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Edited Transcript of TPIC earnings conference call or presentation 8-May-19 9:00pm GMT

Q1 2019 TPI Composites Inc Earnings Call

SCOTTSDALE May 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Tpi Composites Inc earnings conference call or presentation Wednesday, May 8, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christian Edin

TPI Composites, Inc. - Senior Director of IR

* Steven C. Lockard

TPI Composites, Inc. - CEO & Director

* William E. Siwek

TPI Composites, Inc. - President

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Conference Call Participants

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* Eric Andrew Stine

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst

* Ethan Cory Ellison

Morgan Stanley, Research Division - Equity Analyst

* Hilary Elizabeth Cauley

JMP Securities LLC, Research Division - Associate

* Jeffrey David Osborne

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Mark Wesley Strouse

JP Morgan Chase & Co, Research Division - Alternative Energy and Applied & Emerging Technologies Analyst

* Pavel S. Molchanov

Raymond James & Associates, Inc., Research Division - Energy Analyst

* Philip Shen

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to TPI Composites First Quarter 2019 Earnings Conference Call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A.

At this time, I'd like to turn the conference over to Christian Edin, Investor Relations for TPI Composites. Thank you. You may begin.

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Christian Edin, TPI Composites, Inc. - Senior Director of IR [2]

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Thank you, operator. I'd like to welcome everyone to TPI Composites First Quarter 2019 Earnings Call.

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

Today's presentation also includes 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 closest GAAP financial measures.

With that, let me turn the call over to Steve Lockard, TPI Composites' CEO.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [3]

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Thanks, Christian, and good afternoon, everyone. Thank you for joining our call. In addition to Christian, I'm joined today by Bill Siwek.

On this call, we'll provide a summary of the quarter, additional color on our updated guidance for the year and outlook for 2020 as well as a brief update of the growing wind market and our strategy for profitable growth. Bill will then review our financial results in detail before we open up the call for Q&A.

But first, I'd like to share our enthusiasm regarding a few changes we have made to strengthen the TPI leadership team. I'm very pleased to announce that Bill Siwek has been promoted to the position of President of TPI Composites. In this newly created role, Bill will be responsible for global operations, supply chain, finance, human resources, legal and information technology.

Bill joined TPI as our CFO in 2013. Since that time, TPI has seen a fivefold increase in annual revenue; a more than 4x increase in global market share; we diversified our customer base; more than tripled our global workforce to over 11,000 associates; completed 7 new factory startups; executed a successful IPO; maintained a conservative balance sheet; and created over $6 billion in visible revenue.

Bill's contributions to TPI's success span across every area of the company. He is a critical member of the executive team that developed TPI's long-term strategy and drives the organization to perform to our highest potential. Bill is the champion of our ESG initiative and has us on a path to achieve an ESG gold standard. I'm grateful for his contributions and to have him as a partner at TPI. Congratulations, Bill.

Second, Ramesh Gopalakrishnan has been promoted to Chief Operating Officer for Wind. In this role, reporting to Bill Siwek, Ramesh will be responsible for our Wind operations globally as well as supply chain, safety, quality and technology.

Ramesh joined TPI in September of 2016 and most recently served as our Senior VP of Technology, Quality and LATAM operations. Since joining TPI, he's been deeply involved with setting up our greenfield operations in Mexico, China and India and has also developed our long-term technology strategy. He has significantly increased our patent portfolio, set up our engineering office in Kolding, Denmark and strengthened our technical capability as well as building out our global technical program management team.

Ramesh has more than 25 years of international operations, manufacturing, supply chain, technology, strategy and general management experience. He has lived and worked in the Americas, Europe and Asia. He's been responsible for global wind blade and mold manufacturing, in cell assembly and technology development for both Senvion and Suzlon. He started in wind with GE, where he ran their Blade Center of Excellence and earned his Six Sigma Master Black Belt. Ramesh also ran supply chain and strategy for 5 years at Halliburton. Ramesh is uniquely qualified to serve as TPI's Wind COO, and we are thrilled to have him in this role.

And third, we're very pleased to announce that Bryan Schumaker is joining TPI next week as our new Chief Financial Officer, reporting to Bill Siwek. In his role, Bryan will be responsible for leading and directing TPI's finance, accounting and Investor Relations, while contributing to the overall strategic direction of TPI. In addition, Bryan will be the day-to-day leader of our internal audit function, which reports directly to the Audit Committee Chairman.

Bryan joins us from First Solar, where he spent 11 years in the finance and accounting group, most recently serving as the Chief Accounting Officer. Bryan joined First Solar when revenue was $500 million and rose through the ranks as the company's revenue grew to over $3.6 billion. Bryan also served as the CFO for 8point3 Energy Partners, which was a publicly traded $1 billion growth-oriented limited partnership formed by First Solar and Sun Power to own, operate and acquire solar energy generation projects. Prior to First Solar, Bryan spent 5 years with Swift Transportation, a publicly traded trucking company based in Phoenix, where he held multiple positions including VP Corporate Controller. He also worked in the assurance practice of KPMG early in his career.

In my role as CEO, I will continue to provide strategic leadership for the company for the foreseeable future and will continue to drive overall results. I will continue to work with industry leaders and policymakers to grow the global wind markets along with continuing to enhance and develop our customer relationships. I look forward to focusing even more energy on growing our diversified markets business.

Please turn to Slide 5. The first quarter had its share of challenges, including the impact of the strike and restart of our operations in Matamoros as well as the impact of the financial and operational distress that Senvion is experiencing. With plans to grow our top line by as much as 50% in 2019, these 2 challenges have just reinforced our need to continue to focus on execution. Except for these 2 situations, our operations are performing at or above expectations in 2019.

We have also taken this opportunity to consolidate and restructure certain operations for long-term cost and efficiency reasons. Therefore, we have revised our 2019 guidance to reflect this unique set of circumstances. Our targets for 2020 of approximately $1.8 billion in revenue and 10% adjusted EBITDA remain unchanged. Our target to double our revenue to $2 billion over the next few years, with target adjusted EBITDA margins of 12% or better, remains unchanged. Our long-term strategy involves investing heavily to reduce LCOE and creating approximately 18 gigawatts of global wind blade capacity, which at 80% utilization will produce about 15 gigawatts of wind blades annually. And based on these assumptions, we estimate TPI achieving 20% to 25% global market share at that time.

As wind energy LCOE crosses through the marginal price of coal, we expect product transitions will moderate and turbine crisis will stabilize and a more robust margin should be achieved. We remain focused on delivering profitable growth, significant free cash flow and compelling returns on invested capital.

Let me now get into a little more detail on the events impacting Q1 results and our guidance for the balance of 2019. In the first quarter of 2019, we continued our investment in both startups and transitions, with 13 lines in startup and 5 lines in transition during the quarter. The startup of our new facility in Yangzhou, China is going very well, with production starting at the end of the first quarter. And startup for Enercon in Turkey is also on track. Our transitions are also going well, and we are on plan with each of them.

Given our historical returns on invested capital from startups and our rigorous investment policy, startup costs translate to growth and future potential profitability, and we believe the same is true with transitions. We have and will continue to evaluate every transition request from our customers to ensure that it is in the best interest of TPI, our stakeholders and of course our customers.

While both 2018 and 2019 will be heavy investment years as it relates to transitions, we do see the pace of transitions slowing slightly in 2020. And we believe longer term, transitions will become less time intensive and costly for us and our customers as modular blades become more mainstream.

As we announced last week and during our fourth quarter 2018 call, many of our unionized workers in Matamoros, Mexico went on strike in mid-February of 2019. The strike lasted for approximately 2 weeks, but production had slowed down meaningfully before the strike. This disruption, along with the loss of nearly 50% of the workforce because of actions taken during the strike and a slower-than-planned startup in 2018, had a significant impact on production during the first quarter of 2019. The pace of hiring new associates was slower than anticipated after the strike, but has recently accelerated to be in line with expectations. Nevertheless, a material amount of production was lost during the first quarter and will likely carry on into the second and third quarters as the new associates are trained and additional lines are ramping up.

Given the heavy demand for blades in the U.S. market in 2019, TPI's liquidated damages provisions with its customers are quite stringent. As a result, in addition to the impact of lost production, we took a charge to reduce the total consideration expected to be received under a customer contract for the liquidated damages incurred in the first quarter. We believe these production delays will also likely impact second and third quarter volumes and may result in significant liquidated damages charges during the balance of 2019, as we expect to only deliver approximately 60% of the sets original planned in our prior guidance from Matamoros during 2019. We expect Matamoros to be at full volume in 2020.

The combined impact of lost contribution margin dollars and liquidated damages on adjusted EBITDA for the full year related to the challenges with the Matamoros startup and ramp as described is estimated to be approximately $25 million. We remain committed to Matamoros as a strategic manufacturing hub for North, Central and South America, and we are working with the government of Mexico and the State of Tamaulipas on certain incentives and programs to ensure a strong workforce for the future.

In a related matter, given the proposed reforms of the AMLO administration as well as the labor activism along the U.S.-Mexico border, we are proactively addressing the labor situation in our Juárez plants and developing a long-term labor strategy for this location. As a first step, we increased wages at the end of the first quarter for virtually all of our direct labor associates in Juárez by approximately 15% or $2.7 million for the balance of 2019. We are progressing well and localizing raw materials in the region, which will positively impact our competitiveness for Mexico.

On April 9, 2019, Senvion filed a petition with the local court in Hamburg, Germany to start preliminary self-administration proceedings under German insolvency legislation after talks with its lenders failed. On April 17, 2019, Senvion announced that it had secured EUR 100 million loan to enable it to continue its self-administration process. Notwithstanding the ongoing discussions with Senvion as well as the potential opportunity to sell some or all of the blades that we have produced for Senvion directly to the wind farm owners pursuant to their step-in rights, we determined certain assets were impaired and adjusted the revenue recognized by the amount not probable of collection at this time, which adversely impacted adjusted EBITDA by approximately $11 million during the quarter and full year adjusted EBITDA is expected to be impacted by approximately $16 million.

Senvion currently represents approximately 4% of our total blade production capacity globally. We expect any potential future production for Senvion would be from another facility and likely under a restructured or amended agreement.

We also announced plans last week to take a restructuring charge in the second quarter of approximately $12 million related to consolidation of certain of our manufacturing facilities, including our plan to shut down the 2 blade lines operating at our Taicang Port facility and moving our tooling operation from Taicang City to the larger Taicang Port facility, thereby expanding our tooling capacity for larger blades and reducing overall cost. We expect these consolidations will enable TPI to more effectively and efficiently support our customers globally, while reducing cost by approximately $11 million on an annualized basis.

Finally, several of the upside opportunities we mentioned in the fourth quarter call related to additional volume from certain locations will likely not materialize this year, primarily due to constraints on availability of certain key raw materials, driven by significant year-over-year demand in the wind industry globally. We are actively working with our customers and suppliers to localize certain key inputs in Mexico and Turkey as well as to assist our customers in better planning and coordination of supply chains for raw materials for which they're responsible for securing to meet their blade requirements.

Furthermore, delays at U.S.-Mexican border crossings have resulted in challenges in both delivering blades from our Mexico facilities to the U.S. and in receiving raw materials from the U.S. Although this has a tad -- a material impact on our operations to date, if these conditions persist, it could have an impact on both production and delivery in the future. We're actively working on alternative delivery options, including rail directly from Mexico to the U.S. to minimize the potential impacts.

Finally, the U.S. and China are continuing their new trade deal negotiations. While we expect a generally positive outcome over time, we will continue to closely monitor these negotiations.

Turning to Slide 6, last quarter, we announced a multiyear supply agreement with Vestas Wind Systems to provide blades from 4 manufacturing lines, with an option to add more lines for India and export markets. These blades will be produced at a new Indian facility near Chennai, Tamil Nadu, which we plan to open for production in the first half of 2020. This new state-of-the-art manufacturing hub will enable us to reliably and cost effectively serve the India and global wind markets for multiple customers. We also plan to localize a substantial portion of our required raw materials in-country for supply to our India blade plant as well as for export to other TPI global plants to add raw material supply capacity and to continue to drive down our raw material cost. Our move into India highlights the continued execution of our diversified growth strategy. The construction of this plant is on schedule, and we have already added several key senior leaders to the India team. We're off to a very good start.

During the first quarter of 2019, TPI executed a joint development agreement with GE to cooperatively develop advanced blade technology for future wind turbines, underscoring GE's plans to continue to partner with TPI.

2 weeks ago, we celebrated the opening of our second manufacturing facility in Newton, Iowa with Governor Kim Reynolds, where we're building our composite bus bodies for Proterra. Executives from Proterra and General Electric were on hand to highlight this example of 100% clean transportation solutions, where Proterra battery electric buses purchased by DART, the Des Moines Area Regional Transit Authority, will run through the streets of Des Moines after being charged by cost-effective wind energy from local utilities. TPI has also focused additional senior talent and are accelerating some expenditures related to our diversification efforts to capitalize on the opportunities we've been working on over the last 2 years. We've made significant progress on several fronts and believe that the time is ripe for us to begin devoting more resources to their strategic initiative.

As in other example, last week, we received a purchase order to develop and produce a chassis and cab structure for a purpose-built electric delivery vehicle. Prototypes are expected to be completed in early 2020.

Since the beginning of 2018, we've added a net 12 new wind blade lines under contract around the world to bring our total dedicated lines under long-term contracts as of today to 54, including 2 lines for Senvion. These transactions as well as amendments to existing supply agreements represented additions to potential contract revenue of up to $3.4 billion over the terms of these agreements. With the current Senvion situation, although we still have 2 lines under contract with them, or approximately 4% of our total capacity, we have reduced our potential contract values related to those lines for purposes of this metric. Considering this, we now have a total potential contract value of up to approximately $6.3 billion through 2023.

We continue to develop our robust wind pipeline of global opportunities with current and new customers with both onshore and offshore blades. Today, we have 19 lines that we prioritized to close on by the end of 2020. We are confident in our ability to convert this pipeline and continue to be in active negotiations with existing and potential new customers.

At the beginning of 2018, our potential revenue under our supply agreements was approximately $4.6 billion. We have increased that amount by approximately $1.7 billion, net of the impact of approximately $1.3 billion of billings since that time and the removal of the amounts related to Senvion. In other words, contract value added since the beginning of 2018 through new deals, amendments and blade transitions prior to considering what we have realized in total billings over the last year is over $3 billion. The minimum guaranteed volume under our supply agreements has grown to approximately $3.6 billion, up from $3 billion at the beginning of 2018.

Turning to the global wind market, we are pleased to see the continued growth of wind energy as a cost effective and reliable source of clean electricity as we and the industry continue to drive down levelized cost of energy, while consumers and corporate customers demand renewable energy. We see the future of global electricity growth as a strong combination of cost effective and reliable wind, solar, storage and transmission.

Global annual wind power capacity additions are expected to average 72 gigawatts between 2019 and 2028 according to Wood Mackenzie. This forecast also estimates that the top 20 global markets will grow at a CAGR of 7% between 2019 and 2028, while the top 20 emerging markets will grow at a CAGR of 24% between 2019 and 2028. Our strategy is to continue to leverage our global manufacturing footprint to take advantage of growth in both emerging and mature markets and leverage our low-cost hubs to not be too dependent on any one market. We believe we remain well positioned to execute this strategy and serve global demand from our facilities in the U.S., China, India, Mexico and Turkey. And we expect this global growth to continue to drive the outsourcing trend we've seen over the last 10 years.

According to Wood Mackenzie, more than 50 gigawatts of wind power was installed in 2018 worldwide. The U.S. market outlook over the next several years is strengthening, with expected annual installations averaging 11.1 gigawatts through 2021 and then averaging just over 8 gigawatts from 2022 through 2025 according to UBS. 8 gigawatts were installed in the U.S. in 2018, which was 23% more than 2017. And 2019 is forecasted to grow another 45% over 2018. According to Wood Mackenzie, 6.6 gigawatts of wind was safe harbored in 2018 for installation by 2022 and 10 gigawatts in 2017 for installation by 2021. And energy companies like NextEra Energy are safe harboring wind turbines for 2021 and beyond. According to AWEA, a record 39 gigawatts are under construction or in advanced development at the end of the first quarter of 2019, a 17% increase over Q1 of 2018.

Offshore is gaining traction as well through cost reductions and state-level mandates. According to Wood Mackenzie, starting in 2023, an average of almost 2 gigawatts of offshore wind will be installed every year through 2028. We, like many participants in the wind and utility industries, believe that the economics of wind, along with demand for both retail and industrial customers, the electrification of the vehicle fleet and decarbonization initiatives by utilities will continue to drive wind penetration long after the current PTC sunsets in 2023.

According to BNEF, over 66 gigawatts of coal has been retired since 2012 or 20% of the fleet, and there are another 35 gigawatts of announced coal retirements. According to Vibrant Clean Energy and Energy Innovation, about 3/4 of the U.S. coal fleet could be replaced with wind and solar with immediate savings to consumers as the levelized cost of energy for wind and solar is less than the marginal cost of energy for coal in those locations.

In 2019, we remain extremely focused on execution, with strong global wind market growth year-over-year and TPI's planned top line growth of up to 50% calm many challenges. We are localizing raw materials to serve our various manufacturing hubs in a manner that helps us continue to drive cost down. We are doubling our global tooling capacity with additions in Mexico and China in order to keep pace with our new line startups and transitions. We're adding top talent on a global scale.

Q1 was an extraordinary and disappointing quarter due to a couple of unique events. However, we remain confident and committed to our overall business model, strategy and our plan to double the company's revenue over a 3-year period. The fundamentals of our business remain strong. Wind markets around the world continue to grow at an attractive pace, the trend of wind blade outsourcing is continuing and our customers and potential customers are demanding increasing quantities of blades to serve a very strong U.S. market as well as the many fast-growing emerging markets.

Along with our customers, we continue to invest heavily into new line startups and existing line transitions. Our mature operations are performing at or above our expectations, which gives us confidence in our ability to navigate these challenging times and return to the profit levels we expect.

With that, let me turn the call over to Bill.

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William E. Siwek, TPI Composites, Inc. - President [4]

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Thanks, Steve. Please refer to Slides 8 and 9. For the first quarter of 2019, net sales for the quarter increased by $45.8 million or 18% to $299.8 million compared to $254 million in the same period of 2018.

Net sales of wind blades were $277 million for the quarter as compared to $234.2 million in the same period of 2018. The increase was primarily driven by a 15% increase in the number of wind blades produced and a higher average sales price due to the mix of wind blade models produced year-over-year. These increases were partially offset by incremental adjustments recorded in the 3 months ended March 31, 2019, as compared to the same period of 2018 under ASC 606 based upon changes in estimates of future revenue, cost of sales and operating income as well as reductions of revenue based upon the insolvency of Senvion and foreign currency fluctuations.

Total billings increased by $55.8 million or 24.9% to $279.5 million for the quarter compared to $223.7 million in the same period of 2018. The impact of the fluctuating U.S. dollar against the euro in our Turkey operations and the Chinese renminbi in our China operations on consolidated net sales and total billings for the 3 months ended March 31, 2019, was a decrease of 3.3% and 3.5%, respectively, as compared to the same period of 2018.

Total cost of goods sold for the quarter ended March 31, 2019, was $301.2 million and included $16.1 million related to 13 lines in startup and $2.1 million of transition costs related to 5 lines in transition during the quarter. This compares to total cost of goods sold for the quarter ended March 31, 2018, of $225.7 million, which included $14.7 million related to startup costs. There were no transitions during the first quarter of 2018. Cost of goods sold as a percentage of net sales increased by approximately 12 percentage points during the first quarter of 2019 as compared to the first quarter of 2018, driven primarily by a significant increase in underutilized labor in Matamoros, Mexico, which contributed to higher startup cost in plant; a charge for the liquidated damages that we are required to pay for lost or delayed production in Matamoros; and an overall $3.4 million increase in startup and transition costs.

Furthermore, the extended startup of our Newton, Iowa transportation facility and the accelerated depreciation on property, plant and equipment, which was used to fulfill the Senvion contract, contributed to the overall increase. These increases were partially offset by the impact of savings in raw material costs.

Finally, the impact of the fluctuating U.S. dollar against the euro, Turkish lira, Chinese renminbi and Mexican peso decreased consolidated cost of goods sold by 6.4% during the first quarter of 2019 as compared to the first quarter of 2018.

Our corporate overhead costs included within general and administrative expenses for the quarter were $8 million or 2.7% of net sales as compared to $11.2 million in the same period of 2018 or 4.4% of net sales. Before share-based compensation, corporate overhead costs as a percentage of net sales were 2.4% and 3.6% in Q1 of 2019 and 2018, respectively. The remaining G&A cost of $2.2 million in Q1 2019 primarily related to the loss on the sale of certain receivables on a nonrecourse basis to financial institutions pursuant to supply chain financing arrangements with certain of our customers that commenced in late 2018.

The net loss for the quarter was $12.1 million as compared to net income of $8.6 million in the same period of 2018. The decrease was primarily due to the Senvion-related reductions to revenue and the related accelerated depreciation charges, the impact of the Matamoros labor strike and the increase in startup and transition costs. The loss per share was $0.35 for the quarter compared to diluted earnings per share of $0.24 for the quarter ended March 31, 2018.

Our effective tax rate for the quarter was primarily driven by U.S. taxation of global intangible low tax income generated by our foreign operations, which essentially results in the recognition of U.S. tax expense related to profitable operations and non-U. S. jurisdictions, but where we also pay local taxes. Further, the company recorded discrete tax expense amounts in the first quarter related to the uncertain realizability of a deferred tax asset in Taicang, China. For the full year, we expect to be at or near breakeven on a consolidated basis, so the full year tax rate is expected to be impacted significantly by these items.

Adjusted EBITDA decreased to $2.9 million compared to $27.4 million during the same period of 2018. Our adjusted EBITDA margin for the quarter was 1%, down from 10.8% in the first quarter of 2018. The decline was primarily driven by the Matamoros and Senvion matters discussed above, as well as by increased startup and transition activity. Before startup and transition costs in both periods, our adjusted EBITDA margins were 7% and 16% in Q1 of 2019 and 2018, respectively. Excluding the impact of strike-related costs and liquidated damages in Matamoros, the impairment charges for Senvion as well as startup and transition costs, our adjusted EBITDA margin for the quarter was approximately 13%.

Moving on to Slide 10. We ended the quarter with $78.3 million of cash and cash equivalents, total debt of $160.2 million and net debt of $81.9 million compared to net debt of $53.2 million at December 31, 2018. The decrease in our cash position during the quarter was primarily driven by the increased level of startup and transition costs and the related CapEx.

For the quarter, we had a net use of cash from operating activities of $12.1 million, while spending approximately $18.7 million on CapEx, resulting in negative free cash flow for the quarter of $30.8 million. For the year, we expect to be able to take full advantage of supply chain financing agreements with most of our customers, while aggressively managing the rest of our working capital to more than offset the impact of the reduction in adjusted EBITDA. We expect to be at or near breakeven in free cash flow for 2019.

Our balance sheet remained strong with nearly $80 million of cash, and we had an aggregate of $73 million of availability under our various credit facilities.

Please turn to Slides 12 through 14. Before I touch on our updated guidance, I'd first like to refer you to Slide 12, which is an adjusted EBITDA bridge for 2019 to better illustrate the impact of the unique circumstances we're dealing with in 2019 and to demonstrate the underlying operational performance of TPI. If you consider the direct impact related to Matamoros, Senvion and our planned restructuring, adjusted EBITDA for 2019 would have been at or above our original guidance range, demonstrating that our mature operations are performing at or above our expectations for 2019.

With that as a backdrop, our updated 2019 guidance is as follows: We expect net sales and total billings of between $1.45 billion and $1.5 billion in 2019; adjusted EBITDA of between $80 million and $85 million for the full year and between $8.5 million and $9.5 million for the second quarter; loss per share for the year of between $0.03 and $0.09; sets invoiced of between 3,200 and 3,300; average sales price per blade of between $135,000 and $140,000; estimated megawatts of sets delivered of between approximately 9,400 and 9,700; dedicated manufacturing lines at year-end to be between 60 and 63; manufacturing lines installed at year-end to be between 48 to 50; manufacturing lines in startup during the year to be approximately 14; manufacturing lines in transition during the year are expected to be approximately 10; line utilization based on 50 lines in Q1 and Q2 and 48 lines in Q3 and Q4 will be approximately 80%; startup costs of between $43 million and $45 million, and this includes additional startup costs related to Matamoros and our transportation operations; transition costs of between $22 million and $24 million; capital expenditures to be between $95 million and $100 million, approximately 85% growth related; interest expense of between $8.5 million and $9.5 million. This increased slightly due to an increase in the estimated outstanding balances for the year as well as an expected rate increase due to slightly elevated total net leverage ratios pursuant to our senior credit facility. Share-based compensation expense of between $7 million and $8 million.

And with that, I'll turn it back over to Steve to wrap up, and then we'll take your questions. Steve?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [5]

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Thanks, Bill. I want to thank all of our dedicated TPI associates who are doing the heavy-lifting every day and tackling our growth-related challenges. We remain very confident in our global competitive position and the application of our dedicated supplier model to take advantage of the strength in the growing wind market, the trend toward blade outsourcing and the opportunities for market share gains provided by the current competitive dynamic.

We have clear line of sight to doubling our 2018 wind revenue to more than $2 billion in 2021. We are laser-focused on execution during the remainder of 2019 and are looking forward to exciting and profitable growth in 2019 and beyond.

Thank you again for your time today. And with that, operator, please open the line for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Paul Coster with JPMorgan.

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Mark Wesley Strouse, JP Morgan Chase & Co, Research Division - Alternative Energy and Applied & Emerging Technologies Analyst [2]

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This is Mark Strouse on for Paul. So if I could, I just want to start with Senvion. Steve, I think you touched on this a bit, but just to be clear, can you talk about what is happening with those lines that are dedicated to Senvion currently, as they go through your process? And -- I mean, are you contractually obligated to kind of wait that out? Or are you able to kind of proactively try and backfill that business with another OEM?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [3]

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Yes. Mark, thanks. So the Taicang Port operation is where those 2 lines exist, and we're actually converting that to a tooling facility. So Taicang City is in downtown Taicang. Taicang Port is a different location. The Taicang Port building is larger. We can build larger molds and more molds at the same time. So part of our global doubling of tooling capacity and part of the restructuring charge that we've described is we're actually going to take those 2 lines out of Taicang Port and convert Taicang Port to a tooling shop. We do have additional capacity in China. So as we mentioned, depending on how Senvion fares to their restructuring and if we can reach an agreement to do something more with them that makes sense for both parties, then if we restart, we would restart in a different location.

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Mark Wesley Strouse, JP Morgan Chase & Co, Research Division - Alternative Energy and Applied & Emerging Technologies Analyst [4]

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Okay. And then, Bill, the blades that have already been produced, the ability to sell them directly to the utility or the end user, I guess, what are the assumptions behind that, that are baked into guidance this year?

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William E. Siwek, TPI Composites, Inc. - President [5]

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Yes. So we've completed the production of all the blades pursuant to our agreement, especially for that particular wind farm as we mentioned in our preannouncement. And so what's baked into our assumptions for the balance of the year is that we will get paid for the blades that we have in our custody in China that we still hold title to. Anything -- any receivables related to blades that have already been shipped have been impaired, and that was part of our charge in the first quarter. But what we have remaining is just really cash collection on production. That's already taken place.

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Mark Wesley Strouse, JP Morgan Chase & Co, Research Division - Alternative Energy and Applied & Emerging Technologies Analyst [6]

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Okay. And then if you don't mind, if I can just sneak in one more. So you mentioned you're proactively addressing the labor situation, whereas Mexico, I guess how should we think about the rest of your global operations and any risk that is something similar to Mexico could spread globally?

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William E. Siwek, TPI Composites, Inc. - President [7]

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Yes. So we're -- we have unions in Matamoros. We're not unionized today in Juárez, but as we mentioned, we're proactively addressing that situation there and we feel very confident in our position there. The only other place we're unionized today is in Turkey, and we recently went through a renegotiation -- or a negotiation of the normal expiration date of that contract. We completed that in early -- late last year, early this year and that went without a hitch. No labor stoppage or what have you, it was just normal negotiation. So other than that, our employee relations are strong around the globe, and we don't see any other issues on the horizon.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [8]

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And Mark, it's Steve. Just to confirm that as well, the root cause of the issue at Matamoros for us and the kind of preemptive action we're taking at Juárez, the root cause of it was driven by the AMLO administration and labor reform that's driven from that for Mexico City. With respect to Mexico, so as Bill said, we don't expect that elsewhere. We're not seeing signs or concerns of it elsewhere.

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Operator [9]

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Our next question comes from the line of Ethan Ellison with Morgan Stanley.

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Ethan Cory Ellison, Morgan Stanley, Research Division - Equity Analyst [10]

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And Bill, Ramesh, Bryan, congrats on the new roles.

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William E. Siwek, TPI Composites, Inc. - President [11]

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Thank you.

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Ethan Cory Ellison, Morgan Stanley, Research Division - Equity Analyst [12]

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So I guess, first off, given that the 2020 EBITDA guide was unchanged at $170 million to $190 million and it's sort of implying that the Senvion lines are coming out. I guess, what is baked into the reaffirmed 2020 guidance in terms of conversion from the prioritized pipeline? And if the guidance does imply some pipeline conversion, how should we think about the ramp time in terms of having an offsetting positive impact on 2020?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [13]

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Yes. Ethan, I think what we've said is that we have 19 additional lines in our prioritized pipeline, and we would expect to close over the next 2 years and we would draw from those if needed. The fact that it's 2 lines for Senvion out of 54 under contract, it's a relatively small percentage, 4% or so of the total volume. So we have a number of lines that are continuing to ramp. We have more lines that we'll book. We are not writing off the Senvion situation. We just want to be smart for them and for ourselves going forward as to what makes the most sense. We'll have excess space in the Yangzhou facility that we can move into quickly. So we just don't see an impact on 2020. There is a range of outcomes of new molds being added. There's a lot of volume being ramped still as we go through the rest of '19 and into '20. And so that -- there's adequate room in that capacity and that plan to absorb either outcome, the 2 lines related to Senvion. That's why the guidance has not changed.

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Ethan Cory Ellison, Morgan Stanley, Research Division - Equity Analyst [14]

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Perfect. And then just one quick one. In the new 2019 guidance, it looks like non-blade billings is down about $15 million at the midpoint. Could you just talk about what's driving this?

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William E. Siwek, TPI Composites, Inc. - President [15]

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Yes. It's -- a little bit of that relates to tooling in the back half of the year. Tooling was pretty heavy at the beginning of the year. That's dropped off a bit. And then our actions -- and then some of our transportation volume is a little bit lighter than originally anticipated. So those are the 2 primary reasons.

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Operator [16]

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

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Hilary Elizabeth Cauley, JMP Securities LLC, Research Division - Associate [17]

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This is actually Hilary on for Joe. And I just wanted to touch real fast on Matamoros. You mentioned in addition to wage increases that there are a couple of other initiatives that you guys have put in place there to help kind of smooth things down. I was wondering if you could just kind of provide a little more detail on what those might be.

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William E. Siwek, TPI Composites, Inc. - President [18]

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Hey, Hilary, this is Bill, you cut out just a little bit. Couldn't quite understand your question.

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Hilary Elizabeth Cauley, JMP Securities LLC, Research Division - Associate [19]

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Let me try and pick up my headset. On Matamoros, you mentioned that you guys had those wage increases in place as well as some other incentives. I was just wondering if you could provide a little more detail on what those might be.

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William E. Siwek, TPI Composites, Inc. - President [20]

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I might be a little bit confused, but we had -- when we settled the strike, there was a wage increase as well as a onetime bonus. So those costs were baked in, obviously, to the Q1 numbers and then the bonus gets paid out over time. So that's baked into the balance of the 2019 guidance. In Juárez, we have taken some steps to increase wages there, but there were no other incentives that have been provided other than just what is mentioned.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [21]

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And Hilary, what might have been confusing is what we did comment that we're working with the State of Tamaulipas, with the same government, just in general to say how do we work together on training grants or other support mechanisms to make sure that, that area remains a real strong supply of trained workers. So that was the incentive comment that was in our prepared remarks. It might have been confusing, but that's what we were referring to there.

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Hilary Elizabeth Cauley, JMP Securities LLC, Research Division - Associate [22]

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Okay. Great. And then on the transportation side, I know you just said that in back half of this year, you expect to be a little light there. But I was wondering if you could kind of give some guidance for how we might see that ramp with some of these more recent announcements in the coming year or so.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [23]

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So on the transportation stuff, nothing has really changed for us big picture there. I think in terms of the opportunity set that we see, we're pleased with various development programs that we have going on. But this has always been and continues to be a bit of a multiyear development, strategic development area for us. A year ago or so, we started to talk about years 4 through 10. So I guess, now we can talk about years 3 through 9. But that's a way for you to think about this is the work we're doing is developing new products, demonstrating the technology, doing a bunch of reliability testing with our customers and then production will follow a bit later. As Bill said, the non-blade revenue is also today is fairly heavily weighted with tooling, with bolts for wind. So it's not -- those numbers are not all transportation related. It's wind blade tooling and transportation products in general and blade services, which we do some more for as well. So we don't really guide on that bucket as efficiently, because it's a combination of several of those items. What I would just reinforce on the transportation side, we're pleased with the traction on the development programs. As we mentioned in our prepared remarks, we're seeing good traction there and we're planning and are emphasizing that work in terms of our resources internally. A couple of our senior folks spending more and more effort on that area. But you still ought to think about it as a few year development effort to build. Our goal is $0.5 billion revenue in a few years, and that goal remains unchanged.

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Operator [24]

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

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Eric Andrew Stine, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [25]

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So I just wanted to clarify an answer to a previous question, and maybe I misunderstood. But is -- Senvion, the blades that you have in your possession, which you are hoping to deliver and collect on, is that included in your guidance? And I may have missed it. Is that a number that you can quantify? Just trying to get a sense of, if that's not the case, what the potential negative impact would be?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [26]

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Yes. So essentially, all the revenue has already been recognized under ASC 606. The blades that we had in finished goods at the end of the year, that had not yet been invoiced. But as I said, those would be recognized as revenue. So there's really no additional revenue impact beyond [this]. But there is approximately $13 million on the balance sheet related to receivables and the related contract asset related to those finished goods that are sitting on our balance sheet.

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Eric Andrew Stine, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [27]

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Okay. But just -- I mean, to be clear, you feel you're in a pretty good spot and have a lot of leverage, right? Because that wind farm has moved forward, they need those blades, you've got the blades. So -- I mean, obviously, you think the chances are quite high that, that works out in your favor.

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William E. Siwek, TPI Composites, Inc. - President [28]

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Yes. Hey, Eric, just let me correct myself. It's $10 million. There's a $7 million and $3 million. I gave you a wrong number. But -- and the answer is yes. I mean, we wouldn't have left that on our balance sheet if we didn't feel that it was more likely than not that we would be able to realize those assets and the receivables on the contract asset. Just...

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Eric Andrew Stine, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [29]

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Got it okay. And maybe last one from me. I'll take the rest offline. But just curious if you can give a little more detail on the joint agreement with GE, maybe scope, timing, that sort of thing. And I am also curious -- I mean, I would think that, that bodes well in terms of the extension you're targeting in Iowa.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [30]

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Yes. Eric, we can't really comment in more detail than what we've already said. We're pleased to be developing advanced technology with GE for future turbines, but it's not our place to comment on the details of what might affect their product or the exact timing of it. And we've got capacity out of both Mexico and Iowa. All the operations have to be competitive over time. So I think just take it at face value. What we said is what we meant. That's probably all we can say at this point.

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Operator [31]

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Our next question comes from the line of Pavel Molchanov with Raymond James.

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Pavel S. Molchanov, Raymond James & Associates, Inc., Research Division - Energy Analyst [32]

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I suppose the silver lining of the Senvion situation is that you've referenced the very high level of industry demand right now. So you should be able to find alternative sources of -- for those lines. Just thinking more broadly, is this -- 2019, maybe 2020, do you see these as peak years for global wind new builds? Does it feel that way? Is that the message you're hearing from your customer base?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [33]

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Pavel, I don't think so globally. I think the U.S. market is certainly overcharged a bit for the next couple of years, this year and next. And then we look for, call it, that 8 gigawatt a year kind of run rate beyond that. But again, if you look at the 10-year CAGRs, the developing economy is growing 24%, 20-plus percent anyway for the developing markets. That's where a lot of the more aggressive growth is. And those markets are maturing, coming up in volume, running their options, getting their infrastructure in place. So the global numbers over a 10-year period will continue to grow, as we've indicated. And we're mapping largely on to that global growth. As you know, most of our more recent growth has been in places like China and India and Mexico, serving much more than just the U.S. market. So no, I don't think we've peaked. There will continue to be individual markets that are up or down a bit, but we're mapping our global footprint onto the global market and going where the growth is. We're not peaking in '20 and -- '19 and '20 for sure.

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Pavel S. Molchanov, Raymond James & Associates, Inc., Research Division - Energy Analyst [34]

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Okay. And then another kind of big picture question. I think at the time of your IPO 3 years ago, the number you indicated was that 1/3 of the world's turbine blades are being outsourced. And you guys have obviously grown since then. I'm sure LM Wind has had some expansion as well. What's your kind of best guess on the overall degree of outsourcing in the industry? And how much more running room is there for that percentage to go up?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [35]

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Yes. Pavel, the timing or the number a few years ago was probably around -- was in the 40% to 50% range. It was growing, took a step back a bit with the GE acquisition of LM of 10 points or something like that at the time, and has continued to move back up. So we're probably around 60% global outsourcing today, and there's room for more outsourcing. So there's room for the total pie to grow. That's the total gigawatts per year. And there's room for our pie to grow -- our addressable market pie to grow through some additional outsourcing. So it's about 60% today and still growing.

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Operator [36]

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

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [37]

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Most have been answered, but a couple on my end. Mexico, Steve, I was wondering, can you just touch on -- I think you mentioned 50% of staff left. Can you talk about how much has been replaced and sort of what that ramp is? And is there any risk to the second and third quarter being impacted? Maybe that duration is longer, maybe it's faster, I wasn't sure. Maybe you can put into context how many people departed and how many of those spots have been filled.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [38]

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Yes. Jeff, we're pretty much back now to the level at the time of the strike. And so as we said in our prepared remarks, it's taken a little longer to fill -- refill some of those positions. But the last 4 or 5 weeks, our hiring rates have been very good and continues to be strong. So we're roughly back about now at the level prior to -- or at the time of the strike, let's say. And a lot of this was our choice as well. I mean, the key go-forward commitment from TPI's perspective, we need a workforce that is going to work with us over time. So I wouldn't say folks just left, but we chose to make changes the way that we did to build a large capacity here and a capacity that we can count on, a factory that we can count on over time. So there will continue to be some impact throughout the rest of this year. The impact will lessen later in the year. But as you can imagine, bringing on hundreds and hundreds of folks and teaching them how to lay up and infuse fiberglass, there is a training, learning curve associated with what we do. So we started a little slow, dropped at 50%, refilled it back, yet we continue to ramp through the next couple of quarters. So as we said in the prepared remarks, there will be some impact through the rest of this year. There would be no impact next year. So if you think about what we're trying to do globally here, we're basically building up 18 gigawatts of global capacity. Matamoros is one piece of that. If we end up selling 80% utilization on the order of 15 gigawatts of global capacity. We've started up 7 wind blade plants over the last number of years. Matamoros is one of them. We're building this global capacity to be 20% to 25% global market share player. And what's important for us here is that we get Matamoros right, just like every other operation. This one has taken us longer and costing more money than we like. But the big picture is it's going to cost some time and money, and we're going to be, by 1st of next year, where we intended to be all along.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [39]

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Got it. That's helpful. I appreciate the detailed response. You mentioned on the raw material side at the Analyst Day, some time ago, you went through great lengths of all of the different procurement mechanisms in your global sourcing strategy, and that seems to have hit some challenges. So can you just touch on: A, specifically what are the raw materials that the wind market is consuming that are in tight supply that you're having a hard time getting; and then B, what are you doing about it.

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William E. Siwek, TPI Composites, Inc. - President [40]

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Yes. Jeff, it's primarily core material. It's specifically PET core. It's a recyclable material that's used in the core that we put into the blade. There has been a -- there was a fairly rapid shift by most of the industry to go to the PET. The challenge was that the demand as a result outstripped the supply of PET. So it's not that there aren't alternative materials that we can use. And so that's part of what the strategy is, is either quickly requalifying or switching back to some of the original core materials that we were using. As you know, we're building our customers' blades and they mandate what the materials are. So it's a process of going back to our customers and their engineers to make those changes. So it generally can't happen overnight. The good news is, is that the capacity for PET is being put in place now. It should be in place by the end of the year, so we don't see similar issues going into 2020.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [41]

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That's helpful. I think the last one, I'll be very quick, the dedicated lines went down by 155 to 54. Is that just Iowa going from 6 to 5 with the GE transition or something else?

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William E. Siwek, TPI Composites, Inc. - President [42]

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Yes. That's exactly right, Jeff.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [43]

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And Jeff, just back on the raw materials for a minute. So the capacity is something, as Bill said, that we got to continue to grow globally and think about what we're doing globally in Mexico. We're localizing raw materials to both add capacity and reduce cost for our Mexico exports. In India, we're setting up new supply chain to both add global capacity and reduce cost, both for our India blade plants as well as we'll export raw materials from India to other plants around the world. So we've got to continue to stay ahead of this material constraint, kind of to your point. And we're stressing it right now related to the convergence that Bill talked about on PET. But in general, we're growing our raw material supply across the board to keep up with our aggressive growth. And it's generally going well. The PET was a bit of an example, where we got caught by this conversion to the recycled material and growth kind of at the same time. So it's a pinch point that hurt us here in the short term. But a lot of work going on to make sure we stay ahead of it in the broader sense.

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Jeffrey David Osborne, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [44]

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That's good. I appreciate it. I just want to make sure it wasn't polymers, resins, any of the other materials that you are using that might be...

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [45]

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Yes, a bit narrow, a bit of a unique situation that way. But again, we've got to continue to make sure we're not constrained by raw materials.

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Operator [46]

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Our next question comes from the line of Philip Shen with Roth.

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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [47]

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I was bouncing in a couple of calls there, so apologies if some of this has been addressed. In terms of Mexico, the impact was $25 million. Can you break out the mix of that between labor and then the liquidated damages or another -- source of impact, all the other? And then also talk to how much in terms of liquidated damages we could see from a quantifiable perspective for Q2 and Q3.

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William E. Siwek, TPI Composites, Inc. - President [48]

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Phil, it's Bill. It's about 50-50 split between liquidated damages and then lost contribution margin on lost or delayed -- or lost volume, if you will, for the year. And the labor proponent will be baked into that contribution margin number. And as the liquidated damages are factored into our updated guidance, so we won't get any more specific than that, but that's about what it is.

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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [49]

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Okay. Got it. And Steve, I know you're just addressing this, the material issue with Jeff's question earlier. But last quarter, clearly you didn't see that issue. You talked about how your global supply or footprint actually is an asset and can be used to run -- be run on overdrive to offset the challenges in part in Matamoros. Can you speak just a bit more broadly to -- do those benefits of the global supply chain and global footprint still remain? And then, in turn, perhaps speak more broadly beyond just material supply constraints and what we can -- what you guys are doing to ensure that on a go-forward basis next year or 2020, for example, that this extraordinary circumstance either doesn't happen, or if it does, then you guys still have the capability to sidestep what those challenges might be?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [50]

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Yes. Thanks, Phil. So as Bill said a few minutes ago, there are certain materials that the allocation globally are affected a bit by what our customers decide. And then in this situation, kind of unique situation with the PET fall, the recycled material, where our customers and us hit a constraint that affected us in the immediate term. So it's a little bit of a unique situation that way. I think the global capacity, the comment we made still holds. I mean, reality is if we had unlimited material availability, the ability to work additional overtime or throttle forward a bit from some of our other operations to make up some of the volume, that was true then, and it would be true again in the future, but constrained in this case by raw materials. So in terms of what we're doing, to get out ahead of it, I think we mentioned a minute ago, you may not have heard it, Phil, but we're expanding our raw material capacity in Mexico. We're localizing and expanding raw material capacity in Turkey. We're localizing and expanding raw material capacity in India. We're qualifying additional sources in China. And we're going to double our wind revenue over a 3-year period or so. So there's a lot of work going on to just try to keep that global supply chain out ahead of our volume growth and the industry volume growth, and make sure we don't get caught. So we did get constrained here, but there's an awful lot of good work going on to try to avoid that type of constraint in the future.

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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [51]

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Great. As it relates to Proterra, I know you addressed that a bit earlier. I believe -- anyway in your prepared remarks as well as on a question. But want to kind of dig in there a different way. By our account, just based on some press releases and so forth, it seems like Proterra -- and we may have missed some things. But it seems like over the past 12 months, they have announced 110-plus bus commitments. And I believe your agreement with them is for -- what could be on average 670 buses per year for over a 5-year period, starting I believe in '17, and clearly that would ramp over time. So the near-term years would not have as many buses. To what degree can you comment on any risk that there might be for 2020 guidance if Proterra doesn't come through and things get delayed? Or do you feel like there is the opportunity to meet expectations as you guys have -- the 2 of you have sit-outs in the recent past.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [52]

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Yes. Thanks, Phil. So we're not in the position to talk about Proterra-specific volumes and to get out ahead of their own business plans or to comment on the specifics of their volumes. But I think big picture, suffice it to say that they're building a business in the electric -- the battery electric bus transit market. And they've got some good traction as they speak to the unit orders they've got from quite a number of transit authorities. But a lot of those volumes are smaller volumes per order today, whereas then what's key for them, and they speak to this too, is incubating the market and then turning the volume up. And that's something they will do over a period of time. So that's pretty logical that you would expect to see that happen. I think they're pleased with their traction. We're pleased with the traction in general. But this will ramp over a period of time. Our confidence around our target for next year is a range of things that will happen and a range of outcomes, regardless of which will allow us to achieve the goals that we set. So we're not going to predict perfectly any one -- each one of these, but we've got a range of outcomes. And that's also why we can absorb the loss if we end up losing 2 lines ultimately for Senvion, we can absorb the loss of 2 lines and still achieve the outcomes. If one customer misses volume by a small amount, we can still achieve the outcome. So I don't think you should tie too directly the unit volume you might read about Proterra to our ability to meet or not meet our guidance. We've got more conservatism and range of outcomes there than that might imply.

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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [53]

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One last, a very quick question. In terms of prioritized pipeline, in the remaining '19, is there a new geography there at all? And if so, perhaps could you highlight -- perhaps either the region or where it might be?

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [54]

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Yes. I think what we said before and we'll just repeat again on this one, Phil, is that we're expecting to continue to grow out the footprint that we've announced. We're just getting started in India. We expect to do more there. We mentioned that we -- even our first building in Yangzhou will have additional space. It's not yet sold. We could well expand further in Mexico. We'll see how that goes. So let's just say a new geography would not be required in order for us to continue to do what we're doing, and we've not made any comments or announcements about an additional geography. And as you would know too, it's certainly easier for us to expand incrementally on hubs that we've already built out than it is to go to a brand new country. India is a very important step for us, and we mentioned that, that startup is on track. We expect it to continue to go well. So at this point, I would assume that we'll continue to build out the areas that we've announced.

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Operator [55]

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Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Steve Lockard, CEO, for closing remarks.

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Steven C. Lockard, TPI Composites, Inc. - CEO & Director [56]

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Thanks all for your interest again in TPIC, and we look forward to continuing to update you on our progress. Thanks, everyone.

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Operator [57]

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