raw expect, have would our as one COVID-XX As by well. been impacted suppliers material

alternative localization operate our suppliers during do executing to supply Our global job our key supply supply an and continue raw uninterrupted materials locations agreements critical of of to through by excellent regional needed of factories as pandemic long-term securing consistent, strategy the to materials. and continues raw ensuring and/or that ensure a team

production. another not we at by challenges took stages in later. key barring COVID-XX. this will buildup had COVID-XX-related also short-term as also saw will COVID-XX. material any and tightness levels, market materials, in the disruption qualification in supply additional well caused to on disruptions. steps particular, reduce this proactive don’t of time, further and any pandemic of materials We of to working any capital, steps XXXX are market pre-COVID in our most Ecuador secure impact Bryan overall raw from PET essentially of balsa now The and expect the stocks risk raw date, wave is back of supply reflected material the supply foam in as demand in We delays impact safety or – a discuss early to which has These a significant To to core issues due

build-up the We are of on more working to also levels. inventory reducing normal

According Mackenzie, global from the to years. market, continues to demand subsequent XXXX, with for near is the Wood in As capacity term, relates XXXX remained in all pandemic strong as the XXXX XXXX pushed markets impact customers the wind to our nearly today, into impacted strengthening. of and it while

creating to project Wood years in Mackenzie XXXX in at end and be response the projects were So late XXXX and potential of expect XXXX the will the XXXX, commission XXXX, exacerbated U.S., U.S. some alleviate XXXX to coming in in May, subsequently help be In U.S. X.X updated to by strong. forecast one-year XXXX project challenges forecast, government the and delays be extension COVID-XX. that continue execution in which issued in difficulty to the for some for that gigawatts the we of in PTC or while its near is a installation and to COVID-XX installations by levels. commission to at completed

maximize to of quarterly push the Finally, have those our to certain enable transitions cancel either the transitions. production to lost strategic of them reduce customers mentioned desire or and last as out volume during call, to their during us to due decisions several indicated product amount

As be a currently number the beginning of previously we the planned will result, we approximately XX% estimate the year. than XXXX transitions in of at less

costs to COVID-XX. However, we of only be expect as XX% by transition caused a less delays result

does impact value billion by values that anticipated billion, we through last to $X.X contract we supply and nor extending minimum total two $X.X Turning short-term under offset extensions. larger produce We up which XXXX, in are models have The under operating new is XXXX contract and not increase will XXXX potential result guaranteed China $XXX or this as and that the Slide $X a approximately include is $X.X volume of added agreements second lines it net potential of the of contract our contracts, signing X. a and transitions existing contracts after blade new quarter million, additional some and billion. quarter year, respectively, from approximately a now minimum the include from sales. to This from contract do billion the

integration let shareholder focus continue that, drive the While me over operating operating primary down the drive costs expand long-term value. focused objective, With associates apply ensure to scale profitable and to safety turn of Bryan. remain the remains and our and our our on to of material supply, and capacity, our key we our to of call health on imperatives continuity growth ESG initiatives

Bryan Schumaker

XX refer All today to the year-over-year XX. Slides on be same to through made Bill. XXXX. will period a basis Please compared Thanks, comparisons in

under XXXX as blades increase by adversely we The of largely Net sets, China increase of of at net XXXX, quarter increased wind which produced in Matamoros, of first our make associated XX% non-cancelable facilities do to number the purchase million. wind pandemic. blade Start-up during million. produced by contracts production in increased $XXX.X by million and XXXX wind a QX orders million. period to as and second XX, the or driven pandemic. year-over-year $XX by blades XX% with the Mexico of so We unless XX% COVID-XX volume to were primarily impacted to $XXX.X the sales the Net and result by our unable approximately million costs up June facility. decreased QX a of COVID-XX our $XX lost sales for $XX million to long-term a increased the was but believe sales approximately result can are forecasted quarter For had XX.X% the by we in further of upon plants of half XXXX based our $XX.X were ending impacted transition

India, to suspension Mexico transitions by Turkey COVID-XX and the at our are and being impacted due production start-up However, facilities. temporary of

X.X% to sales million related to decrease to Our G&A $X.X quarter net net travel administrative sales. decreased primarily and expenses percentage by XXX a in as million. quarter. cost $X.X the a training during points of the general of This decrease basis was and for decreased

percentage G&A X.X% sales X.X% Before in share-based compensation, as net of was of a respectively. and and XXXX, XXXX QX

losses quarter same in in period the Our earnings as for XXXX, XXXX. was of expense tax-free COVID-XX. due of entity the forecasted annual losses that The the by effective compared rate by jurisdiction several to is to income QX in XX, XXXX revised impacted was for forecast applying tax XXXX, million a an March to quarter jurisdictions primarily was tax for a XXXX annual to $XX.X at due the specifically, as effective period-over-period. million a that a is by XX, in income impacted to located tax change $X.X June More also rate and mix was in forecasted significantly from the tax increase comparison result zone. the

of the we amount For changes from back tax over decrease are year-to-date income expecting as to to tax the half expense of expense XX% the mix year, year. the XX% jurisdictional the

million income the of our for was decrease the million to above. for be as to The taxes Net primarily noted $XX the the period to approximately XXXX. forecasting We reasons million net cash same in due $XX.X loss was are year. to $XX million quarter $X.X compared in

suspension labor the is impacted also was typically facilities production under production the with health of net a along the $X.XX reduction change with quarter warranty in $X other Mexico, lost addition, customer specific loss isolated costs in prior these production associates early million our million in due by period reduced warranty share Net income blade have additional with quality per adversely and in With and XXXX. temporary to was issues measures a share net February India, In loss incurred $XX volume future. for quality a loss since occurring to of and types per non-cancelable are put of approximately the our This customer with from primarily Iowa, to in to campaign issues locations, accrual. in XXXX and by warranty XXXX related models. Notwithstanding, to in associated safety orders COVID-XX. Net types impacted our for estimate the with we associated model. purchase same place of to non-productive related in remediation $X.XX primarily the – associated production specific prevent to customer-specific our and the blade was a of varying Turkey the quarter blade compared

costs reserve We limit based have our our campaign adjusted for forecasted our liability. of estimated on this and contractual remediation

that will remediation temporary balance impacted we Adjusted do due associated of we to million we additional to of Turkey $XX.X in Year-to-date, to $X.X our period additional $XX incurred We by compared volume associated we EBITDA closely any COVID-XX negatively decreased additional in the production are an our with as with to million to forecasting XXXX. the are million remediation customers of other warranty for Iowa, impacted and all not lost costs approximately and EBITDA $XX was provision incur facilities. the the that efforts, have same production with material efforts production warranty ensure and year. our related warranty warranty working all in have India of that approximately Mexico, exposure. million of $X.X million The facilities. suspension the Adjusted

incur COVID-related that forecasting will treatment million until on associated for are costs effective the basis a $X with we health of approximately better and We our associates of are quarterly options and/or safety COVID-XX. there vaccine

in our direct meeting QX costs demands QX In labor addition, expecting higher to XXXX. and customer of are with we incur associated

Moving on through continue COVID-XX XXXX. net to capital more amendment for our support liquidity to with the and and end our growth permitted planned manage pandemic total to initiatives adjustments of covenants us leverage In XXXX certain agreement to expenditures to Slide we June the increase the our during The ratio made amended flexibility provide XX. to March credit and XXXX, XXXX.

Our well covenants total our of which net under calculated leverage leverage the ratio ratio below under X.XX% permitted amendment. total for QX, net our was as X.X%, is

ratio to in expect peak We decrease net total before see leverage in QX a our we QX.

long-term desired total down back our level X%. of to is drive Our net goal ratio leverage our to

Turning ended outstanding and amount of net to XXXX. Slide with million debt of to debt $XXX.X net $XX.X million XX. total of QX cash We principal and of debt $XX.X equivalents, the million compared of as million $XXX.X of cash of quarter the end

as inventory and inventory build balances well sheet. inventory part assets on a COVID-XX-related is the to of The as of manage costs. contract our million the risk our built For negatively by provided operating was in build of quarter we used the we inventory activities quarter, an by $XX million cash operating $XX.X impacted as balance COVID-XX Cash up impact the in activities. of

facilities. reduce into COVID-XX risk while balances production We any QX QX on of closely we’re monitoring are potential and strategically inventory working throughout our our to

are meet capital that to of on operations focus to required continue critical safety the commitments. to essential associates, critical our defer customer to our health and and CapEx expenditures and We

our on to measures world effect due XXXX, around the our governments by XXXX and As a the the XX, COVID-XX implemented The its pandemic. operations. rapidly April we duration address impact of evolving of reminder, withdrew variety to guidance magnitude and on manufacturing nature, the

operating levels are Mexico COVID-XX-positive India, our our plant capacity, Although operating several with manufacturing in or regions plants are particular, cases. high currently facilities, reported in above at of of in and

manufacturing facilities of these other positive any manufacturing or back the may volume be where facilities. nature there there on not As such, we our regions production Bill? wrap over the of we will fluid is reductions be will resurgence turn we extent COVID-XX to temporary to that, a operate or an reinstate our at this the then of our in to potential COVID-XX cases in suspensions it outbreak manufacturing will is Due to at the Bill providing XXXX required at your guidance of or COVID-XX up, and take cases we I With facilities, business, to time. impact and questions.

Bill Siwek

Thanks, Bryan.

Turning XX. our health to and which communities in the well The they of our as their live Slide families priority. one number associates and remains as safety

are reiterated the associates safe our we in as safety working facilities. steps and proactive on front the we as well taking to necessary our today, As ensure of COVID-XX the conditions

with pleased of extensions approximately value add extending the pipeline to by more was and also these were additions $XXX our And potential work impact GE our earnest. capacity contract that we able million. two to GE. We for Nordex we continue challenging existing to agreements The and in notwithstanding are Wind environment, increase while

are a space The This are the of also to by very a be that transportation relatively interest, space increased We space electric time. investment service in capitalize we we positioned progress on we’ve continue us have is in the very We exciting. continue short well forward. period focus made progress moving encouraged to seen recently. to also we’ve the will activity for and the accelerate the make and believe vehicle in in

during on and security current on are time, the as managing on our We we focused environment. to while and we drive this mitigating impacts through COVID-XX lost financial of our stronger have focus provide now this to negative liquidity operations imperatives emerge operating

want drive for annual of to of mission transportation these time; for EBITDA gigawatts scale maintaining XX a continue establishing of sheet. annual drive during Wind TPI global unchanged: to global our our electrify, their to efficiencies commitment and remains We especially dedicated mission to start-ups achieve operating associates all capacity while more continue thank million drive strong buying revenue; $X and overall our during to $XXX billion to all to down speed transitions, decarbonize to blade and reach leverage adjusted times. plan cost, and balance I for challenging over revenue double-digit of Our levels.

stronger operator, very time remain you again will from the game for with We environment, Thank in are we and open confident your current And the that, for confident our emerge today. multiyear we plan. lines questions. please

Operator

question Philip comes from with [Operator Please Certainly. Partners. Instructions] first ahead. go Shen ROTH Our Capital

Donovan Schafe

this is for on Hi guys, Phil. Donovan

GE The eager with the of I were we first have Nordex and line. line first is kind to actually, hear congratulations all, question really about. – something the was on of That

so many And How us lines great that’s there. you extensions? But in guys how Hello? had tell by the how Mexico? Iowa covered in and XG many that many are you could lines advances have

Operator

yours Presenters, are lines live.

Donovan Schafe

can hear me? you Hello,

Bill Siwek

go. Oh, there we

Sorry. me Can you now? hear

Donovan Schafe

can hear you. Okay. I Yes,

Bill Siwek

Yes.

Donovan. Mexico. we’re adding lines four question. in line in five plus Sorry Mexico, additional I about the – in lines got an sorry for Iowa, Thanks that, It’s

Donovan Schafe

so Okay. cadence? kind maybe of what customers part really that mean of that’s build-up kind is of for about margins going of will willing question in be and – transitions And how think many and that of that a will out Great. delay, QX? there Fantastic. mean it’s cancel up. hit but transitions Or fantastic should XXXX to in a we then Will that or to that where terms my you’ve a start-ups, QX? figuring end had could is your And big second

Bill Siwek

No.

moved some was – cases, forward of impact where for other – canceled, moving ones transitions those out. it. is trends that clearly, In product think, or not not I how just on far were the it won’t depends

and provide XXXX the we finalized – for to more we that on get for but closer yet with year. XXXX, information All end for the you can as of of those aren’t or

Donovan Schafe

like I being So but as in the is a of of sort date it correct – thinking in mind? postponed maybe it am specific transition without is

Bill Siwek

– are that completely right. some that others to just been there the canceled, They’ve pushed have been have

of been Some of from standpoint solidified a those them. all have now timing not but

a for you why we’re to at customers. point the little it’s hard our information still XXXX give it that’s So with this as through working

Donovan Schafe

Okay. And production then you Does one said there’s be, into any just you’ve It that serial in mean would like a on tooling last production the one serial pilot sounded Island. more that. if Rhode EV update signed you’re agreement? expecting to get on

Bill Siwek

Yes. What customer can that quarter. we two last our in commented talked on meet of the ramping volume production that prepared XXXX. particular tooling, was begun production of the remarks we anticipate year about And off them this that have needs that those so we we that of

Donovan Schafe

Okay. Fantastic. I’ll off. jump

Bill Siwek

Donovan. Thanks,

Operator

Our Please next Eric from comes question Stine go with Craig-Hallum. ahead.

Aaron Spychalla

taking Yes, questions. for Eric. is for hi. Spychalla Aaron Thanks This the on

Bill Siwek

Aaron. Hi,

Aaron Spychalla

you lost and term? in here that margins. gross some hear labor sounds the bit good up how warranty back you’re COVID that talked in margins the But just about, give maybe half that you volume color – first year. It that of more might between a like making Maybe the trend on and last little can on near to costs Hi. those of

Bryan Schumaker

Yes.

us of year, COVID the and perspective the looking on of of putting X% year, X% in at just we’ve looking second the half half on seen impact with back that at we around to EBITDA margin, probably what we’re towards QX. stronger As adjusted QX in foresee based the we’re

Aaron Spychalla

maybe talked XX% past? to then you All kind being the update right. timing those those give transitions, your you just on Can by reduce in understand the And an on that of pushed on had initiative of I about out. kind

Bill Siwek

– in – like. standpoint the we and all We significant a there until for, had made know, It’s of we progress you again, as we little guys problems we with travel Yes. – bit early time transitions COVID. from got created for a couple a year. pre-COVID, stuck And some the were

that confident as – as that we’re of very longer that delay. us So of through we result the may get very to we the on XX% It work COVID are bit rest we little take track level. to the a are challenges a

We here have few transitions a half the of the in year. back

we same on that in time hoping of significant don’t that COVID. to path respect that the we have to We’re we and had effort. types with And can the limitations continue reduction

Aaron Spychalla

right. All

the Thanks good. Sounds for taking questions.

Bill Siwek

Aaron. Thanks, Yes.

Operator

from Greg Lewis ahead. comes question with Please BTIG. go next Our

Greg Lewis

kind mean and bit where Yes. you afternoon. of more good capital. your that you curious, up there’s until of Clearly, issues. as throughout uncertainty it little leaving of a facing to I – comments I’m that, areas at mean opposed hoping of could parts there. I around potential And around level what or think you’re you through your comfort lowering still a a kind it’s there’s in was higher gives kind lot of Thank just we potential you, this? about moving COVID. the paying, – talk I we to should of lot about just out – like maybe starting or restarts working inventories working get work about down that the mentioned a call

Bill Siwek

question, in a are can great it talked it’s We did and the a bit. a I to quite going slow where work Yes. certain order mean up we we build down. about materials bit. it No, types we enough strategically of capacity

a that. ensure and it cautiously But be will we may can won’t somewhere. back we’re very supply want – we cautiously get disruptions. we chain we’re be we partially to uncertainty today, feel But and reduce suppliers today that. at as we when be given we will Again, that around confident we – we’re any our we’ll about continue cautious pretty we it we short can do it down. operate, not it’s But the But may that or so that should bring where bit. with there with the at stuck that reckless where to So COVID again, don’t level come clearly, short-term

Greg Lewis

Thank for the great. Okay, very much you time.

Bill Siwek

you. Thank Yes.

Operator

question go with Please Webber Research. next Mike from comes ahead. Our Webber

Mike Webber

guys. afternoon you? How good Hi, are

Bill Siwek

are How good. you? Hey,

Mike Webber

business. And new to on I Nordex Good. GE of and a start the I off earlier. know wanted you touched with bit some

structure curious bit periods lines how Just GE? $XXX getting similar can potential contract out. play, number seeing then of spread in maybe option give value, any breakout customer look periods COVID? you’re in and how but base like whether you option shifting any from think curious, what – pricing more And for a of between Nordex your I would of of be bit little the a just in shifts million and a customers the a your spread terms that given curious on that behavioral more of into would that’s

Bill Siwek

Yes. Well, a of to And it with Nordex place the extension hard we to the already your in did are Iowa India. an it’s for additional along little not that. then Mexico. contracts, going Mexico again, in and two GE line which entire you we’re tell understand lines in bit question. But in And was

what up. makes that’s it So

competitive As our we’re customers, marketplace. industry. a far in wind as a The is competitive

working to to down. of continue all down, drive We’re drive energy costs levelized cost

our structure to our margins. their drive our work collaboratively intact. we has down Our but customers – or retain drive with to pricing costs improve – continue down, ASP pricing is retain still to our And to also

similar think I pricing-wise, position. So, in we’re a

from standpoint, bit a our industry seen pricing has standpoint. you’ve an As from customer stabilized

the But we’re a the structures past. work significantly with what always from drive deviation – in have been the contracts are not deviated continue contract to cost. going hard not or have to So our to contract these new extensions

Mike Webber

Got right. That’s helpful. you. All

it say maybe in was kind QX to of say, of impact manufacturing from – of COVID Should than, kind how severe kind more In make about QX. about the trying the Or that, about network, accurate started facilities in China QX? up ripple would the was kind even QX your impact Just to it’s COVID in through than of QX terms similar overtime rolled how be as terms non-China more think that’s of in delta? maybe shutdowns. interpret like think working sets the is in just number through we or QX that to going of of higher Chinese in that of – for to further maybe we thinking

Bryan Schumaker

Yes.

And quite QX, of impact. with said the in Mexico $XX China and to in QX said we then down. facilities it was look India’s down being million about you to So the revenue being for Iowa, that $XX we if impact million while, a COVID then was related at due Turkey what

going and pretty million, that have forward. China to some revenue right. to volume. that works QX of some an to due that things, the in $XX and mechanically, just inventory run for give And You’re how purchases did off too, of you because due made we then additional idea hard of up and QX other did recognized XXX and

Mike Webber

May. serves helpful. It you’re maybe of end then Got you. serves, have that and the online? at actually And I mid-May. curious, just actually on shooting did facility. If one think – for back memory If more memory that slipped come Mexico That’s when may

you this still So area. that And point? come Or classify of of then absenteeism when online? you being are any risk high-risk a would mostly there, did actually seeing back in in seeing [ph]? what at Or it’s governmental you’re terms degree obviously there the

Bill Siwek

yes. So,

to I you’re referring Matamoros facility. think the

So were a And and early XX, full for – had June down about been went again. weeks level a to yes, ramping reduced fairly a there few we’ve production XX. June up stop we since we until

in of as today that capacity plant. XXX% at We’re

governments quite Tamaulipas So and and/or We’ve remains the federal the the or plant level of I spikes and the as what for and may testing and changes very closely Mexico, risk think state reacts that to as for frankly, test worked with the as local well the risk, be. how well of Chihuahua COVID positive government. just as government

with we would told do. in done we’re them very good what We’ve we position think We’ve them. executed. I

challenges I’m government our to relates plants not individual as there. concerned So, it as about

good outbreak we’ve on It’s – just the that. pretty of one a handle more the locations. wider-spread if a there’s I in think got of

Mike Webber

Gotcha.

Okay. Great. Thanks for time the guys.

Bill Siwek

you. Thank Yes.

Operator

[Operator Please Instructions] ahead. Our Pavel Molchanov next Raymond James. comes with question from go

Pavel Molchanov

my taking for question, Thanks guys.

knowledge, lockdowns because my at measures retail, that in restaurants, we’ve mentioned revenue cases. not to touched your of to been of seen And manufacturing the I of has either ask to reluctance give time in possibility May You company due and any advanced your because being least precedent frame. is resumed April, manufacturing maybe since any operations those understanding regulatory kind in of countries? of affected But is Is there disrupted guidance this of Mexico being summer, India. some

Bill Siwek

again, put individual place come specific a government not The the do in industry they’re a government. of be confident it question associates we while might our an an regulation a might problem are and proper outbreak we for for but much significant had had And countries all the we in, And if COVID it’s thanks feel guess pretty any question. Pavel, screening could plant. we be entire keep create very the But that the plant, it’s – with policies can It’s we’ve aware procedures outside not the Yes. potentially some then that those to not significant they’re doing again, because that in have in but challenges. right? quickly. as it what safe are – of us, to outbreak. that shuts, spread is, the I’m plant? specifically, when two but the I they if about So

suggesting not a that a we of plant, that’s could So required in reason. have be that is a if that’s only we’re to for period be that, time? we outbreak could concern But do significant – the particular shut that the

Pavel Molchanov

electric the vehicle business. A question about

or, R&D guess, getting terms know, As deal if public. advancement of you any uplift signed of I deal in relationship of... more with curious your you’re one partners, a is Workhorse, revenue which anticipating your of follow-on meaningful Lordstown, going just a on kind I’m

Bill Siwek

Yes.

work team. very Workhorse to continue closely with We their and

customers, into we would build their the and production our relationship bodies this to for the them the we the with to to our we’re of continuing And deliver back them of half to beyond. execute would opportunity production we for we’re today. year and as for hope expand mentioned, CXXXX – needs with them, meet with are doing do all XXXX I beyond and what As we and ramping

Operator

Genuity. Ken Our Canaccord Herbert next ahead. question from comes Please with go

Ken Herbert

afternoon, Bryan. good Bill and Hi, Yes.

Bill Siwek

nice you. to to Ken, Hey, talk

Ken Herbert

you. to talk to Good

how in years color of be services a more could and little the you accretive business. EBITDA of bit some margins? services the that couple You could just �� give on to more extent to I’m And a just growth sort good think called be what out curious impactful business next little in if you can

Bill Siwek

business very working stuff. I than Yes. ultimate around can well OEM I mean, our on situated. on a for got customers working TPI? very we’ve the us globe work – for that footprint work we’re that blades Our helps asset is market, or to because with assets Whether service this and global owners, we’re the all large obviously, who better

of job So to We our for actively drive Marram, great initiatives grow last very year, that business. one it’s done person to far. thus that experienced a a on again, brought Lance He’s us.

be it one, our can time. business And accretive. can two, it number of part So a we larger think overall number very be over much

Ken Herbert

your are I putting but – – is the just of it know it’s expected? – obviously – the your it And customers. from for was I’m response curious you small plan? effort in are far, you very than Or it better tracking you doing how is Is so to what sort you’re

Bill Siwek

we ahead of we’re say this where be time. we thought probably would would I Yes. at

additional it. the continue some to to talent We’re adding grow to team

time. we so we’re to at expect where it this say would probably And of be I ahead a yes, bit

going. So yes, where excited about we’re pretty we’re

with asset the they Obviously, us. service with that’s with opportunity I them to good OEM we want agreements self-perform, that again, to think And our And owners well. received. been opportunity And blade can if a a part asset it’s have team, of of we’re owners. customers. for might closely as have working work lot for lots well their they we have of decided the then be

– life. big a exciting we’re dedicated some at doing also some some own. our challenge as part in to customers for blades of resources recycling well the pretty a do it’s So And industry of we’re with with We’ve our as a you do that of on partnership what is part. also is the stuff end

We service an part as offering over also think can time interesting that well. that, be of the

Ken Herbert

Okay. could, one That’s just helpful. And final question. I if

highlighted recent raw other or materials, tightness, balsa we of early tightness sit a August, some as you little sort maybe maybe Have and that the increased qualified as a nothing Or in think for areas. into disruptive half few here that foam – of maybe little you I maybe a seen this your back concern? year? should but any do be view you cause the of

Bill Siwek

No.

we’ve think it. I got

the that capacity We that – in And COVID with well. tightness the PTE coming first especially a that coming result COVID of of was balsa saw good There bit We’re market expectation supply frankly. delayed for that get foam tightness year. a qualified early, year, quite online in Ken. was as hit. lot lot earlier would of as PET when a was quite already there a was the – of demand,

think balance with those But So in pretty position to was of combination good And all worked secure hard a pretty of alternative the it materials. all things. year we’ve now I sources. raw of the we’re for our

Ken Herbert

Great. Well, contracts. congratulations the on

Bill Siwek

Thanks, Ken. it. Appreciate

Operator

would back This for turn closing over concludes question-and-answer I any to to remarks. Siwek the session. conference Bill like the

Bill Siwek

be and Thank Be And well. in you your next you. safe interest all TPI. you. for thank again, Until Thank quarter.

Operator

This concludes call. conference today’s

for Thank a pleasant your have you lines. may participating, and day. You disconnect

TPI Composites (TPIC) 8 Aug 202020 Q2 Earnings call transcript