TPIC - Earnings call transcript Q2 2022

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Operator

Good afternoon and welcome to TPI Composites Second Quarter 2022 Earnings Conference Call. Today's call is being recorded.

We have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Anthony Rozmus [ph], Investor Relations for TPI Composites. Thank you.

begin. may You

Unidentified Company Representative

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

will actual tpicomposites.com. uncertainties We Commission found will are could A and that latest of in Exchange applicable and this during financial non-GAAP Today’s differ risk our include cause detailed on which is discussion be making and references subject filings be forward-looking to with which statements Securities results presentation can materially. to to website, our included call reports risks the measures.

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

William Siwek

all coming time a Anthony. a afternoon, good I CFO look to brings here want you with joining Thank CFO. recently of Miller, aerospace multinational for defense and the wealth with the Relations experience, of FP&A Ryan am you a the weeks. Ryan large And I as Thanks, Ryan new considerable operations, our Investor in Ryan and him most our call. everyone. introducing to to team in and company. to forward days TPI I and welcome division of of spending

and We call chain of the Please cover Ryan million financial transitions supply will the discuss free to costs And operations, controls, prior broadly. which unanticipated the start-ups. $XXX.X tight of sales $XX.X for the shutdown including global and review our as our during nonrecurring including flow our the cost a from our first market second transitions sales X. will quarter Adjusted in of transportation turn including number then year. cash our results I over Mexico. solid onto we Iowa Sequentially, million slightly as generated was and businesses where a Q&A. we EBITDA then Slide Now million, we result start-ups. execution, down then results, quarter $XX.X wind completed open quarter delivered of XX% will service multiple increased and was and more and energy

have on blade potential of see revenue Slide through can billion X, we you approximately XXXX. $X.X As wind

should as wind contract You that lines our to again see extend on are the the revenue up we potential XXXX. well to through under negotiations XX approximately expect close currently growing through as lines blade of under under production XXXX production end XX contract as to contract

give as our now quick chain global market. as of supply I'll X. a you Slide update to operations well Turning the wind

QX met efforts we Yangzhou well continued supply in experience have the impacted. of of June. issues quarter, raw our that and the But chain to source where During as moderated basis our deliver from Domestic production China time cases from we not COVID, to production targets have second we since materials the as including China, thanks significant team, in a blades China. timely did been on in still beginning any logistics COVID export on

We to all and on schedule. or transitions continued the ahead and China, make we excellent quarter, on of our India, startups the Mexico completed During transitions. progress speed across start-ups and five

plan performing in Matamoros, in Our at facility Mexico ahead Nordex well. plants exception all India well with are as China, Turkey plan in or performed the our above and of And of our QX. operations

this strong maintain footprint put growth and safety, times to a savings with challenging in focus branch execution, addition increase continue once while us quality, in year. these balance position the We're enable XX% us global track our to footprint manufacturing of expanded further the of top a Europe have to operations on cost the we a U.S. growth line and sheet continuing for Our business, service our our France for In on in will optimization during returns. demand in to XX%

XXXX result the supply in continues XX% passenger deliver The to to of revenue reduce electrification transportation efficiency, approximately grow reduction, constraints. and in segment composite validate the due with benefits industry. based fleets. development on solutions. operational by investment development programs business experienced chain programs customer OEM awarded reduced continue issues delivering the enable We despite agreement performance we chain are plaguing Through these automotive to improvements collaborative agreements to transportation notwithstanding The starting volumes aforementioned supply efficiencies customers, strong their our and to expect solutions unit engagement vehicle certain supply innovative to We in and the will market EV in weight and in time the development incremental supply anticipate QX XXXX. programs potential programs, commercial customer of

supply situation on Moving The to our to be challenging. chain. continues

higher continue as well higher We to see on prices prices as energy petroleum-based feedstocks.

to the significant carbon epoxy resin logistics in supply and constraints respect past increases were as well fiber During costs. and there year, as with inbound price both increases

production. expect infrastructure Production products some see are petroleum-based costs capacity as for industries rising to carbon carbon driving to energy certain Epoxy XX% adversely from the with materials carbon be impacting is related cost to after constrained feedstocks of to constrained increases up to additions. bullish North Europe automotive, supported and resin of carbon outpace and resin very in pressure high-priced prices construction. in continue price We and also product America supply producers XXXX. curtail like Europe continues costs High already for seeing high fiber of to remain by continue and carbon and prices demand demand feedstocks energy and during energy-intensive

in have including we that plant controlled XXXX, materials raw for materials is production raw our by all customers. adequate secured the today, of As

and bear price any customers therefore fiber our in of fiber levels is approximately or XX% price. of carbon XX% resin either elevated of and expect systems receive will customers resin decrease under increase XXXX, that these contracts use resin or borne carbon we the at the of Although remain and or we approximately purchased in controlled by and XXX%

are reduce high pricing of in derisk and build and China to relies with best supply market. logistics spend TPI-controlled short, X%, wind from qualifying manufacture security China strategic medium in which than long sources ensure the costs, our suppliers in down we provide in XX% diversify our and impact regions for to Onto chain by and the in Chinese the long-term the We term. XXXX. of reduced primarily Other products exposure production key suppliers, partnerships supply which we continuing on to availability the have our under over to

energy which Europe globe. but Europe's EUs an call, not independence the action plan the announcing over by the that billion are XX We option transform and by European in Russian across to EU has As Ukraine July, crisis. that energy Commission's announced to and the additional the dependence the In on climate projects innovative in we forefront fossil investing only applaud later EUR system projects could aimed our announced explained the be in last further the fuels they for brought handing is war earnings and need XX on EU large-scale for May addressing the X.X with this tech clean swift year. Repower security

wind are once the encouraged act U.S. we to we stability the certainly U.S., serve this benefit immediately, of Act our continue needs impact by European provide of XXXX. In get demand are market. to have needs the today should their footprint market Inflation recovers. recently Reduction to the The could we by In of with demand better their the start to law. the ultimately would won't signed listen and to encouraged the While it the the we optimize work accelerate into in be meantime, proposed positioned customers and and best prospects long-term to see our serve

blade market, to turn again. meet me continuing TPI our capitalize also including in multiple our goal with aggressive unique industry set with recognize relationships for demand the expanding our to wind long-term combat strategic in expertise around geographies, of a enable offerings energy Execution, over to will capabilities climate as the on financial and growth and design let cost position our and globally term along global demand in challenges wind Ryan control the and logistics results. leveraging necessity to forefront suppliers and collaborative security change. strengthen while given are our while our to the begins and over in global the move TPI service we the initiatives faces, our still grow believe to remains expected review our to decarbonize for strategic independence that, key the on the at and expanding accelerate energy on customers While forward priorities the to to footprint the liquidity focus with long With the wind recycling. to electrified we call wind

Ryan Miller

on Bill. compared Thanks, period X. will All the to turn a made basis to Please today XXXX. year-over-year in comparisons same Slide be

Mexico, decrease wind as $XX.X $X megawatts, over and manufacturing changes, notwithstanding due loss in favorable decrease preferred approximately in million a compared from in sales was expense the X% of second increased were to prior compared dividends year. second operating same preferred XXXX a wind models from prior quarter was improvement XXXX, reduction $XX.X in million stopped. wind a which net the For of blades $XX.X net in The million, quarter were generated compared common by and blade accretion prior megawatts Net in increase associated the period million a and Including has of Net $XXX.X stock primarily by fluctuations down the lines transitions the currency due partially by stock the as currency estimated year. slightly of X,XXX preferred $XX.X average were offset in $XX.X year of of million about due driven Juarez, income reduction partially XXXX. lines accretion the $XXX.X that of to sales dividends sales same the the a Newton, with second certain in non-restructuring production million $XX.X volume. This mix $XXX.X was that produced. $X.X and XXXX. to in a in sales number to accretion, the Note loss where $XXX were in improved in XX, attributed in in production quarter of lines, tax blade related million dividends wind costs price the million million decrease Dafeng, in to Iowa; manufacturing offset over China; due our loss million primarily before loss stock to the a well and quarter million stockholders of existing blades higher in the net to X% loss ended period to for of blade facilities and June million to produced blade in foreign

million $XX.X where to due with $XX.X the to the sales of X.X% same was QX manufacturing three associated primarily in facilities or related was costs The production operating Our sales in in X.X% adjusted the of EBITDA stopped. period non-restructuring has million XXXX. or compared decrease

Now We moving of with and debt. $XXX XX. of cash on equivalents ended the and cash $XX.X million to unrestricted quarter Slide million

free six free cash second flow XXXX, quarter of June a million, good cash a was our million the of of had While and for use net ended cash months flow. we XX, $XX.X $XX.X generated

the quarter, healthy balance During to constraining challenging the as turns to tight a our we payment stretch controls, same time and across managing trying on customers we certain at we The working wind current the chain. expenditures. environment capital continued cost have continues supply ensuring while capital focus be market

forward, and time only efficiently market Bill. move the but are our the acutely to the comes. Back capitalize we also not able As on wind operations when focused we you, to of we sustain position. are cash ensuring recovery on

William Siwek

Ryan. Thanks,

Slide XX. to Turning

rest forward and as utilization. expect the the QX we improved look higher billings will be volume sales basis on than of EBITDA year, we adjusted As to to QX higher anticipate drive a we

for CapEx $XX our $XX We million. from for Other guidance to million $XX has down to than guidance to changed. have $XX updated XXXX our million, that, formal million not

corresponding our questions. and all as loyalty or which long-term XX. potential solution guidance ASC dedication again TPI future Slide We close, to and it global to enable future. once open contract impacts for to their to electrify. I'll related to business of or commitment, the call our current their decarbonize and for growth provider be market our adjusted volume thank through the EBITDA time. want remain we given and to customers the volatility, TPI efforts I TPI our turn and under to associates not and with managing execution in profitable the customers at Please XXX are revenue now and to industry to operator cannot forecast mission providing challenges changes this to modifications near-term position still certainty our back our turn preferred in focused GAAP extensions To to on the

Operator

of ROTH Instructions] [Operator first line the question Clare with Our comes Justin from Capital Partners.

Justin Clare

off, first here you potential contract you as expect guess, on close I revenue you that your under to So negotiations. mentioned some grow

maybe timing an and So the a extending if provide contracts you bit of to you XXXX helpful. for XXXX. then extensions. end Could And the the color bit little be contract – in more there would you be in near years could wondering Just coming term on are both at detail more those contracts that a here? just mentioned

William Siwek

bet, yes. You Justin,

extensions of both next on customers 'XX. end that We're year, to So that right for you're at XX and and year. of XX with our of middle all right, ending 'XX are we those have we the relate the as or about in speak this so would another discussions for

for would that expect as seeing with 'XX expiring so announcements over -- being you I beyond 'XX next some the in to quarter are those be both to terms. So well extended or here lines as

Justin Clare

facility. And How you if for wondering an that talk I restarted see you of demand? about credits Great. through improving how And did lines extension Reduction you’re PTC. for then then facility expansion there take facility Iowa if Newton, here room supported Act to thinking the long that within Is how be for could demand support? could visibility given potential could it? your many the if for Okay. Inflation was the

William Siwek

Yes.

question. good a So it's

that room of as blades, be As there that number had had little treated us. larger get the rebuild We that the well time we far a far of that very There loyal it lines, and on able in past. expansion -- larger less were the been very them out again, as to produced be depends of long-term again, associates bit lines And facility it size We've -- would many blade. as as anticipate ramp-up, limited obviously, on number six workforce. there. is we've I some lines a that or to might associates than the takes back is With with as the way the to that. for TPI. they in But

So the the depending six removed today same out nine that that it's on whether start period ramp to are -- month probably or whether we to change blade. there been a yet to up building molds from in we're haven't

So ramp. six to it's month probably to nine a period time fully

Justin Clare

for Reduction Okay. Got it. There That's XX% helpful. And then also one more domestic is met. on the bonus Act. are content Inflation if PTC the requirements this

domestic So just requirements? could so, U.S. need potentially developers U.S.-manufactured you to meet source to those get premium wondering blades? do a if in would that for the get think legislation pass, content if you to blades price -- And were

William Siwek

XXX% again, Yes. it’s turbine a steel. OEM, sourced of portion – depending act, think vary under the a It the it weight by on is will clearly. a I And steel, new significant

would So necessity all manufacturing the U.S. think a sourcing with the advanced with obviously, would in Getting would I blades certainly U.S. don’t think a depending producing the which competitive price it’s manufacturing – in we’re in if a more make credit OEM. there production have facility, on U.S. blade many of help. outside I cases – cases, is premium you

realize been in a in past it’s or So to margins the be remains seen. whether that normalized to than more we’ve it’s able just premium location

Operator

from of question with Dumoulin-Smith comes next Our the of Julien America. Bank line

Julien Dumoulin-Smith

Excellent. on angle a of of the know as itself to perhaps hear. regards that in seemingly would here wind with Appreciate could questioning extent front? of on talk the on an there? still that’s Any administration How there. angle I what the use wants here? of that at out complement brief about lingering Can but could potentially Justin’s sort DPA. that And look we to sector the last If have play some late in out? just headlines your absent are some to been DPA offshore I that line respect love to focused it. also, of follow-up updates can, Notably plans what

William Siwek

a Julien, it little? question really Can a what had down that again? I exactly you turn -- time was. I your a loud, repeat were so you understanding hard had Can you

Julien Dumoulin-Smith

Sorry.

enthusiastic at me a Yes, call Some time. sorry.

I are headlines been what applied There’s So saying What to DPA. that for Production and wind your opportunities offshore Act, thoughts for as some Defense especially being is was industry. about the all? there pertain might it you

William Siwek

at totally significantly be this To point. focused on I frank, the DPA haven't

you on specific to So get point have on Julien. view to I back don't that, I'd a of --

Julien Dumoulin-Smith

position opportunity prepared that may, European your at could to there. and that How latitudes are impact describe year Got which with would about you you Fair that. that sheet swiftly that next respect the remarked described your We’ll some of that offer have what think the length move the liquidity that does All tons how opportunity you at you in balance of the use the right. there? materialize, to can know perhaps into you half just customers? to leave or it. times to Excellent. And that might I capital If you here to extent the of pivoting of back the I enough. some as yourself? or Turkish remarks, the ultimately, exist conversations operations? What the exist [ph] year in through needs on could for

William Siwek

Yes.

operations from especially serve clearly I It from. to a think Turkey but from great and cost-effective very today workforce probably there a very a a just performed location productive operations. of best-performing costs in some cost-effective, is general, EU with logistics well, the -- our just our a Very workforce.

Turkey. in customers are additional our in capacity So interested

an to under of that and the is overdrive kind be next a year there an overdrive we would right circumstances. location likely we're there to expand well that -- look running are now, as We right

be into $X the location for it up, good term. obviously CapEx. there, so CapEx as think to pretty sites million of the of obviously take that if at we line that’s something think it $X demand we’re to it closely. as standpoint, as continues be that’s From time. a some would expanding think million ramp to looked in near strong future, We’ve And a looking So us about at European to just per will

moves six million forward in that So if CapEx $XX it’s sometime you’re four it ‘XX speed. talking of and lines, be with to million some if $XX probably wouldn’t to until

Operator

next Our of Stine with question from Craig-Hallum. comes the line Eric

Eric Stine

a know, in OEMs has overhang know issue legislation take kind that’s been have mean to I big uncertainty demand, what I here the again globally? are of were for balancing pass global in to process that obviously, might kind U.S. how they are big with see regulatory know and So with you if, dealing that, that’s a the long I that and do U.S. pickup if that it a on the this basis. But for and things dealing thought I of of OEMs you versus

William Siwek

impact the of we to I in 'XX see begin to proposed. But more 'XX, pickup a simpler getting of individual the Yes. how the through longer. interpretation than I some if obviously, PTC thought, each before rulings back with a in probably quicker expect see pure some will Again, legislation half bill could should it extenders, on actually probably kind Treasury components new 'XX. of an but we little was beginning bit just a extension Takes would applied. pickup from and of little it's was be see

Eric Stine

That’s right. missed the gave expectation And it. a I that. the helpful. just then transportation I side, for apologize on Got All year. growth you

also maybe way of be any mentioned along a many very that. what and you working potentially agreements. towards just number if lines hit about talk there those you’re that you supply that size But how or Just to details maybe type So towards OEM helpful. you’re clarify of any working assuming? rate you’re could Is would

William Siwek

Yes.

talked qualifying volume We have So our that And in in chains, a projects year be year-over-year. up what a deals little the with eight little this primarily that XX-plus down their strong working far XXXX their down quarter, volumes to of about percent working so we six a make first we're do bit. because from the come actively we're year, XXXX, where growth, that expect right challenges line delivering the having expect bit the top as that on, now, perspective. parts, of customers et should prototype where parts, some brought development as cetera. we growth are from We supply to we're

rate would Our hit I high, those been high refocused as that has six very on rate to pretty to rate X. with new leadership our in has the -- hit we've hit been expect our be organization, so

Eric Stine

And regard? does that eight. pipeline the like six what Got to I mean, it. in look obviously,

At pipeline you’ve body programs. gosh, the I think one think, I in cited, like EV was what six it time, OEM six six. part the looks OEM Maybe past, program, just there?

William Siwek

of very you prototypes. looks and in pipeline selective as the that being the longer much told we and profitably working Xs. actively can far What it we right Tier we're The making what a we on do sure needs There's now or building I we what can OEMs good. meet as we're can is that Yes. choose, that the extra Again, pipeline. scale

So the is robust. pipeline

has only to speed been the as market I not the tooling, been pretty efficiency as to of think weight to ability remarkable. we've take out demonstrate our but well upfront able

this robust. optimistic where going is in So pipeline again, we're and is the

Operator

Cowen comes question Osborne the from & with line Jeff next Company. Our of

Jeff Osborne

questions my of couple A end. on

the Going question those bill today? on into One you’re IRA having on back any passing part XXXX, And are discussions not? lines, are that. view If XX to the there’s the for U.S. on lines Bill, of or going many two any the then of how contingent that. is,

William Siwek

really. Not

Turkey. into the they and handful those So a of in to stay and those nine well all if mostly got market part We've then in those and are European U.S. the -- we've Turkey in lines, for -- got as we've the got coming are don't Mexico most so

IRA answer into those contingent IRA. coming not So answer a point. accelerate is it's on that in is just the got as certainly Mexico coming interest the idle no. the -- plant at certainly, on depending It's does out comes lines Mexico now if plant the that's in we've it well. on could this are and right it how the that the U.S. But sitting And in that up are

Jeff Osborne

to prior talked possible M&A Got it. on you expand calls, service And your about think portfolio. I opportunities

mentioned now on You turning M&A; you touch that improving, free for utilization – just can is: seems But and I on you’re cash expanding your pipeline positive looks organically. think, what are into what and B, flow you it rates can the touch appetite A, France, like like there?

William Siwek

Yes.

I think we I on on to continuing and it, we're that given when focused wind strong materializes. the balance to transaction. our been still make an evaluate sure for the that we're there a bit just being core a demand sheet down is that business. but for that that's really a slowed and into before have have an making we say where pipeline do and sure business get prepared would keeping we're new core that appetite We're market execution obviously, M&A wind But overall laser-focused we

Operator

question Instructions] [Operator line next from the Our Stifel. Gengaro with comes of Stephen

Stephen Gengaro

for how go as six from really we improvement? what we So as gross what improvement we of to quarters? the think think quarters, the margin progression obviously, key we four should about next should I So that here forward volumes the over mean, the drives next several the the improvement be and line an key perspective? focused about But do. on really the drivers

William Siwek

and business. mentioned fixed again, cost facilities pretty utilization a I mean we're of I you think our Yes. volume. Stephen, --

gross driving to is line. key So margin that utilization

whether So a driving to of It's efficient more improving we from that it's standpoint. of can reducing out waste, focus utilization. the continued being costs material, extent bill cost, headcount process, the on be process

of has been but utilization. of is and would all mover say biggest I it's above needle So the the the

So see, utilization quarter. as you the third in climb

should couple second in things unique our Those plants sales of of non-restructuring -- you line. the in We of ran had costs cost improve. Over remarks Ryan quarter, see our some margins some with shut mentioned gross around the down. through prepared that this a

utilization. you'll of those gross rid and increase on of basis, that see get few you number start So start with a a to margin normalized to

Stephen Gengaro

East or wind we more And of year then, offshore X? can how out front, you offshore the hearing are just us you an that on over update see you as the think and on more playing just – where When stands a give we’re of kind where the and follow-up. on side the about Coast and – kind this next

William Siwek

Yes.

quarter. So of huge on of from in we're actively last not long-term a still the -- opportunities Coast. agreement working here those optimistic a We're update end a will the East We're XXXX. couple result before that

think the exist have offshore the given offshore U.S. credits Inflation on Act huge in supply standpoint, chain advanced build a can benefit a will that I just to the from wind the available Reduction manufacturing doesn't the side that be for today

could have XXXX offshore nice able the be signed law, ultimately to Coast, the a into hope Gulf, announce here IRA if would benefit course. both West Coast the of for and we something that to So in on back the in of East half again, general gets year. in And

Operator

Guggenheim. Osha Our of line with next the question Joseph from comes

Joseph Osha

A couple of questions.

as passing customers? through metal of in more kind – freight passing I’m what some have stuff approach changed comparable through cost, and First, to this We’ve businesses, in one trying and people with your firm to thinking you’re you just looking customers, at costs, like large Really of roll approach Arizona. this. to your to you new contracts to other if volatility you’re seen not. can input take including you’re wondering, conversations what off what able about contract the pass

William Siwek

Yes.

carbon of all mentioned, I controlled virtually customers. by that our contracts under is as today, buy we So the

customers. the that we is by controlled resin purchased of under XXX% gets -- So is passed buy our through. those Resin percent XX-plus of -- under contracts systems, of

Other a a shared XXX% that pain/gain. So XX-XX of Joe, that, gets that have generally, split. on. than we And passed it's

on our XX% So passed gets customer. to

to XX%. have absorb We

but of customers We future. as contracts extending our only look might I also in are not like these what earlier, having agreements commercial discussions, with all mentioned about the

all And in risk. of not some offloading we frankly, trade of process. would reducing and for might those that. like our Clearly, quite may have percentages customers for price, utilization see to the are Those some -- different or terms discussions some where

customer that we it's on work balance to with on share we on utilization, then our costs. risk So a of have with and the deal commodity how price, wallet of

Joseph Osha

Right. factors, situation fine. and what and the of the fiber rest I where with about disproportionately at. in risk past – seems And that’s resin in But kind utilization been to you the logistics other was and a you. lot We getting of that’s carbon you’ve that talked

be your So for you’ve there’s perhaps. relationship the we’ve if economic might as gross way seen opportunity volatility any – in customers I’m the with to one there because more be just margins that might wondering indicated, sort address you fundamentally remake to of

William Siwek

And that's working with that's the customers exactly right exactly we today our balance Go Correct. Right. do how risk. on ahead. Yes. what better and we're

Joseph Osha

Exactly.

Second following bad? a affect lira you the about answered bit your asking I’m it if – missed How question, this tanking Julien Does sorry, And business? what just was it Is I Turkey. good? matter? it on if Is already. does not

William Siwek

in euro, all our in direct -- revenues labor about Turkish is BOM stuff lira. the and of generally It's is But of -- if all you local cost of euro. our in most of think some obviously most

in some that of it with did we standpoint. are this financial from deval. a the So have that for challenging though, well. us through In -- from standpoint. actually have We're our benefit make lira does us Turkey that a customers. we quarter financial some from with it it more working It help benefits And general, our as does suppliers

Joseph Osha

might is affect becomes wage sure. property Reduction question. your you requirements. into is go When of the manufacturing then apparent the that’s my the to credit, tax one that How Act, through apprenticeship the everything signed for credits, PTC, final the Inflation business tied that if prevailing everything, law? and Yes, things that And

William Siwek

our can't frankly. Well, from today. standpoint, or customer from a for TPI customers' U.S. not speak I again, -- a our we're in quite customers, But the manufacturing

because However, when to were a and union better was Iowa We had initiative with prevailing it's was the we than associates our were, were in we offering. wage. paying we union fair pay paying benefits defeated that

our So U.S. see an that market the re-entering for to as makes wouldn't that I us manufacturing and us sense customers. inhibitor if

Joseph Osha

going either you U.S.? union or up do wages the you’re restarting fair be would paying union to that it end level be But if – to you in assume

William Siwek

wage, would at paying We prevailing be least correct.

Operator

next comes of the Our Strouse Mark from line JPMorgan. question with

Unidentified Analyst

for It's Mark. on Drew

repower and just timing one What pertains Or EU, you standpoint? broader, about hearing? you are more for helpful. from they seeing thinking some contracts any -- waiting customers? they they formal And kind really of Are Just as legislation? a are on really from just Europe. are and how to what orders it and your would First are be color there new really,

William Siwek

Yes.

it the a final they're that It's as a repower positive just I think to demand. like way take the looking happen legislation accelerate little EU and a think Obviously, EU it's to one long-term I see way XXXX. as got will clearly a they layers all go and here. complicated perspective. the Again, from any time with in works. three the Well, early through really doesn't different some until

I longer-term rolled how sort Turkey perspective. in and and through being when about a term seen out as we it we that of It's implemented, ultimately But will But because to positive. customers a is general some that in there's expand, demand see out, for is came medium So from that to an it it there's and it Turkey to serve haven't EU long to through there's accelerating. lot see a will repower going so bit so -- to a our from how but Turkey very implement. There's sorted we as term, clearly -- little the -- be and the interest market European I how take is bit of short think of right? what the time favorable. a attractive optimism do talked immediate see in work actually to wait spike little market, anticipation We're us

Unidentified Analyst

some if transition – Got second looked first follow-up issues one again it. it the comparable may. in the drove was just And they up or in quarter timing, quarter, higher. ASPs there transition were or like the to like quarter. the there things first And that ASPs I sounded

of there’s some more contract as on new of ASPs. in legacy than were they if especially they a are of kind of going higher a contracts? about in outlook you the XQ? just think little talk be the And to range negotiations, the So longer-term Do curious bit that them here historic we

William Siwek

Yes.

were I bit quarter, because were of think little -- quarter about transitions. they the the high we as a first -- we they first artificially in in talked some

we we -- the it, something like I that, XXX think calculate way we're , were like XXX, a X,XXX blade.

the We expect for in XXX. year XXX up wind to that to

a higher. contracts inflationary in an clearly, a bit well. type, we're building or bigger to obviously continue be extend ASP would renew has blade, to higher ASP we As And I blade on environment increase of is the ASP. see driven going depending expect the to If the contracts as

price Just blade. commodity as raise it's to up, we costs the of going see the

you a So ASPs as size time, to continues But continue combination increase. see blade of over to think it's up go I those things.

Operator

Seaport. from line And question the with Curran our next comes Tom of

Tom Curran

you delivery transitions XQ, your a you half? the in XXXX. ahead to Heading over on did half what’s the second And the outlook customers compare into of for enabling very them known XQ? In were realized additional and of relative surprise executed, XXXX, How front those of transitions start-ups positive internal five and the loaded. performance schedule volumes expectations for finishing all

William Siwek

Yes.

will QX. And lines the capacity this see XXs full The So the climb back year. we the of of in QX. all QX. running end transitions in into in much That's transitioned at you'll no half the up for we we transitions couple low of by have our why wrapped point, up pretty be utilization a start-ups should slated at our of

see so So planned -- certainly, utilization for you should of QX. improve in But year. nothing the half this and back

Tom Curran

and relative did Is a half? heading the field repair XQ better? evolving Got to outpacing? how you demand the how give been it. Bill, has of top us at inspection Is aftermarket for holding services, what’s the blade And can up and there then sense into demand? of outlook the in And just set second you wind it

William Siwek

obviously for business the service the been field given The in the or business, business. would say has wind we're again, I -- flat U.S. as Yes. seen, policy we've growing challenges techs. techs and being It's able really That's significant field grow the and it's about we service. I -- to blade just if would the really the in blade with quicker today see about relatively opportunity growth business. the than But how retain, obtain and EU. yes, you the train will, you having

that grown So U.S. and grow U.S. significantly aggressively we're outside We've it we are in our the area. in the continuing workforce to recruiting

where a our opportunity an have these that mass geographies, with Especially us significant service of critical see we we are bit in a need gives So footprint, it blade repair. there of lot advantage and global a there. where installs and/or

only manufacturing footprint a a not also the standpoint having from service is in So field operation. deployment of benefit that but global

Tom Curran

do in to you that for Got any I And of it. where could in you terms there. expanding investing update Maybe techs, more to And targets us for share been when you’ve field take comes second for then look workforce you of it recently and an headcount? have the know services. half Europe

William Siwek

Yes.

demand where to we’ve significant in but we’re we – That’s I don’t the give got would we the going – business. headcount specifically numbers U.S. really So, started out

us. market strong the opportunity outside so, just, expanding over Turkey and while. critical we’ve a European the a huge But Turkey. last a We’ve But mass got begun we’ll continue to of grow been for for year we’ve So or is in here that.

Spain. in we’re So

We’re in France.

and EU. as repowering significant We’re is pretty well opportunity And in U.K. for as the service in the the just blade repair

see for as growth we a So well. significant that us opportunity as pretty

Operator

Greg And question of our comes from Research. Webber line with Wasikowski next the

Greg Wasikowski

actual one asking dedicated what's could to real me, expansion? And the without lines for recap dedicated that many then lines have maximum are versus you lines installed what your parter. Can two where the the way, lines how Maybe could then and up you described significant there for are that year you Just another end ramp theoretical XXXX? rest you of estate mainly the into guidance in guys for XXXX? by of Iowa CapEx and an similar

William Siwek

So we today. have XX dedicated lines

We expansion being. for could you a if our at – go the capacity if footprint without you and Iowa India, facility. of XX between China, we But Mexico, time lines excluding to Turkey have look

operating. of Now $XX already. it’s since probably enable get you be lines. there could million get CapEx those us CapEx to seven very in And if there little to and million another And would be up but throw to to four Iowa, sitting the that some to [ph] is six CapEx again, CapEx to six $XX lines there

Operator

to Bill end now the the have we and call over Siwek closing reached the for question-and-answer session And I'll of remarks. turn back

William Siwek

next your the for everybody, you. on quarter. thanks analysts, Thanks, Yes. participating And look questions for and speaking forward with to again to Thank you call. the

Operator

disconnect concludes today's your may lines you your you time. And participation. this Thank this and at conference for

TPI Composites (TPIC) 4 Aug 222022 Q2 Earnings call transcript