Q4 2023 TPI Composites Inc Earnings Call
Participants
Jason Wegmann; Investor Relations; TPI Composites Inc
Bill Siwek; President, Chief Executive Officer & Director; TPI Composites Inc
Ryan Miller; Chief Financial Officer; TPI Composites Inc
Mark Strouse; Analyst; JPMorgan
Eric Stine; Analyst; Craig-Hallum Capital Group LLC
Justin Clare; Analyst; Roth MKM
Dimple Gosai; Analyst; BofA Global Research (US)
Andrew Percoco; Analyst; Morgan Stanley & Co. LLC
Kashy Harrison; Analyst; Piper Sandler & Co.
William Grippin; Analyst; UBS Securities LLC
Jeffrey Osborne; Analyst; TD Cowen
Presentation
Operator
Good afternoon and welcome to the TPI Composites fourth quarter and full year 2023 earnings conference call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Jason Wegmann, Investor Relations for TPI Composites. Thank you. You may begin.
Jason Wegmann
Thank you, operator. I would like to welcome everyone to TPI Composites' Fourth 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 Securities and Exchange Commission, which can be found on our website, TPI Composites.com.
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.
With that, let me turn the call over to Bill Siwek, TPI Composites' President and CEO.
Bill Siwek
Thank Jason. , and good afternoon, everyone, and thanks for joining our call. In addition to Jason, I'm here with Ryan Miller, our CFO, who will discuss our results and highlights from the fourth quarter and full year, our global operations and the wind energy market more broadly, Brian will then review our financial results and then we'll open the call for Q&A.
Please turn to Slide 5. As we indicated on our third quarter earnings call, we expected our fourth-quarter sales and adjusted EBITDA to be down as we started line transitions across our plants and lowered inventory levels to optimize cash. Our strategy to preserve cash in the fourth quarter were successful as we ended the year with $161 million of cash, which was flat with where we ended Q3.
I'm very happy with how our team executed our cash flow initiatives to prioritize liquidity through the quarter, given some of the headwinds we were facing. As Ryan has been discussing the last few quarters, we believe we had opportunities to harvest cash out of our balance sheet, and that's exactly what we did during the quarter.
Our sales were negatively impacted at one of our plants to up spec materials received from a supplier that resulted in a significant production slowdown over a 10-week period, including a shutdown for four weeks. While we resolve the issue with both suppliers and our customers. This reduced our fourth-quarter sales by approximately $23 million and adjusted EBITDA by $8 million. But we do expect to recover the display volume revenue and adjusted EBITDA along with liquidated damages from the supplier in 2024. I was pleased with how our team reacted to this issue, shut down production and engaged with our customer quickly to ensure we didn't have a quality issue.
As we announced in mid December, we refinanced our Series A. preferred shares by converting the $350 million of Series A., along with $86 million of accrued pay-in-kind dividends through a cashless exchange for $393 million of senior secured term loan and the issuance of 3.9 million shares of common stock. This refinancing and improve our liquidity by about $190 million over the term of the loan, and we permanently reduced our obligations to Oaktree by about $90 million.
We can now pick up to a 100% of interest payments through December 31st, 2025, and up to 50% of interest payments from January 1, 2026 through the maturity on March 31, 2027. This agreement provides us with significantly greater financial flexibility. And along with the $132.5 million convertible green bond we issued earlier in 2023 provides us with the liquidity we expect to need to fill our existing capacity, manage through the current market conditions and ultimately grow to serve our customers' capacity needs.
From a customer perspective, we finalized several contract extensions and expansions to provide a significantly enhanced visibility into our sales volumes in 2025 and beyond. We signed a new supply agreement with GE in Mexico to provide their workforce turban, which will facilitate AGT's ability to competitively serve the US market while building on a long and productive relationship. We will start at four lines of the new blade this year and production will ramp up in the second quarter to be a full serial production over the second half of the year.
With the addition of this play, we now support GT's three primary care models for the U.S. market to expand its reach in the European wind energy market. We established two new production lines in Turkey, a for Nordex, increasing our total capacity for them in Turkey to eight lines or approximately 3.2 gigawatts. This expansion secures production for up to three years through 2026. We also extended our supply agreements with Vestas through 2024 in Mexico and India and continue to work with Vestas to align our footprint with their long-term needs.
Please turn to Slide 6. Before I jump into our operating results, I would like to formally welcome Chuck drug, our COO of Wynn. Chuck comes to us having spent 24 years in the aerospace industry, most recently as Vice President of Operations for power and controls within Collins Aerospace, a multibillion dollar business with a track record of leading large complex organizations.
Chuck brings deep operational expertise and leveraging his passion for lean principles, drive operational excellence and consistently deliver results. We are thrilled to have Chuck joined the TPI team and look forward to his contributions to our ultimate success.
Also joining us this past year as our Chief Quality Officer was Neil Jones brings over 25 years of experience in quality and engineering positions in the wind and automotive industry. I've spent more than 13 years invested in a variety of quality leadership roles for the last five and Senior Vice President, Quality, health safety and environment. Before joining Vestas, Neil spent over 20 years in the automotive industry, including engineering and quality leadership roles with TRW and his senior quality leadership role with he's not alone.
I'm excited with the transformative strength of our new and improved executive team as each member brings exceptional talent, diverse perspectives and a proven record of success making them well-equipped to guide our company to the next exciting chapter.
Now moving on to the Salt Lake facilities in India and Turkey continued to excel operationally driving our global utilization rate to 87% while delivering 602 sets or 2.6 gigawatts during the quarter. As expected, revenue from our global service business declined year over year due to fewer technicians deployed on revenue-generating projects due to the warrants and campaign we announced in the second quarter that will turn around in 2024.
While the automotive business has made significant progress with the order pipeline and operational execution initiatives. 2022 revenue was down year over year due primarily to Proterra US bankruptcy. As you know, we have made meaningful investments to expand the automotive business during the last several years, while we believe there is enough demand for composite products for electric vehicles, and we have made significant progress with the automotive business.
We intend to prioritize capital for growth in the wind business in the near term, which is why we have been exploring strategic alternatives to ensure our automotive business is sufficiently funded to execute on its growth strategy. Our intent is to complete this process no later than June 30th of this year.
Our supply chain costs have improved significantly compared to the past two years. Raw material costs continue to decline from 2023 levels, and we anticipate that excess capacity of key inputs and reduce Chinese demand should create further cost savings in 2024.
While logistics costs have returned to pre-pandemic norms, we have seen a spike in rates due to the ongoing Red Sea situation. While the situation remains fluid. We've mitigated the lingering impacts through alternative suppliers and multimodal logistics solutions and will continue to closely monitor the events for potential effects on our cost and availability of critical raw material.
Now with respect to the wind market globally, we have seen the surge in government support for renewables in recent years, exemplified by the U.S. inflation Reduction Act and the U.S. policy push or streamline regulations, faster permitting and cross-border cooperation. These initiatives fueled our optimism for long term with industry growth. This momentum was further bolstered at cost 28 were parties made history by agreeing to a transition of fossil fuels in the global stock. Today, renewable energy direct as a key part of the year and green energy deal was amended in early 2023 and adopted by all EU countries that November raising its 2030 renewable energy target to 42.5%.
In addition to wind power package was launched aiming to double wind capacity by 2030 and strengthen Europe's competitiveness in wind energy manufacturers, while favorable long-term policies by the IRA and net zero Industry Act provide optimism we still don't anticipate increased wind industry installations to fully materialize until 2025 has the wind industry of late some critical details on implementing key components of the inflation Reduction Act and the execution of the more robust European policy.
Additionally, permitting hurdles, transmission bottlenecks, elevated interest rates, inflation and the cost and availability of capital all contribute to delaying a bullish market recovery. We expect 2024 to be a year of transition, with sales declining slightly from 2023, but with a significant EBITDA improvement. Currently, we are operating 37 lines, including the four for Nordex in Matamoros that will transition back to them in mid 2024 as well as new lines starting up in four lines.
Transitioning all in 2024. This will impact utilization and output in the first half of the year with the second half projected to improve markedly faster lines in start-up and transition achieved serial production levels. So notwithstanding slightly lower utilization at 24 compared to 23, we expect a significant improvement in EBITDA and EBITDA margin has many of the operational and quality challenges we experienced in 2023 are now behind us. We expect our 2020 for EBITDA margin to be in the range of 1% to 3% for the full year, but on a trajectory to get back to EBITDA levels north of 100 million in 2025 into our targeted EBITDA margins in the high single digits.
With that I'll turn the call over to Ryan to review our financial results.
Ryan Miller
Thanks, Bill. Please turn to slide 8. In the fourth quarter of 2023, net sales were $297 million compared to $402.3 million for the same period in 2023, a decrease of 26.2%. Net sales of wind blades, tooling and other wind-related sales which here after I'll just refer to as wind sales decreased by $96.9 million in the fourth quarter of 2023 or 25.6% compared to the same period in 2022.
Sales were negatively impacted at one of our plants by a production slowdown over a 10-week period, including a shutdown for four weeks due to out of spec material we received from one supplier and we rent down pipelines and preparations for transitions that will occur in early 2024. Sales were also impacted by a reduction in wind blade inventory included in contract assets driven by working capital initiatives.
Inventory reduction impacted net sales of wind for the quarter ended December 31st, 2023 as lower bleeding inventory cost directly correlates to lower rental revenue under the cost-to-cost revenue recognition method for our blade contracts. These decreases were partially offset by higher average selling prices.
Field service sales decreased by $1.1 million in the fourth quarter compared to the same period in 2022. While we were able to deploy many of our field services technicians back to revenue-generating services in the quarter, our field services sales continued to be negatively impacted by the warranty campaign we disclosed in the second quarter of 2023.
Automotive sales decreased $7.3 million in the fourth quarter compared to the same period in 2022. This decrease was primarily due to reduction of bus body deliveries due to Proterra bankruptcy.
Net income attributable to common stockholders from continuing operations was $11.6 million in the fourth quarter of 2023 compared to a net loss of $41.9 million in the same period in 2022. The year over year improvement was primarily driven by the refinancing of our Series A preferred stock into a senior secured term loan, whereby we recorded an $82.6 million gain on extinguishment.
Adjusted EBITDA for the fourth quarter of 2023 was a loss of $28.1 million compared to adjusted EBITDA of $21.2 million for the same period in 2022. The decrease in EBITDA for the three months ended December 31st, 2023 as compared to the same period in 2022 was primarily driven by lower sales, as I just described, increased profits related to quality initiatives and higher start-up and transition costs.
In addition, note, the fourth quarter of 2023 includes $20 million of losses from our Nordics Matamoros plant. This should be the last quarter. We see anywhere near that level of loss. This plan as we have better pricing in 2024 and plan to transition that factory back to Nordex in the middle of the year.
Moving on to slide 9. We ended the quarter with $161 million of unrestricted cash and cash equivalents and $485 million of debt which includes the senior secured term loan with Oaktree. The 132.5 million convertible notes we issued in March of last year, the credit facilities we utilize the Turkey India from its working capital, a small number of equipment finance leases.
We had negative free cash flow of $15.4 million in the fourth quarter of 2023 compared to positive free cash flow of $15.5 million the same period in 2022. The net use of cash in the fourth quarter of 2023 was primarily due to our EBITDA loss and capital expenditures, partially offset by working capital improvements, which were primarily aimed at lower inventory levels and our contract asset balance.
Note that we were able to reduce our contract asset balance by $72 million in the fourth quarter from 40%. We continue to place significant focus on preserving cash and ensuring officially flat working capital to make sure we can comfortably execute key initiatives as we had before and restart our idled capacity.
Now a summary of our financial guidance for 2024 can be found on slide 10. We anticipate sales from continuing operations in the range of $1.3 billion to $1.4 billion, representing a slight decline from 2023. This decline is primarily driven by lower blade sales due to production line transitions and temporary demand softness, partially offset by rising ASPs. Additionally, automotive revenue will likely decline due to the Proterra bankruptcy while field service sales are expected to improve with increased technicians deployed on revenue-generating projects.
We previously highlighted our expectation for a significant improvement in 2020 for adjusted EBITDA and EBITDA margin. This is driven by several factors, the absence of a large warranty charge, completion of the Nordex Matamoros contract, the essence of the Proterra baggage charge and of your field service organization returning to revenue-generating work.
However, these positive factors will be partially offset by utilization decline from 82% to a range of 75% to 80% due to planned start-ups and transitions, higher startup and transition costs and continued inflation challenges, particularly in Turkey and Mexico. These factors contribute to an expected EBITDA margin range of 1% to 3%.
I wanted to give you some directional perspective on our plans for 2024. We believe 2024 will be a tale of two halves. In first half will be ramped up 10 lines that are either in start-up or transitions. We expect the gas volumes to be a fair amount lower than second half of the first quarter will be lower than the second quarter. As we work through these transitions and start-ups early in the year, we are expecting to generate modest losses and consume cash.
In the first half of the year, I'm expecting our adjusted EBITDA margin to be a mid single digit loss. And as the volumes ramp, our adjusted EBITDA margin improves to mid-single digits in the second half. We currently expect sometime in the second quarter will likely hit our low watermark for cash on hand. And then as the 10 lines ramp to serial production, we expect to generate positive cash flow in the second half of the year.
In 2024, we anticipate capital expenditures $25 million to $30 million. These investments are driven by our continued focus on achieving our long-term growth targets and restarting our idled lines. We continue to be confident in our liquidity position, which has improved significantly since we refinanced the Oaktree preferred shares into a term loan. Our balance sheet, along with the improvement in our liquidity operating results will enable us to navigate another transition year that will also allow us to invest to achieve our mid to long-term growth, profitability and capital targets.
With that, I'll turn the call back over to Bill.
Bill Siwek
Thanks, 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 of the transition. We remain focused on managing our business to short-term market challenges and remain excited about how well positioned we are with our significantly improved liquidity and strong balance sheet to capitalize on the significant growth the industry expects in the coming years and in turn, attain our growth and financial goals. I want to thank all of our TPI Composites once again for their commitment, dedication and loyalty to TBI.
I'll now turn it back to the operator to open the call for questions.
Question and Answer Session
Operator
We will now begin the question-and-answer session. (Operator Instructions)
Mark Strouse, JPMorgan.
Mark Strouse
Good evening. Thank you very much for taking our questions. So wanted to go back to the comment about the and some of your customer. Well, I guess kind of the ramp in order activity kind of waiting for some of the guidelines of the IRA to come out. I just want to make sure I'm thinking about this right. Is that more a comment of kind of the pipeline opportunities and new lines that might come with that?
I think the follow-on question is just kind of the visibility into the second half ramp is that is largely set in stone or is there anything that that ramp is waiting on as far as the IRA or otherwise?
Bill Siwek
Yes, Mark, thanks for the question for. I mean, as far as the second half that's that's pretty much baked in right now, right. I mean, we've got there's nothing dependent on the IRA. for that. I think from a longer-term perspective, we see an inflection point in 2025. You've seen a number of our customers announced some pretty good orders towards the end of last year, beginning of this year. Many are those are for 25 and 26 and beyond. And so again, I think there is some clarification on IRA there.
So there's I think we're starting to see a lot of interest in activity around repowering as well. And I just think there's still some clarification, domestic content and a few other things that will we'll kind of open up the spigot if you will on whether it's repowering or further orders into 25 and 26.
Mark Strouse
Okay.. Thanks, Bill. And then the comment about the you're getting north of $100 million in annualized EBITDA in 20 or beginning in 2025? Just kind of I'm making sure I'm thinking about that, right. Are you saying kind of the full year 2025 number, you're expecting that to be over $100 million or is that at some point in 2025 the annualized run rate will be north of $100 million?
Bill Siwek
No, that would be for the year 2025 over $100 million. (multiple speakers) Okay. Thanks. Thanks, Mark.
Mark Strouse
No, sorry, Bill, I didn't mean to interrupt.
Bill Siwek
No you're good we're good.
Mark Strouse
Thank you.
Operator
Eric Stine, Craig-Hallum.
Eric Stine
Hi, Bill or Ron.
Bill Siwek
Eric, how are you?
Eric Stine
I'm doing well, Bill. So maybe we could just talk a little bit about the the more color on the materials issue and the cause of the slowdown and then also the shutdown. I mean, is this something that is common in your business, but this just happened to be very large. So it had an outsized impact and the need to call call it out or are just maybe some thoughts in there. Is it something that we can think about that is behind you?
Bill Siwek
It's behind us it's not comment and it was a material impact to us, which is why we called it out. So this was a customer directed supplier with a quality issue. We identified it quickly early on, quite frankly, some had stopped production and as a result, because we didn't want to have any quality escape.
So it's not something that is normal in the industry but it happens from time to time and we paid it is behind us. And it did it did create a significant slowdown for us in at least in one plant in the fourth quarter, which is why we called it out separately.
Eric Stine
Yeah, it was something that I mean just to confirm. So you do expect I mean, this is not lost volume these are volumes that you will you will see in 24 you expect to see in 24? And is there any way to think about kind of the magnitude of the makeup that you might get from that supplier? Or is I mean I would assume it's a meaningful amount.
Bill Siwek
Yes. I mean, we've obviously we've returned the material, but it was I think we it's a $20 million sales impact and an $8 million EBITDA impact in the fourth quarter. So you would expect that to flow through into 2024.
Eric Stine
Okay. And then maybe second one for me. Just on the warranty issues, good news that some of your technicians are starting to transition back to more revenue producing activities. I mean, on one hand, you're sounding much more optimistic about it, but yet it still sounds like it's something that you expect to to have an impact going forward. So is this just a case of these things winding down? And I mean, do you feel like you've got a handle on the entirety of the issue? Is something that you think you're getting very close to it being done?
Bill Siwek
Yes, we definitely feel we have a handle on how many issues, quite frankly, we have for quite some time. But these warranty campaigns take a little bit of time to work through. So we'll see and we'll be continuing to work through the balance of those campaigns, even though the cost is already sitting in the P&L, but we will still have some technicians as we as we finish up those campaigns.
So the vast majority of our technicians are already on on third-party work or on billable work already. So yes, 2024 should be a much better, much better year from the field service standpoint.
Eric Stine
Okay. That's great. Thanks.
Bill Siwek
Thank you.
Operator
Justin Clare, Roth MKM.
Justin Clare
Hi. Thanks for taking our questions here. So I guess first off, I was wondering if you could just update us on how many lines you expect to have operating at the end of 2024? I know you had some commentary earlier about it, so it sounds like maybe 39, but I wanted to be sure. And then how many of those lines that you expect at the end of the year are under contract versus how many are are under negotiations still?
Ryan Miller
Justin and I'll start off. We ended this year with 37 lines and you know, we're turning for backlog for lines back over to Nordex for Matamoros, spreading four lines in for TI down in Orest. So those kind of offset. And then there's six other lines that were starting up and through started some transitions this year. And then there'll be seven lines that go away because in one factory just due to space that we're going from three lines down to. So we'll end the year with 36 lines installed.
Justin Clare
Got it. Okay. Is there on any discussions with your customers to potentially add more lines by the end of 2024 than than where you are right now? Or if not in that timeframe, given the strong order flow and the potential ramp in 2025, what's the possibility that you could look at expanding at in that timeframe?
Bill Siwek
Yeah, we -- there's certainly we do have some available capacity that we could fill relatively quickly in 2024. And as you as you rightly point out, there has been a lot of order activity in our recently end of last year and carried into this year. We do see volumes picking up fairly significantly in 2025. So you might imagine we're having discussions with all of our customers about capacity, additional capacity and additional lines.
Justin Clare
Okay. And then just one one other one. Just curious on the trend in OpEx in 2020 for versus what we saw in 23. And then as we move further into 2025 on any meaningful change that we should be thinking about?
Ryan Miller
I'm assuming you're saying OpEx or our capital expenditure guidance, we've guided to $25 million to $30 million. About half of that is related to start-ups and transition expense. Okay. Are you referring to operating expense or CapEx, Justin?
Justin Clare
Operating expense.
Bill Siwek
Operating expense. Yes, I mean, we have we have taken significant amount of operating costs out of our out of our structure over the last several years. And we will continue to do that. And our new COO is has a very deep history and experience on it with lean. And that is a mindset that we're employing throughout our organization. So we expect to continue to take down structural costs and we'll continue to focus on that as we move forward. So I would the trend of reducing our operating costs as a percentage will continue.
Justin Clare
Okay, great. Thank you.
Bill Siwek
Yes. Thanks, Justin.
Operator
Dimple Gosai, Bank of America.
Dimple Gosai
Hi, good evening. Thank you so much for taking our question today. I have two questions, please. One is okay. Given that you've realized higher pricing in the sort of results, can you give us an idea of what how we can think about, you know, the cadence of margins through 2024 given various different dynamics at play? That's the first question.
And also on the pricing side and the backlog, do you see any evidence of customers that are basically looking to renegotiating pricing for some of these projects in the backlog?
Bill Siwek
I'll take the second first, and then I'll let Ryan take you through the margins. But no, I mean, obviously, we have we reprice essentially every quarter based on market pricing of raw materials and what have you. But as far as renegotiating price based on specific projects, and that's not something we're seeing. I mean, it's a we have contractual arrangements with our customers that have formulaic pricing. So we're not seeing anybody come back on specific projects for repricing. And on the margins, Ryan?
Ryan Miller
Yeah, I think on the pricing side, you said this year, our mix of blades is a little bit more towards the longer blades. We actually had on that mix more than outweighed that we had material cost coming down. As you know, a lot of our material cost flow to our customers that partially offset that as we look to 24 on the pricing side, we do expect our ASPs to go up on that will be large. Some of that will be largely due to just the length of blades and some of the ramp up of those from a margin perspective of.
The big the big hitters, as you look from 23 to 24 is we had almost [$50 million] of warranty charges. The single way. We also had odd about $45 million of losses from the Nordics Matamoros plan that effectively go down to close to zero. And then we had a $22.5 million charge for Proterra bankruptcies as that goes away. And so as those go away, we have a number of different of margin improvement plans that we have in place.
One of those being that our field services will be obviously a lot more third party revenue generating activities and less time on warranty work. And then we have about $30 million of total cost reductions baked into the plan that are offsetting a lot of the inflation headwinds that we have currently out there today. As you when you go into our 10 K, we talked a lot about the inflation headwinds we have in Turkey, Mexico. And so our teams have worked to go and take a lot of cost out of our system to make sure that we can offset those things.
Bill Siwek
So first, linked, as we've talked as we talked about, though, that it's a tale of two halves, right? So first half, we're talking about mid single digit loss back half of the year. Second half of the year, mid single digit profit. So that's that's kind of the cadence.
Dimple Gosai
Perfect. Thank you so much.
Bill Siwek
Yes.
Operator
Andrew Percoco, Morgan Stanley.
Andrew Percoco
Thanks so much for taking the question. Most of mine have been answered, but I just want to follow up quickly on the margin cadence. Can you maybe just give us a sense for what's baked in for the Red Sea dynamic. I think it was mentioned that having an impact on freight costs, you can just give us some sense for what you're baking into your margin guidance for elevated freight costs? And maybe just remind us what your contract structure looks like in terms of passing those costs through to customers?
Bill Siwek
Yes, I can't I can't give you a precise percentage that we've baked in. Again, we're not impacted that significantly. Quite frankly, it's relatively few raw material skews, if you will, and we have looked at it and we and we do have alternative suppliers to avoid that, that route to some extent.
So it's actually a pretty minimal impact. And however, to the to the extent it does impact our our pricing is on total delivered cost. So to the extent we have price increases as a result of logistics, that would get baked into the into the blade price as well.
Andrew Percoco
Okay. That's helpful. And then maybe just to come back to working capital for a second. Can you just give us a sense for what that looks like in the first half of the year as you transition some of these lines? And maybe just give us a sense for when look, the liquidity front sounds like you're focusing on managing cash, but what are the some of the levers that that might warrant some additional capital to be brought onto the balance sheet to manage through this transition?
Ryan Miller
We're not planning on bringing incremental capital onto the balance sheet at this point in time. I think there's still a little room to work in our existing plants that have that we have mature blades on or producing. I think there's still some room out there that we can bring some of that working capital down, particularly around our inventory balances and contract assets, which is what we executed on the fourth quarter.
But you will see a modest increase in working capital because we have a lot a lot of lines that are ramping up here in the first half of the year. So that consumption of cash that I talked about in the prepared remarks, it was really focused in on on some of those areas that we have and we have production that will be ramping up. So that will consume some of that working capital. But we're going to continue to go after everything we can on the balance sheet as a target and as efficient and disciplined as we can.
Andrew Percoco
Great. Thanks so much.
Operator
Kashy Harrison, Piper Sandler.
Kashy Harrison
Thank you for Good afternoon, everyone, and thanks for taking the question. Maybe a follow-up to mark to how much of your revenue guidance is derisked by your current supply agreements. And then while we're under the discussion of revenues, what is the level of revenue required in 2025 get to $100 million of EBITDA?
Bill Siwek
Yeah. So the all of our revenues de-risked in '24. I mean, it's all under contract. So that's that's pretty straightforward revenue. And I mean, we're not going to give you we're not going to give you a guidance for 25 at this point in time clearly. But think of it as --
Ryan Miller
Yeah, I would think Kashy mid-single digits is where we plan to be at the second half of the year. I think as we enter 25 will be on that pace. And as volumes start accelerating, you know, that's where we start to get on that walk to get up to our high single digits that we expect to be on a pace to be there as we exit 25 and go into 26. So still working through the timing on some of those start some transitions. But I would think about us being on at least the mid-single digits EBITDA type business as we get into 25.
Kashy Harrison
Got it. I appreciate the color there. And then just my follow up question. You guys have highlighted the FIRA. clarity of the driver of project delays. Can you remind us what exactly customers are waiting on? When do you expect to get that clarity and there?
And then I guess maybe just another question is why is it that solar development has moved forward regardless of hire a clarification? And while wind is taking longer and that's taking longer to move forward post IRA?
Bill Siwek
So on IRA, there's there's still even though guidance has come out on domestic content, there's still a lot of clarification that's needed, obviously, on the green hydrogen piece, which could drive a significant amount of wind in the long term. There's still a lot of clarification around that. The initial guidance was not that favorable. Those are just a couple of examples.
On the solar side, it's a good question. I think part of it is our development of solar might be perceived as being a bit easier. I think some inflation has been has impacted solar a little bit differently than it has than it has wind. I think wind does take longer to permit in some locations. So it's a whole bunch -- it's a whole combination of different factors, Kashy. You can't just point to one, but it's a number of different different factors.
Kashy Harrison
Got it. Thank you.
Bill Siwek
Yes.
Operator
William Grippin, UBS.
William Grippin
Hi, good evening. Thanks for the time. My first question was just around the strategic alternatives for the automotive business, and if you can speak to just the any potential outcomes or maybe maybe range of outcomes here as you move towards some possibly completing it sounds like by June here?
Bill Siwek
By a range of outcomes, you mean structure or I mean it's I think we've talked about it before. It could be we could be talking about joint venture partnership or any combination of those things that would provide capital to that business to execute on a lot of the development programs we have and the growth we expect.
William Grippin
Got it. Perfect.
Bill Siwek
Was that answered?
William Grippin
Yes, yes, you got it. You got it. Yes. And just thinking a little longer term three-plus years out here as the wind market hopefully continues to recover and stabilize, how are you thinking about potentially adding lines beyond the 37. And at that point, are you comfortable with kind of the footprint you have in place? Or would you expand more if you think the demand is there and sustainable?
Bill Siwek
Yes. Yes. Clearly, if the demand, if we see the demand there and it is sustainable and we have commitments from our customers that in certain regions, we certainly will look at the opportunities we're looking at them today. It is the still if it's a greenfield, it takes a long time to get there. So looking at markets and geographies where demand, we think demand will be for quite some time. We're evaluating that today.
So the answer is yes, we will certainly consider that. Are we comfortable with our footprint today? Absolutely. I think we have a great footprint and we do have capacity to fill. So I think just by filling our capacity today, we get north of $2 billion of revenue, filling our capacity and running that at a fairly modest utilization rate 90s, mid 90s and gets us to those EBITDA numbers that we've talked about. So I think we're we're in a good position today. But if the opportunity presents itself, we can certainly look at additional growth opportunities beyond our existing footprint.
William Grippin
Appreciate it. Thanks, Bill.
Bill Siwek
Yeah, you bet. Thanks, will.
Operator
Jeffrey Osborne, TD Cowen.
Jeffrey Osborne
Hey, Bill. I have three quick ones on the EV side. I think you had previously talked about year end having some clarity on that I think the 10 K it makes reference to you is the sort of anti HIV marketplace delaying matters or just a slower process than anticipated?
Bill Siwek
I would say it's more of this a little bit slower process than anticipated. But still, you know, we're moving forward a lot of interest and we do believe we'll have something done here shortly.
Jeffrey Osborne
Got it. Good to hear. And then on the supplier issue, it looks like the decremental margins were around 35%, just a divided by 23. And what are the areas? Why is that is that just you have to pay people to the around from a labor perspective, I assume in Mexico for four weeks to do nothing. Or can you just walk us through that? And then when you are going after damages, is it for the full value of the product lost or the full lost income or EBITDA to the Company?
Bill Siwek
Yes. So the cut, I mean, you're basically losing contribution margin, right? So it is we do have people that are still I wouldn't say they were doing nothing, but they are not nearly as productive as they would be if they're building blades. And so yes, you're basically stopped and you can't just send them home. You feel you've got to keep that workforce intact.
So that's additional cost to deal with some of to deal with the speed up then of the production, once you once you do restart some damages that I might talk about that publicly, but our contracts provide for that. And so we'll follow our contract.
Jeffrey Osborne
Got it. And the last question I had is, is there any update on what the plan is for new news that I assume that's not in 2024 guidance? And perhaps if it's like repowering for G, is that something that could be started fairly quickly versus a newer blade model that maybe you haven't produced in the past?
Bill Siwek
Yes. Yes. So you're right, it's not in 2024 guidance. And to your point, to the extent we were to be asked to start with the existing blade that the plant is tooled for, we could start up fairly quickly. It would just be a matter of assembling the workforce. So that would be relatively quickly, but yes, it is not in the 24 guidance at this point.
Jeffrey Osborne
The rationale there is that because they need clarity on IRA or is there some other market driver, why you don't have clarity on that facility?
Bill Siwek
Yeah. That's -- it's more clarity for four GE. and what they want to use the plant for at this point.
Jeffrey Osborne
Got it. Thank you. That's all I had.
Bill Siwek
Thanks, Jeff.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Bill Siwek for any closing remarks.
Bill Siwek
Thank you again for your time today and continued interest and support in TPI will talk next quarter. Thank you.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
