NASDAQ:TPIC TPI Composites Q3 2023 Earnings Report $0.95 -0.02 (-2.49%) As of 03:12 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast TPI Composites EPS ResultsActual EPS-$1.71Consensus EPS -$0.62Beat/MissMissed by -$1.09One Year Ago EPSN/ATPI Composites Revenue ResultsActual Revenue$372.86 millionExpected Revenue$377.81 millionBeat/MissMissed by -$4.95 millionYoY Revenue GrowthN/ATPI Composites Announcement DetailsQuarterQ3 2023Date11/2/2023TimeN/AConference Call DateThursday, November 2, 2023Conference Call Time5:00PM ETUpcoming EarningsTPI Composites' Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by TPI Composites Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 2, 2023 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:11Please note this event is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Jason Wegman Please go ahead, sir. Speaker 100:00:21Thank you, operator. I would like to welcome everyone to TPI Composites' 3rd Quarter 2023 Earnings Call. We will be making forward looking statements during this call that are subject to risks and uncertainties, which could cause actual results to differ materially. A detailed discussion of applicable risks is included in our latest reports and filings with the Today's presentation will include references to non GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non GAAP measures to the comparable GAAP financial measures. Speaker 100:01:07With that, let me turn the call over to Bill Siwek, TPI Composites' President and CEO. Thanks, Jason, and Speaker 200:01:14good Good afternoon, everyone, and thank you for joining our call. In addition to Jason, I'm here with Ryan Miller, our CFO. Today, I'll discuss Our results and highlights from the Q3, our global operations and the wind energy market more broadly. Ryan will then review our financial results, and then we'll open the call for Q and A. Please turn to Slide 5. Speaker 200:01:34Despite the challenging global wind market and economic climate, our operational The Q3 was in line with our expectations, but our overall results were negatively impacted by an incremental warranty charge and charges related to the unexpected Proterra bankruptcy. The 3rd quarter was highlighted by strong cash performance as we ended the quarter with 161,000,000 position will enable us to deal with the near term challenges the industry is facing and provide us with the runway required to execute and attain our long term financial targets. We also made progress during the quarter with our customers on several fronts to gain visibility into volume and capacity needs in 2024 and beyond that are part of our pathway to those long term targets. Therefore, we expect to announce final signed contracts by the end of the year for a number of extensions, Start ups and transitions. Please turn to Slide 6. Speaker 200:02:35To summarize our operations For the quarter, in the Blade business, although we continue to work through some challenges in Mexico, our Blade facilities in India and Turkey continue to perform exceptionally well. Globally, we produced 6.66 sets or 2.9 gigawatts with a utilization rate of 85%. As anticipated, our global service business is down year over year due to a reduction in technicians deployed to revenue generating projects due to the warranty campaign we are working on. For the full year, we expect revenue to be down about 40% year over year. Things continue to progress nicely in our automotive business. Speaker 200:03:12However, we now anticipate automotive's 2023 full year revenue to be down from 2022, primarily due to lower Proterra bus body sales because of their bankruptcy. It's important to note that the reduction of sales Proterra does not have a meaningful impact on TPI's go forward EBITDA and cash flow given that the bus volumes forecasted by Proterra were never achieved and the program was operating at about breakeven. In addition, the automotive business is also experiencing lower than expected sales and other automotive products due to our customer supply chain constraints and delays in new product launches. With that said, We are planning to launch 3 new automotive production programs in the Q4. These programs include large structural panels and a full battery enclosure for 2 Class Vacation initiative is paying dividends as these three launches are each with a different customer with 2 of them being new to TPI. Speaker 200:04:16In addition to products being launched, our investment in innovation and new manufacturing technologies is aligned with the needs of the automotive market. We are continuing to explore strategic alternatives for the automotive business and are encouraged by the progress we have made and expect to have more information to share by the end of the year. As for our supply chain, the situation continues to be significantly better than during the last 2 years. The overall cost of raw materials Continue to trend down compared to 2022, while logistics costs have returned to pre pandemic levels. We expect to see additional cost savings in 2024, given the excess capacity for many of our inputs and a slowdown in demand in China. Speaker 200:04:57However, we will need to keep an eye on the events in the Middle East and the potential impact that may have on petroleum prices, which could impact the cost of certain feedstocks as well as transportation costs. Over the course of the past few years, we have seen numerous government policy initiatives aimed at expanding the use of renewable energy, including the passage of the Inflation Reduction Act in the U. S. And several policy initiatives in the EU that are expected to simplify regulations, speed up permitting and promote cross border projects to accelerate climate neutrality in Europe. We expect that the new government policy will accelerate long term growth in the wind industry. Speaker 200:05:37Despite these favorable long term policy trends, we don't An increase in demand is till 2025, while the wind industry awaits clarity on the implementation guidance related to key components of the IRA and clarity around more robust policies in Europe. In addition, permitting, transmission, transmission queues, the ability of the broader Wind industry supply chain to ramp volume, rising interest rates and inflation and the cost and availability of capital are further factors limiting the timing of the wind market Kavri. Specific to TPI, we currently expect to have 6 lines in start up and 4 lines in transition during 2024 as our customers prepare for stronger expected demand beginning in 2025, which will impact utilization and output during 2024. Furthermore, we expect demand from one of our customers to be down in the near term as they consider their existing inventory levels and contemplate changes in geographic demand, which are expected to result in lower volumes from the underutilization of certain lines and a reduction in overall lines from that customer. So while we do not expect 2024 to be a year of growth for TPI, we do expect to make significant improvements to our EBITDA and EBITDA margin. Speaker 200:06:52Today, we are operating 37 lines, including the 4 lines in Mexico for Nordex that we will transition back to them in the middle of 2024. With the transition of lines to larger blades, the start up of new lines and completion of the Nordex contract in Mexico and a reset of lines with Vestas, The current plan is to exit 2024 with 36 dedicated production lines. During 2025, we'll be working through additional start ups and transitions and expect to have all of our capacity under contract resulting in 39 lines of production as we exit 2025. With all that as a backdrop, we continue to stand by our mid- to long term sales, adjusted EBITDA and free cash flow targets. With our current manufacturing capacity of nearly 15 gigawatts, we expect our wind revenue to eclipse $2,000,000,000 yielding a high single digit adjusted EBITDA margin and a free cash flow percentage in the mid single digits over the next couple of years. Speaker 200:07:49Now with that, I'll turn the call over to Brian to review our financial results. Speaker 300:07:54Please turn to Slide 8. All comparisons discussed today will be on a year over year basis for Please note our prior year financial information has been restated to exclude the discontinued operations from our Asia reporting segment as we shut down our manufacturing operations in China at the end of 2022. In the Q3 of 2023, net sales were $372,900,000 compared to $384,400,000 for the same period in 2022, a decrease of 3%. Net sales of wind blades, Tooling and other wind related sales, which hereafter I'll refer to as just wind sales, increased by $6,400,000 in Q3 of 2023 or 1.8% compared to the same period in 2022 due to higher wind blades produced, favorable foreign currency fluctuations and an increase in tooling sales in preparation for manufacturing line start ups and transitions. The increase in wind blade volume was primarily driven by lower production in the prior comparative period due to a temporary production stoppage in the Q3 of 2022 in one of our Mexico plants As the customer implemented a blade redesign and a brief flavor disruption in Turkiye in the Q3 of 2022, as we work with the union to resolve inflationary pressures on wages. Speaker 300:09:04These higher blade sales were partially offset by lower average sales prices due to the impact of raw material and logistic cost reductions on our blade prices. Field services sales decreased by $10,100,000 in the 3rd quarter compared to the same period in 2022. The decrease was due to a reduction in technicians deployed and revenue generating projects due to an increase in time spent on non revenue inspection and repair activities. Automotive sales decreased by $7,900,000 in the Q3 compared to the same period in 2022. This reduction is mainly due to a decrease in the number of composite bus bodies produced due to Proterra's bankruptcy during the Q3 of 2023. Speaker 300:09:39In addition, sales of other automotive products were down due to our customer supply chain constraints and delays in transitions of new product launches. Net loss attributable to common stockholders from continuing operations was $72,800,000 in the Q3 of 2023, compared to a net loss of $21,800,000 in the same period in 2022. Adjusted EBITDA For the Q3 of 2023 was a loss of $27,400,000 compared to adjusted EBITDA of $5,100,000 during the same period in 2022. The decrease in adjusted EBITDA during the Q3 was primarily due to $22,600,000 of credit losses and charges related to the bankruptcy of Proterra and a $13,500,000 incremental warranty charge as we revised estimates related to the warranty campaign announced in the Q2. Excluding these two items, adjusted EBITDA would have been $8,700,000 or 2.3 percent of sales. Speaker 300:10:33Moving to Slide 9. We ended the quarter with $161,000,000 of unrestricted cash and cash equivalents. We had $196,000,000 of debt, which includes the $132,500,000 convertible notes we issued in March and credit facilities we utilize in Turkey and India to manage working capital, Our debt levels were stable from the end of last quarter. We had negative free cash flow of $20,800,000 in Q3 of 2023 compared to negative free cash flow $29,400,000 in the same period in 2022. The net use of cash in the Q3 of 2023 was primarily due to our EBITDA loss and warranty costs incurred, partially offset by working capital improvements. Speaker 300:11:11We continue to place a significant focus on preserving cash and ensuring we efficiently deploy our working capital to make sure we can comfortably execute key initiatives as we move forward. We do expect a modest level of cash burn during the balance of the year as we satisfy our warranty commitments, implement the improvement initiatives and invest for growth. As we look beyond 2023, I want to provide some commentary on why we remain confident in our liquidity. The biggest change you should expect is a return to positive EBITDA in 2024 as we get a number of significant items in Speaker 100:11:41the rearview mirror. For example, Speaker 300:11:44We expect significantly reduced warranty costs, which this year include $47,800,000 in charges primarily related to a single campaign. We additionally expect to avoid approximately $40,000,000 of anticipated losses in 2023 from the Nordex Matamoros facility, We will hand it back over to Nordex at the end of the contract period on June 30, 2024. We also don't expect to experience another customer bankruptcy charge that impacted our 2023 EBITDA by almost $23,000,000 And finally, we expect to move our field services technicians back to more Revenue generating service work and less non revenue warranty work. Other areas we expect our cash flows to be positively impacted are advances from Customers to help facilitate start ups and transitions we will be executing in 2024. And as I had previously mentioned, we are continuing to work our work in process inventory and optimize our working capital efficiency. Speaker 300:12:37Offsetting these sources of cash will be CapEx, primarily related to transitions and start up of idle lines, Interest and taxes and as of now cash payments to Oaktree for the preferred dividends. We believe our balance sheet, our projected liquidity And our operating results will enable us to navigate the short term challenges and invest in our business to achieve mid to long Term growth targets of $2,000,000,000 plus in wind sales and high single digit adjusted EBITDA margins. Moving on to Slide 10. Given all that transpired in the Q3, we are updating our financial guidance for the year. We now expect sales to be approximately $1,500,000,000 This is about $50,000,000 lower than the midpoint of our previously provided sales guidance, which is being driven by 2 factors. Speaker 300:13:20First, are working through rationalization of their own inventory levels. And as a result, we are experiencing some weakened near term demand. 2nd, as we matured our discussions on transitions with 2 of our customers, we will begin to wind down production on some lines in the 4th To begin the decommissioning process of the lines and to ready ourselves for transitions in 2024. We've also revised our full year guidance or adjusted EBITDA to a loss of about 5%. Our loss is driven by the warranty campaign, the Nordex Matamoros facility losses, The Proterra bankruptcy charge, increased cost of inspections and repairs and the impact of diverting our field service technician to non revenue warranty work. Speaker 300:14:02As we look to the Q4, I'm expecting a modest loss as our Nordics Matamoros plant will be back in full scale production. The other That will negatively impact adjusted EBITDA in the 4th quarter is that we plan to have lower sales than previously expected and significantly reduce our work in process inventory, which will create negative cost absorption impacts in our factories. This reduction in work in process inventory is driven by the previously mentioned line transitions, We are also planning to drive our work in process inventory levels down to lean out our balance sheet. These reductions will temporarily negatively impact adjusted EBITDA, but they will allow us to harvest cash from the balance sheet as we head into another transition year in 2024. With that, I'll turn the call back over to Bill. Speaker 200:14:44Thanks, Ryan. Please turn to Slide 12. We remain bullish on the long term energy transition and believe we will continue to play a vital role in the pace and ultimate success We remain focused on managing our business through the short term challenges in the industry and are excited about how well we are positioned to capitalize on the significant growth the industry expects in the coming years. I want to thank all of our TPI associates once again for their commitment, dedication and loyalty to TPI. I'll now turn the call back to the operator to open it up for questions. Operator00:15:17Thank you. We will now begin the question and answer session. And the first question will come from Eric Stine with Craig Hallum. Please go ahead. Speaker 400:15:47Hi, everyone. Thanks for taking the questions. So last call, I know that when you're talking about your line Expectations, I think you were expecting 39 exiting 24. Now it sounds like that's 39 exiting 25. So can you just walk us through Kind of the puts and takes, is that simply just timing of startups being pushed out, now taking longer or maybe just walk through that for us? Speaker 300:16:16Hey, Craig. I'd say from a big picture perspective, over the course of the last few months, we've matured a lot of the discussions with our customers online And where they're going. And just part of that has been what we started to talk about last quarter. We are seeing a slide to the right. When we talked last quarter, there were a lot of start ups and transitions and we thought we'd be at 39 and 25 when we exited. Speaker 300:16:41We don't think that's changed right now. We still expect to be at 39. The timing of some of those transitions and startups is moving around. I'd say as we think through where we're at right now, we expect to There'll be some puts and takes, but as we look at 2024, we expect to exit with around 36 lines today. And then we'll grow that throughout with additional startups in 2025. Speaker 300:17:05Also, there'll be some transitions whereby we'll bring in longer blades and There's a few factories where those longer flights consume more space and so we actually go down a few lines because of that. But I'd say it's still lots of moving parts. I'd say we're still in the probably the 6th or 7th inning of a lot of these customer negotiations and discussions. And where we're at today is, we will be 25 is when we will be on pace to be at that $2,000,000,000 plus in sales and high single digit EBITDA margins. Speaker 400:17:34Got it. You mean exiting 25, you think you'd be in a position to do that? Speaker 300:17:39Yes. It will be on a run rate as we exit 25 is our current expectations. Speaker 400:17:44Got it. Okay. And then maybe just sticking with the customer conversations, I mean, the quality issues and I know that there it's not You've necessarily dealt with in the past and felt like it's relatively contained, but I also know this quarter There was more there. Just confidence that this is not part of a larger issue and curious what The conversations look like with your customers. I mean, I know that in some cases these are based on their designs. Speaker 400:18:17And so how much of this is on TPIC and how much is on the customers? Speaker 200:18:25Yes. Hey, Eric, it's Bill. Good to talk to you. When we put when we announced the warranty provision last quarter, we were Still pretty early in the execution of that. And so that's why we added 2 at this quarter. Speaker 200:18:42So there's nothing different. It's just we have better information today than we did when we talked last time. And I would say, Yes, we believe our conversations with our customers, if it's a warranty charge, it's on us, Eric. Let's be clear with that. Now, There are times when a blade fails or there's blade issues and it's a design issue and then that's not a warranty issue for us. Speaker 200:19:04But if there's a warranty Charge that we talked about, then that is on us. It can be complicated by design, but it's on us. But conversations with our customers are, We've taken many steps to improve our quality systems, to enhance our quality systems, I should say. I would say The industry is very sensitive to quality today, given everything that we've seen in the press from a number of the OEMs. And so the conversations with our customers are very constructive. Speaker 200:19:35We're in this together. We're working together to make sure that We have processes that can meet their design specs. We are working with them very early in the design process to make sure that What they're designing is manufacturable in an efficient and effective way. So very constructive discussions and we believe we have Our arms around the issue that we announced last quarter, and to the extent we to the extent there are Material issues, we disclose them as we did. If we don't disclose anything, it's because they're not material and they're just normal course. Speaker 400:20:12Got it. Okay, thanks. Speaker 200:20:14Yes. Thank you. Operator00:20:16The next question will come from Morgan Reid with Bank of America. Please go ahead. Speaker 500:20:21Hi. Thanks for taking the question. I know that we were just kind of talking about some of the New opportunities in the industry and that you're having a lot of productive conversations with OEMs as you all work through product quality issues as sort of a collective industry. Just curious if you're seeing any sort of emerging market share opportunities or emerging sort of near term opportunities as one of your competitors It deals with its own product quality issues and potentially pulling back on some of their commitments for the near term. Just curious if there's an opportunity for you all to pick up some demand there? Speaker 200:20:59Well, again, so That would be our customers that would be looking at expanded market share as a result of that particular OEMs challenges with the onshore space. With that said, clearly, if there's market share gains by our customers, that certainly provides an opportunity for us to gain share as well. So long answer to your question, but I wanted to make sure we're clear. But, yes, absolutely, to the extent our Customers are gaining share. That certainly is an opportunity for us to gain share as well. Speaker 500:21:35Got it. That makes sense. And is there any sort of timing expectation around that? Or is that still kind of falling inside your expectation and communication of sort of like An improving environment for TPI in 2025 plus on the demand side? Speaker 200:21:51Yes, I think it's still a little bit influx. I mean, we're not Counting specifically on that, to be frank, I mean, we are working with our existing customers, evaluating what their needs are. And as we've said, we see 2024 as a continued of the transition with an inflection probably in 2025 is what we're looking So we're not focused specifically on the challenges of a single OEM. We're more focused on what we can control and The OEMs we're working for today and how we can help them be successful. Speaker 500:22:28That makes a lot of sense. And one more from me. I was just curious Where you are in servicing your own warranty issues, I know you just mentioned that you're taking up that charge just a bit as you're later in that process. So just curious if you can provide an update on maybe what was different from your expectations and maybe what's left here as you've taken up that expectation for warranty charges. Yes. Speaker 200:22:53I think the further along you get in the process, the more Experience you have at dealing with the challenges. I think we've done what we have left is there's a fair amount of up Tower, which tends to be a little more challenging than if the blade is down tower. But I would tell you we've worked very closely with our customer and our customer's customer on developing a very efficient program to get this warranty work behind us Over the next couple of quarters, quite frankly, so we will have some work going into 'twenty four, but we've already begun shifting our technicians on on the billable work for the back for the end of this year. So we'll see more of that as we get into the early part of next year. We'll have Much more billable work and we'll wind down that warranty work in the first half of next year. Speaker 500:23:47Got it. Very helpful. I'll take the rest offline. Thank you. Speaker 200:23:50Yes. Thanks, Morgan. Operator00:23:52The next question will come from Pavel Molchanov with Raymond James. Please go ahead. Speaker 600:23:59Yes. Thanks for taking the question. So I know you're not giving kind of formal 2024 guidance at this stage, but I think you mentioned that you're not expecting A growth year, so just zooming in on that, from the $1,500,000,000 in 2023 Total top line, flattish, down, what kind of magnitude? Speaker 200:24:30I'd say flattish to slightly down. Speaker 600:24:37Okay. Okay. That's clear. And the trajectory quarter to quarter Kind of more backend weighted because 2023 has been quite the opposite. You started higher and ended lower. Speaker 200:24:55I'd say it's probably more back end because of the transitions and start ups that we'll have in the first half of the year. Speaker 600:25:03Okay. Absolutely clear. Follow-up question on the Preferred, you said that at this stage, per the agreement from 2 years ago, You will be moving to a cash dividend starting next year. Are you in talks with Oaktree about amending that, in other words, prolonging the payment in kind arrangement? Speaker 200:25:36Yes, I would tell you, we are right in the middle of very constructive discussions with Oaktree about providing us with more flexibility next year. Just leave it at that. Speaker 600:25:50Okay. Thank you very much. Speaker 200:25:53Thank Operator00:25:58you, Pavel. Our next question will come from Jeff Osborne with TD Cowen. Please go ahead. Mr. Osborne, you may be muted. Speaker 100:26:13Sorry about that. You folks walked through on the call all the cash flow issues that won't repeat themselves next year and putting aside the Oaktree Dividend is can you walk through what the uses of cash will be next year, especially in the first half? I imagine there's some CapEx, maybe you can give us an update on the Newton facility, and then just how we should think about cash burn through the first half of the year in particular when things might be a bit more Speaker 300:26:41Yes, I think the first half to your point is going to be a period of time when they are going to be a bit more challenged. The good news what I will tell you is Our customers have been much more amiable to providing us funding to help with those start ups and transitions than they have in the past. So We're feeling pretty good about where we're at right now with our plan. I do think that you're probably going to see our low watermark for cash performance happen in the first half as we're going through those transitions. But we are getting subsidized by our customers, so that will help out a fair amount. Speaker 300:27:11We are already this year starting to Then some CapEx dollars that you saw a little bit of a tick up this quarter. You'll see that continue next quarter. Probably the first one out of the gate is going to be the We announced last quarter with the Dolores facility, where GE is going to be producing their workhorse blade, we'll be starting up that facility. And then we have a couple of other transitions that will be going on where we're going from shorter blades to longer blades. So this is all good stuff. Speaker 300:27:36I mean for us, we need to go through these in order to get to where we want to go to the $2,000,000,000 plus in sales as we get to full rate. But The first half will be, I think, the low watermark for cash for us just because of those. And it's not just the transitions. It's the slowdown in sales and Dollars coming in that you get when you're going through a decommissioning process of the old lines and everything. So we're starting that here in the Q4 for a handful of lines that will continue into the Q1 and We'll move into those transitions. Speaker 100:28:05Makes sense. And then can you give us an update on what the anticipated CapEx would be for the full year? And any Comments that you can share on Newton would be helpful. Speaker 300:28:14Yes. What I will tell you, we're not quite ready to guide what CapEx is going to be out for the full year, but I'll kind of tell you Where we think it's going to be. We've historically kind of our OpEx, CapEx bare bones without start ups and transitions has generally been about 1% of sales. And what I would tell you is from a start up and transition perspective, we're probably going to be at least that or maybe a little bit more than that, as we get into next year, but we're still Fine tuning the timing on some things right now, especially as thinking about the timing of transitions that happened in 2025 that may in fact have 2024 CapEx. We definitely won't be spending anything beyond where we are this year because we're buying the wind turbines in Turkey, but we will have a combination of startup and Transition CapEx and just normal OpEx CapEx. Speaker 200:29:02And Jeff, as it relates to Newton, that's still we're still working With our customer on timing for that one. So we do not have that locked down yet as far as exactly when we will start Or the blade type in that facility. Speaker 100:29:18And then very quickly, Bill, on the EV comments you made in the thermal barrier Light duty truck, is there any CapEx associated with that? Anything you could share around content per vehicle and when the start of production might be? Speaker 200:29:28Yes. The CapEx for that is relatively light. Some of it's already been spent. It will depend on how fast it ramps, quite frankly. If it ramps faster, there will be a little bit more CapEx next year for it. Speaker 200:29:42But relatively small amounts of CapEx to ramp those programs that we've got started here in the Q4. Speaker 100:29:50Perfect. Thank you. Speaker 200:29:52Thanks, Jeff. Operator00:29:55This concludes our question and answer session. I would like to turn the conference back over to Mr. BillRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallTPI Composites Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) TPI Composites Earnings Headlines1 Small-Cap Stock with Competitive Advantages and 2 to Keep Off Your RadarMay 1, 2025 | msn.com1 of Wall Street’s Favorite Stock with Impressive Fundamentals and 2 to Turn DownApril 23, 2025 | finance.yahoo.comURGENT: Someone's Moving Gold Out of London...People who don’t understand the gold market are about to lose a lot of money. Unfortunately, most so-called “gold analysts” have it all wrong… They tell you to invest in gold ETFs - because the popular mining ETFs will someday catch fire and close the price gap with spot gold. May 5, 2025 | Golden Portfolio (Ad)TPI Composites, Inc. Announces First Quarter 2025 Earnings Release Date and Conference CallApril 17, 2025 | gurufocus.comTPI Composites, Inc. Announces First Quarter 2025 Earnings Release Date and Conference Call | ...April 17, 2025 | gurufocus.comTPI Composites, Inc. Announces First Quarter 2025 Earnings Release Date and Conference CallApril 17, 2025 | globenewswire.comSee More TPI Composites Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like TPI Composites? Sign up for Earnings360's daily newsletter to receive timely earnings updates on TPI Composites and other key companies, straight to your email. Email Address About TPI CompositesTPI Composites (NASDAQ:TPIC) manufactures and sells composite wind blades, and related precision molding and assembly systems to original equipment manufacturers (OEMs) in the United States, Mexico, Europe, the Middle East, Africa, and India. It also provides composite solutions for the automotive industry; and field service inspection and repair services comprising diagnostic, repair, and maintenance services for wind blades to OEM customers, and wind farm owners and operators. The company was formerly known as LCSI Holding, Inc. and changed its name to TPI Composites, Inc. in 2008. TPI Composites, Inc. was founded in 1968 and is headquartered in Scottsdale, Arizona.View TPI Composites ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings American Electric Power (5/6/2025)Advanced Micro Devices (5/6/2025)Marriott International (5/6/2025)Constellation Energy (5/6/2025)Arista Networks (5/6/2025)Brookfield Asset Management (5/6/2025)Duke Energy (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Ferrari (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 7 speakers on the call. Operator00:00:11Please note this event is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Jason Wegman Please go ahead, sir. Speaker 100:00:21Thank you, operator. I would like to welcome everyone to TPI Composites' 3rd Quarter 2023 Earnings Call. We will be making forward looking statements during this call that are subject to risks and uncertainties, which could cause actual results to differ materially. A detailed discussion of applicable risks is included in our latest reports and filings with the Today's presentation will include references to non GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non GAAP measures to the comparable GAAP financial measures. Speaker 100:01:07With that, let me turn the call over to Bill Siwek, TPI Composites' President and CEO. Thanks, Jason, and Speaker 200:01:14good Good afternoon, everyone, and thank you for joining our call. In addition to Jason, I'm here with Ryan Miller, our CFO. Today, I'll discuss Our results and highlights from the Q3, our global operations and the wind energy market more broadly. Ryan will then review our financial results, and then we'll open the call for Q and A. Please turn to Slide 5. Speaker 200:01:34Despite the challenging global wind market and economic climate, our operational The Q3 was in line with our expectations, but our overall results were negatively impacted by an incremental warranty charge and charges related to the unexpected Proterra bankruptcy. The 3rd quarter was highlighted by strong cash performance as we ended the quarter with 161,000,000 position will enable us to deal with the near term challenges the industry is facing and provide us with the runway required to execute and attain our long term financial targets. We also made progress during the quarter with our customers on several fronts to gain visibility into volume and capacity needs in 2024 and beyond that are part of our pathway to those long term targets. Therefore, we expect to announce final signed contracts by the end of the year for a number of extensions, Start ups and transitions. Please turn to Slide 6. Speaker 200:02:35To summarize our operations For the quarter, in the Blade business, although we continue to work through some challenges in Mexico, our Blade facilities in India and Turkey continue to perform exceptionally well. Globally, we produced 6.66 sets or 2.9 gigawatts with a utilization rate of 85%. As anticipated, our global service business is down year over year due to a reduction in technicians deployed to revenue generating projects due to the warranty campaign we are working on. For the full year, we expect revenue to be down about 40% year over year. Things continue to progress nicely in our automotive business. Speaker 200:03:12However, we now anticipate automotive's 2023 full year revenue to be down from 2022, primarily due to lower Proterra bus body sales because of their bankruptcy. It's important to note that the reduction of sales Proterra does not have a meaningful impact on TPI's go forward EBITDA and cash flow given that the bus volumes forecasted by Proterra were never achieved and the program was operating at about breakeven. In addition, the automotive business is also experiencing lower than expected sales and other automotive products due to our customer supply chain constraints and delays in new product launches. With that said, We are planning to launch 3 new automotive production programs in the Q4. These programs include large structural panels and a full battery enclosure for 2 Class Vacation initiative is paying dividends as these three launches are each with a different customer with 2 of them being new to TPI. Speaker 200:04:16In addition to products being launched, our investment in innovation and new manufacturing technologies is aligned with the needs of the automotive market. We are continuing to explore strategic alternatives for the automotive business and are encouraged by the progress we have made and expect to have more information to share by the end of the year. As for our supply chain, the situation continues to be significantly better than during the last 2 years. The overall cost of raw materials Continue to trend down compared to 2022, while logistics costs have returned to pre pandemic levels. We expect to see additional cost savings in 2024, given the excess capacity for many of our inputs and a slowdown in demand in China. Speaker 200:04:57However, we will need to keep an eye on the events in the Middle East and the potential impact that may have on petroleum prices, which could impact the cost of certain feedstocks as well as transportation costs. Over the course of the past few years, we have seen numerous government policy initiatives aimed at expanding the use of renewable energy, including the passage of the Inflation Reduction Act in the U. S. And several policy initiatives in the EU that are expected to simplify regulations, speed up permitting and promote cross border projects to accelerate climate neutrality in Europe. We expect that the new government policy will accelerate long term growth in the wind industry. Speaker 200:05:37Despite these favorable long term policy trends, we don't An increase in demand is till 2025, while the wind industry awaits clarity on the implementation guidance related to key components of the IRA and clarity around more robust policies in Europe. In addition, permitting, transmission, transmission queues, the ability of the broader Wind industry supply chain to ramp volume, rising interest rates and inflation and the cost and availability of capital are further factors limiting the timing of the wind market Kavri. Specific to TPI, we currently expect to have 6 lines in start up and 4 lines in transition during 2024 as our customers prepare for stronger expected demand beginning in 2025, which will impact utilization and output during 2024. Furthermore, we expect demand from one of our customers to be down in the near term as they consider their existing inventory levels and contemplate changes in geographic demand, which are expected to result in lower volumes from the underutilization of certain lines and a reduction in overall lines from that customer. So while we do not expect 2024 to be a year of growth for TPI, we do expect to make significant improvements to our EBITDA and EBITDA margin. Speaker 200:06:52Today, we are operating 37 lines, including the 4 lines in Mexico for Nordex that we will transition back to them in the middle of 2024. With the transition of lines to larger blades, the start up of new lines and completion of the Nordex contract in Mexico and a reset of lines with Vestas, The current plan is to exit 2024 with 36 dedicated production lines. During 2025, we'll be working through additional start ups and transitions and expect to have all of our capacity under contract resulting in 39 lines of production as we exit 2025. With all that as a backdrop, we continue to stand by our mid- to long term sales, adjusted EBITDA and free cash flow targets. With our current manufacturing capacity of nearly 15 gigawatts, we expect our wind revenue to eclipse $2,000,000,000 yielding a high single digit adjusted EBITDA margin and a free cash flow percentage in the mid single digits over the next couple of years. Speaker 200:07:49Now with that, I'll turn the call over to Brian to review our financial results. Speaker 300:07:54Please turn to Slide 8. All comparisons discussed today will be on a year over year basis for Please note our prior year financial information has been restated to exclude the discontinued operations from our Asia reporting segment as we shut down our manufacturing operations in China at the end of 2022. In the Q3 of 2023, net sales were $372,900,000 compared to $384,400,000 for the same period in 2022, a decrease of 3%. Net sales of wind blades, Tooling and other wind related sales, which hereafter I'll refer to as just wind sales, increased by $6,400,000 in Q3 of 2023 or 1.8% compared to the same period in 2022 due to higher wind blades produced, favorable foreign currency fluctuations and an increase in tooling sales in preparation for manufacturing line start ups and transitions. The increase in wind blade volume was primarily driven by lower production in the prior comparative period due to a temporary production stoppage in the Q3 of 2022 in one of our Mexico plants As the customer implemented a blade redesign and a brief flavor disruption in Turkiye in the Q3 of 2022, as we work with the union to resolve inflationary pressures on wages. Speaker 300:09:04These higher blade sales were partially offset by lower average sales prices due to the impact of raw material and logistic cost reductions on our blade prices. Field services sales decreased by $10,100,000 in the 3rd quarter compared to the same period in 2022. The decrease was due to a reduction in technicians deployed and revenue generating projects due to an increase in time spent on non revenue inspection and repair activities. Automotive sales decreased by $7,900,000 in the Q3 compared to the same period in 2022. This reduction is mainly due to a decrease in the number of composite bus bodies produced due to Proterra's bankruptcy during the Q3 of 2023. Speaker 300:09:39In addition, sales of other automotive products were down due to our customer supply chain constraints and delays in transitions of new product launches. Net loss attributable to common stockholders from continuing operations was $72,800,000 in the Q3 of 2023, compared to a net loss of $21,800,000 in the same period in 2022. Adjusted EBITDA For the Q3 of 2023 was a loss of $27,400,000 compared to adjusted EBITDA of $5,100,000 during the same period in 2022. The decrease in adjusted EBITDA during the Q3 was primarily due to $22,600,000 of credit losses and charges related to the bankruptcy of Proterra and a $13,500,000 incremental warranty charge as we revised estimates related to the warranty campaign announced in the Q2. Excluding these two items, adjusted EBITDA would have been $8,700,000 or 2.3 percent of sales. Speaker 300:10:33Moving to Slide 9. We ended the quarter with $161,000,000 of unrestricted cash and cash equivalents. We had $196,000,000 of debt, which includes the $132,500,000 convertible notes we issued in March and credit facilities we utilize in Turkey and India to manage working capital, Our debt levels were stable from the end of last quarter. We had negative free cash flow of $20,800,000 in Q3 of 2023 compared to negative free cash flow $29,400,000 in the same period in 2022. The net use of cash in the Q3 of 2023 was primarily due to our EBITDA loss and warranty costs incurred, partially offset by working capital improvements. Speaker 300:11:11We continue to place a significant focus on preserving cash and ensuring we efficiently deploy our working capital to make sure we can comfortably execute key initiatives as we move forward. We do expect a modest level of cash burn during the balance of the year as we satisfy our warranty commitments, implement the improvement initiatives and invest for growth. As we look beyond 2023, I want to provide some commentary on why we remain confident in our liquidity. The biggest change you should expect is a return to positive EBITDA in 2024 as we get a number of significant items in Speaker 100:11:41the rearview mirror. For example, Speaker 300:11:44We expect significantly reduced warranty costs, which this year include $47,800,000 in charges primarily related to a single campaign. We additionally expect to avoid approximately $40,000,000 of anticipated losses in 2023 from the Nordex Matamoros facility, We will hand it back over to Nordex at the end of the contract period on June 30, 2024. We also don't expect to experience another customer bankruptcy charge that impacted our 2023 EBITDA by almost $23,000,000 And finally, we expect to move our field services technicians back to more Revenue generating service work and less non revenue warranty work. Other areas we expect our cash flows to be positively impacted are advances from Customers to help facilitate start ups and transitions we will be executing in 2024. And as I had previously mentioned, we are continuing to work our work in process inventory and optimize our working capital efficiency. Speaker 300:12:37Offsetting these sources of cash will be CapEx, primarily related to transitions and start up of idle lines, Interest and taxes and as of now cash payments to Oaktree for the preferred dividends. We believe our balance sheet, our projected liquidity And our operating results will enable us to navigate the short term challenges and invest in our business to achieve mid to long Term growth targets of $2,000,000,000 plus in wind sales and high single digit adjusted EBITDA margins. Moving on to Slide 10. Given all that transpired in the Q3, we are updating our financial guidance for the year. We now expect sales to be approximately $1,500,000,000 This is about $50,000,000 lower than the midpoint of our previously provided sales guidance, which is being driven by 2 factors. Speaker 300:13:20First, are working through rationalization of their own inventory levels. And as a result, we are experiencing some weakened near term demand. 2nd, as we matured our discussions on transitions with 2 of our customers, we will begin to wind down production on some lines in the 4th To begin the decommissioning process of the lines and to ready ourselves for transitions in 2024. We've also revised our full year guidance or adjusted EBITDA to a loss of about 5%. Our loss is driven by the warranty campaign, the Nordex Matamoros facility losses, The Proterra bankruptcy charge, increased cost of inspections and repairs and the impact of diverting our field service technician to non revenue warranty work. Speaker 300:14:02As we look to the Q4, I'm expecting a modest loss as our Nordics Matamoros plant will be back in full scale production. The other That will negatively impact adjusted EBITDA in the 4th quarter is that we plan to have lower sales than previously expected and significantly reduce our work in process inventory, which will create negative cost absorption impacts in our factories. This reduction in work in process inventory is driven by the previously mentioned line transitions, We are also planning to drive our work in process inventory levels down to lean out our balance sheet. These reductions will temporarily negatively impact adjusted EBITDA, but they will allow us to harvest cash from the balance sheet as we head into another transition year in 2024. With that, I'll turn the call back over to Bill. Speaker 200:14:44Thanks, Ryan. Please turn to Slide 12. We remain bullish on the long term energy transition and believe we will continue to play a vital role in the pace and ultimate success We remain focused on managing our business through the short term challenges in the industry and are excited about how well we are positioned to capitalize on the significant growth the industry expects in the coming years. I want to thank all of our TPI associates once again for their commitment, dedication and loyalty to TPI. I'll now turn the call back to the operator to open it up for questions. Operator00:15:17Thank you. We will now begin the question and answer session. And the first question will come from Eric Stine with Craig Hallum. Please go ahead. Speaker 400:15:47Hi, everyone. Thanks for taking the questions. So last call, I know that when you're talking about your line Expectations, I think you were expecting 39 exiting 24. Now it sounds like that's 39 exiting 25. So can you just walk us through Kind of the puts and takes, is that simply just timing of startups being pushed out, now taking longer or maybe just walk through that for us? Speaker 300:16:16Hey, Craig. I'd say from a big picture perspective, over the course of the last few months, we've matured a lot of the discussions with our customers online And where they're going. And just part of that has been what we started to talk about last quarter. We are seeing a slide to the right. When we talked last quarter, there were a lot of start ups and transitions and we thought we'd be at 39 and 25 when we exited. Speaker 300:16:41We don't think that's changed right now. We still expect to be at 39. The timing of some of those transitions and startups is moving around. I'd say as we think through where we're at right now, we expect to There'll be some puts and takes, but as we look at 2024, we expect to exit with around 36 lines today. And then we'll grow that throughout with additional startups in 2025. Speaker 300:17:05Also, there'll be some transitions whereby we'll bring in longer blades and There's a few factories where those longer flights consume more space and so we actually go down a few lines because of that. But I'd say it's still lots of moving parts. I'd say we're still in the probably the 6th or 7th inning of a lot of these customer negotiations and discussions. And where we're at today is, we will be 25 is when we will be on pace to be at that $2,000,000,000 plus in sales and high single digit EBITDA margins. Speaker 400:17:34Got it. You mean exiting 25, you think you'd be in a position to do that? Speaker 300:17:39Yes. It will be on a run rate as we exit 25 is our current expectations. Speaker 400:17:44Got it. Okay. And then maybe just sticking with the customer conversations, I mean, the quality issues and I know that there it's not You've necessarily dealt with in the past and felt like it's relatively contained, but I also know this quarter There was more there. Just confidence that this is not part of a larger issue and curious what The conversations look like with your customers. I mean, I know that in some cases these are based on their designs. Speaker 400:18:17And so how much of this is on TPIC and how much is on the customers? Speaker 200:18:25Yes. Hey, Eric, it's Bill. Good to talk to you. When we put when we announced the warranty provision last quarter, we were Still pretty early in the execution of that. And so that's why we added 2 at this quarter. Speaker 200:18:42So there's nothing different. It's just we have better information today than we did when we talked last time. And I would say, Yes, we believe our conversations with our customers, if it's a warranty charge, it's on us, Eric. Let's be clear with that. Now, There are times when a blade fails or there's blade issues and it's a design issue and then that's not a warranty issue for us. Speaker 200:19:04But if there's a warranty Charge that we talked about, then that is on us. It can be complicated by design, but it's on us. But conversations with our customers are, We've taken many steps to improve our quality systems, to enhance our quality systems, I should say. I would say The industry is very sensitive to quality today, given everything that we've seen in the press from a number of the OEMs. And so the conversations with our customers are very constructive. Speaker 200:19:35We're in this together. We're working together to make sure that We have processes that can meet their design specs. We are working with them very early in the design process to make sure that What they're designing is manufacturable in an efficient and effective way. So very constructive discussions and we believe we have Our arms around the issue that we announced last quarter, and to the extent we to the extent there are Material issues, we disclose them as we did. If we don't disclose anything, it's because they're not material and they're just normal course. Speaker 400:20:12Got it. Okay, thanks. Speaker 200:20:14Yes. Thank you. Operator00:20:16The next question will come from Morgan Reid with Bank of America. Please go ahead. Speaker 500:20:21Hi. Thanks for taking the question. I know that we were just kind of talking about some of the New opportunities in the industry and that you're having a lot of productive conversations with OEMs as you all work through product quality issues as sort of a collective industry. Just curious if you're seeing any sort of emerging market share opportunities or emerging sort of near term opportunities as one of your competitors It deals with its own product quality issues and potentially pulling back on some of their commitments for the near term. Just curious if there's an opportunity for you all to pick up some demand there? Speaker 200:20:59Well, again, so That would be our customers that would be looking at expanded market share as a result of that particular OEMs challenges with the onshore space. With that said, clearly, if there's market share gains by our customers, that certainly provides an opportunity for us to gain share as well. So long answer to your question, but I wanted to make sure we're clear. But, yes, absolutely, to the extent our Customers are gaining share. That certainly is an opportunity for us to gain share as well. Speaker 500:21:35Got it. That makes sense. And is there any sort of timing expectation around that? Or is that still kind of falling inside your expectation and communication of sort of like An improving environment for TPI in 2025 plus on the demand side? Speaker 200:21:51Yes, I think it's still a little bit influx. I mean, we're not Counting specifically on that, to be frank, I mean, we are working with our existing customers, evaluating what their needs are. And as we've said, we see 2024 as a continued of the transition with an inflection probably in 2025 is what we're looking So we're not focused specifically on the challenges of a single OEM. We're more focused on what we can control and The OEMs we're working for today and how we can help them be successful. Speaker 500:22:28That makes a lot of sense. And one more from me. I was just curious Where you are in servicing your own warranty issues, I know you just mentioned that you're taking up that charge just a bit as you're later in that process. So just curious if you can provide an update on maybe what was different from your expectations and maybe what's left here as you've taken up that expectation for warranty charges. Yes. Speaker 200:22:53I think the further along you get in the process, the more Experience you have at dealing with the challenges. I think we've done what we have left is there's a fair amount of up Tower, which tends to be a little more challenging than if the blade is down tower. But I would tell you we've worked very closely with our customer and our customer's customer on developing a very efficient program to get this warranty work behind us Over the next couple of quarters, quite frankly, so we will have some work going into 'twenty four, but we've already begun shifting our technicians on on the billable work for the back for the end of this year. So we'll see more of that as we get into the early part of next year. We'll have Much more billable work and we'll wind down that warranty work in the first half of next year. Speaker 500:23:47Got it. Very helpful. I'll take the rest offline. Thank you. Speaker 200:23:50Yes. Thanks, Morgan. Operator00:23:52The next question will come from Pavel Molchanov with Raymond James. Please go ahead. Speaker 600:23:59Yes. Thanks for taking the question. So I know you're not giving kind of formal 2024 guidance at this stage, but I think you mentioned that you're not expecting A growth year, so just zooming in on that, from the $1,500,000,000 in 2023 Total top line, flattish, down, what kind of magnitude? Speaker 200:24:30I'd say flattish to slightly down. Speaker 600:24:37Okay. Okay. That's clear. And the trajectory quarter to quarter Kind of more backend weighted because 2023 has been quite the opposite. You started higher and ended lower. Speaker 200:24:55I'd say it's probably more back end because of the transitions and start ups that we'll have in the first half of the year. Speaker 600:25:03Okay. Absolutely clear. Follow-up question on the Preferred, you said that at this stage, per the agreement from 2 years ago, You will be moving to a cash dividend starting next year. Are you in talks with Oaktree about amending that, in other words, prolonging the payment in kind arrangement? Speaker 200:25:36Yes, I would tell you, we are right in the middle of very constructive discussions with Oaktree about providing us with more flexibility next year. Just leave it at that. Speaker 600:25:50Okay. Thank you very much. Speaker 200:25:53Thank Operator00:25:58you, Pavel. Our next question will come from Jeff Osborne with TD Cowen. Please go ahead. Mr. Osborne, you may be muted. Speaker 100:26:13Sorry about that. You folks walked through on the call all the cash flow issues that won't repeat themselves next year and putting aside the Oaktree Dividend is can you walk through what the uses of cash will be next year, especially in the first half? I imagine there's some CapEx, maybe you can give us an update on the Newton facility, and then just how we should think about cash burn through the first half of the year in particular when things might be a bit more Speaker 300:26:41Yes, I think the first half to your point is going to be a period of time when they are going to be a bit more challenged. The good news what I will tell you is Our customers have been much more amiable to providing us funding to help with those start ups and transitions than they have in the past. So We're feeling pretty good about where we're at right now with our plan. I do think that you're probably going to see our low watermark for cash performance happen in the first half as we're going through those transitions. But we are getting subsidized by our customers, so that will help out a fair amount. Speaker 300:27:11We are already this year starting to Then some CapEx dollars that you saw a little bit of a tick up this quarter. You'll see that continue next quarter. Probably the first one out of the gate is going to be the We announced last quarter with the Dolores facility, where GE is going to be producing their workhorse blade, we'll be starting up that facility. And then we have a couple of other transitions that will be going on where we're going from shorter blades to longer blades. So this is all good stuff. Speaker 300:27:36I mean for us, we need to go through these in order to get to where we want to go to the $2,000,000,000 plus in sales as we get to full rate. But The first half will be, I think, the low watermark for cash for us just because of those. And it's not just the transitions. It's the slowdown in sales and Dollars coming in that you get when you're going through a decommissioning process of the old lines and everything. So we're starting that here in the Q4 for a handful of lines that will continue into the Q1 and We'll move into those transitions. Speaker 100:28:05Makes sense. And then can you give us an update on what the anticipated CapEx would be for the full year? And any Comments that you can share on Newton would be helpful. Speaker 300:28:14Yes. What I will tell you, we're not quite ready to guide what CapEx is going to be out for the full year, but I'll kind of tell you Where we think it's going to be. We've historically kind of our OpEx, CapEx bare bones without start ups and transitions has generally been about 1% of sales. And what I would tell you is from a start up and transition perspective, we're probably going to be at least that or maybe a little bit more than that, as we get into next year, but we're still Fine tuning the timing on some things right now, especially as thinking about the timing of transitions that happened in 2025 that may in fact have 2024 CapEx. We definitely won't be spending anything beyond where we are this year because we're buying the wind turbines in Turkey, but we will have a combination of startup and Transition CapEx and just normal OpEx CapEx. Speaker 200:29:02And Jeff, as it relates to Newton, that's still we're still working With our customer on timing for that one. So we do not have that locked down yet as far as exactly when we will start Or the blade type in that facility. Speaker 100:29:18And then very quickly, Bill, on the EV comments you made in the thermal barrier Light duty truck, is there any CapEx associated with that? Anything you could share around content per vehicle and when the start of production might be? Speaker 200:29:28Yes. The CapEx for that is relatively light. Some of it's already been spent. It will depend on how fast it ramps, quite frankly. If it ramps faster, there will be a little bit more CapEx next year for it. Speaker 200:29:42But relatively small amounts of CapEx to ramp those programs that we've got started here in the Q4. Speaker 100:29:50Perfect. Thank you. Speaker 200:29:52Thanks, Jeff. Operator00:29:55This concludes our question and answer session. I would like to turn the conference back over to Mr. BillRead morePowered by