Q1 2020 Earnings Call

We're providing P.P.E. to our associates and their families. So they can be a safe as possible when they leave our plants and help to prevent community spread so as we continue to navigate through these challenging times you can be sure that the health and safety of our associates will be our priority while at the same time secure.

During our financial stability to emerge stronger from the current environment.

Please turn to slide five.

In the first quarter, we delivered net sales at 357 million, 19% increase over Q1 of 2019, and adjusted Eve adopt 1.3 million or 0.4% of net sales down 60 basis points the impact of covert 19 on revenue and adjusted even during the quarter was 38 million.

At $11 million respectively.

During the first quarter of 2020, we announced that Bill side will become our president and C.E.O. effective may 20th and I'll transition to the chairman of the board.

You have our long term current directors will not be seeking reelection as we look to continue to refresh strengthen and diversify our board of directors going forward.

We published our first annual E.S.G. sustainability report the report highlights how T.P.I. has incorporated sustainability, Andy S.G. into our day to day operations are substantial improvement in safety over the last four years and are significant potential contribution to global emissions reduction.

We hosted our Investor Day in New York City in early February where we detailed our strategy a building longterm sustainable value.

Capitalizing on two major macros decarbonizing, the electric sector and electrifying the vehicle fleet trends driven more and more by economics, what customers want to buy what investors want to invest in and the need to positively affect climate change.

Announced today that we've been awarded a contract to build production tooling supporting a new passenger electric vehicle platform.

The tooling will allow us to capability to produce advance composite cards on our new automated pilot production line in war in Rhode Island, beginning later this year.

We started bleep production.

Our new India facility on time and under budget with a very experienced senior management team and a labor force with significant previous in country blade manufacturing experience.

Now turn the call over to bill to provide a more detailed business and market update including our cobot 19 response Bill.

Thanks, Dave Please turn to slide six I'll start by describing in more detail. Our response to the code that 19 pandemic and will follow that with an overview of the current operational status of our manufacturing facilities discuss the status of our supply chain and finish up with a brief update on the wind energy market.

To protect the health and safety of our associates their families and communities during the Cobot 19 pandemic in China in February and globally in March we put in place a series of policies and safety protocols, following C.D.C. and W.H.O. guidelines and the guidelines of health organizations in the communities in which we operate.

These include it mobilizing the global cross functional Cobin management team, eliminating non essential travel globally restricting visitors tourist sites to business essential personnel only.

Implementing temperature scanning for all individuals entering our manufacturing facilities and prior to boarding and he'd company provided transportation.

Associates are also required to where appropriate P.B.E. on all company provided transportation and additional buses in shuttles were added to allow for more physical distancing.

Moving as many associates as possible to work from home arrangements, providing ongoing education and reinforcement of safe behavior, such as proper P.P.E. hand, hygiene cleaning and sanitizing and social distancing for all bar associates to continue to.

To work on site as well as when they're in their homes, providing P.B. to our associates in their families for use at home as well as to frontline health care workers in our communities in coordinating with local state and federal government's on restarting and locations, where we are temporarily shut down as well as for that testing of our associates.

We are also focused on continuing to run our business safely while working to mitigate the negative impacts to our operations of covert 19 by partnering with our customers and suppliers to make up as much of the loss volume as possible in each of our locations, including pushing out transitions because our customers demand remains.

Wrong.

We have also not lost focus on the operational imperatives, we outlined at the beginning of the year to continue to drive cost out and improve our operations globally.

Finally, we remain focused on our liquidity to secure business continuity and ensure the long term viability of T.P.I. as we navigate these dynamic and unpredictable times are stress testing results indicate adequate liquidity if needed to withstand pro long shut downs in our plants and today or liquidity stands at 188 million.

Dollars and we will continue to manage it by pushing out non essential cat backs controlling and reducing other costs and focusing on our cash conversion cycle.

Turning to slide eight and I'll take us around the world and give you an update of our operations.

As you know our China facilities were shut down for an extended Chinese new year break due to the outbreak of cope at 19.

We are now back to normal operations and ahead of our recovery plan and expect to deliver more volume than our original 2020 budget in part the result of pushing out a planned transition.

We are the startup phase and arching I, India manufacturing facility and we operated for most of the month of April with a reduced workforce due to the government of India's imposed curfew, we were able to resume limited production on April 21st 2020 with additional personnel after working with the government to obtain special approvals.

On may 6th we increase production to approximately 50 per cent of plan and we expect to begin the ramp to full production on may 17th if the government's current plans do not change since this facility isn't startup during 2020 and was ahead of schedule at the time the curfew was instituted the financial impact on T.P.

The year is expected to be minimal.

We operated our Izmir, Turkey manufacturing facilities at approximately 50 per cent capacity during the first half of April.

<unk> decision to temporarily reduced production was due primarily to government mandated stay at home orders in response to cope with 19, which resulted in demands from our union in Turkey to temporarily reduced production since mid April we have been running our production at normal levels are second quarter blade production in Turkey will be slightly.

Packed it by the two week production slowdown as well as a shortage of course related to one blade models.

We operated our Matta Morris, Mexico facility at reduced capacity or approximately 30% to 35%. During April 2020, and have increased that to approximately 50 per cent. Beginning in may we may be required to continue to operate at a reduced capacity through may 30th 2020, when the federal government has.

Indicated the sanitary emergency in Mexico is expected to be lifted.

Because we've been operating at these levels are second quarter blade production will be negatively impacted.

Are for factories in whereas are currently shut down as well due to the sanitary emergency and the lack of clarity provided by the government and as a result, a lack of clarity for associates as to whether we are an essential business under the decree or under what conditions. The government will allow us to safely restart prior to the expiration of the decree.

We are working with our customers their customers and the government of Mexico to resolve this uncertainty as soon as possible.

However, if this uncertainty is not resolve our plants and whereas maybe shut down through may 30th and R. Q2 volumes will be negatively impacted with that set some progress is being made in Mexico was state and federal government officials to safely restart operations for critical supply chain companies, who are serving essentially U.S.

Mexican industries.

On April 23rd 2020, we decided to voluntarily pause production at our Newton, Iowa manufacturing facility due to an increase in Kobe at 19 levels in the surrounding counties, including a significant increase in the number of confirmed cases in the prior week among or associates at this facility.

We performed in additional deep cleaning of our facility and implemented a mandatory testing program for all Newton, Iowa Associates in collaboration with the state of Iowa, We restarted production on a limited basis yesterday after working closely with the Governor's office in Iowa health officials to reopen the plant as soon as it was safe to do so.

Q to volume will be negatively impacted due to the duration of our production pause finally, our operations in Rhode Island have not been material impacted during the pandemic.

Now an update on supply chain.

As one would expect a raw materials suppliers have been impacted by cope at 19 as well.

Our global supply team continues to do a phenomenal job insuring that our factories continue to operate during the pandemic by secure in critical raw materials through alternative suppliers and or locations as needed and executing our strategy of regional Localisation and long term supply agreements to ensure a consistent uninterrupted.

Supply of key raw materials. We also took steps in the early stages of the pandemic to secure additional safety stocks of most key raw materials to reduce the risk or impact if any short term supply disruptions. We expect that the impact of these proactive steps will be reflected in a buildup of working capital.

Notwithstanding our efforts, we will still see tightness in supply in poor materials false in particular do to Kobe related challenges in Ecuador, as well as overall market demand and 2020. Today. This is not had a material impact on our production, but there are still risk around the balance of the year with respect to the balance of our supply.

Chain, we will continue to navigate short term disruptions enough develop contingency plans for key materials as we worked through the impacts of the pandemic and continued strong demand from our customers.

Turning to the when markets as of today, we have not seen a material change and demand from our customers for 2020 or 2021 due to cope at 19, however, the potential impact on the market will be derived from many factors, including manufacturing disruptions potential project execution delays supply chain.

Shortages logistics challenges and postponed auctions among others be any apps global onshore 2020 market forecasts was downgraded by nine Gigawatts to approximately 60 Gigawatts in March due to cope with 19, which would still be a record year for onshore installations globally. However, B.N.E.F. forecast.

That all of this reduction will roll over into 2021, and they have increased or 2021 forecast by 11 Gigawatts to 73 Gigawatts.

<unk> upgraded the 2022, and 2023 onshore forecasts as well by five and 7% respectively. So while cope with 19 is creating some uncertainty for the overall market in 2020, it coming years still looked to be relatively strong at this point.

In the U.S.B.N.E.F. downgraded the U.S. when market for 2020 from 13, and a half gigawatts to 11.1 gigawatts due to the impacts of cope with 19, but has upgraded as estimates for 2021 by five Gigawatts 13.4 data wads in response to potential project commissioning delays in the U.S.

The wind industry is working to clarify P.T.C. Safe Harbor qualification and force majeure rules with the potential to extend project completion dates by one year, which could alleviate some of the installation and commissioning challenges exacerbated by cobot 19.

Finally, several of our customers have indicated their desire to push out transitions to enable us to maximize production. Once we are back at full capacity and reduce the amount of volume loss. During these transitions as a result, we currently estimate the number of transitions and 2020 will be approximately 30% to 40% of what we're.

Previously planned so we expect transition costs will be significantly less as well.

[noise] are pipeline remains strong with the potential to adult onshore as well as offshore lines and multiple geography.

Our focus on filling the existing capacity, we have in India, and China and carefully managing our liquidity. We also remained focused on extending those contracts that expire at the end up 2020, and we fully expect to extend those contracts covering the most of these lines shortly turning to slide nine we now have a total potential.

Contract value of up to approximately $5 billion through 2023, and the minimum guaranteed volume under our supply agreements is 2.5 billion.

The potential an minimum contract values do not include the two lines in China that we were operating under a short term contract this year.

Nor does it include the impact from some of the anticipated new larger played models that we will produce after 2020 and 2021 transitions or the extensions we expect to close on shortly.

Yeah.

While the health and safety of our associates remains our primary objective. We remained focused on our operating imperatives and continue to apply our scale to expand material capacity and sure continuity of supply. This is especially important now drive operating costs down and focus on the integration of our key E.S.G. initiatives to drive.

Profitable growth in long term shareholder value.

With that let me turn the call over to Brian.

Thanks No.

Please refer to slide 11 through 13.

All comparisons made today will be on a year over year basis compared to the same period a year ago ended March 31st 2019.

For the first quarter of 2020 any March 31st 2020 that sail you increase 556.9 million for 19% to 356.6 million.

<unk> windley increase by 21.4% to 336.3 million.

The increase was primarily driven by a 10.8% increase in the number of wind blaze produce you're over your largely as a result of increased production at our new plans and Madam worse, Mexico in China, along with increased production or plants in war as Mexico.

Do you want 2020 revenue negatively impacted by approximately 38 million associated with a temporary production suspension in China due to cope with 19.

Our general administrative expenses for the quarter increased by 1.5 million to 9.5 million G.N.A. as a percentage of net sales was 2.7% for both periods before sharebased compensation G.N.A. as a percentage of net sales was 1.9% and 2.4% in Q1.

Of 2020 and 2019, respectively.

Provision for income taxes for the quarter was the benefit of 15 million as compared to a benefit at 4.6 million for the same period and 2019. The change was primarily driven by the jurisdictional earnings mix.

The net loss for the quarter was point 5 million as compared to a net loss of 12.1 million in the same period and 2019. The decrease was primarily due to the operating results discussed above net loss was negatively impacted by approximately 9 million net of 2 million of income taxes associate with the production volume loss due to the temp.

The suspension of production in China, and other costs related to cope with 19.

Net loss per per share was one set for the quarter compared to a net loss.

Per share a 35 cents for the same period in 2019.

Adjusted EBITDA decreased to 1.3 million as compared to 2.9 million. The same period in 2019, adjusted EBITDA negatively impacted by approximately 11 million associated with the production volume loss due to the temporary suspension of production in China and other costs related to Kobe 90.

Moving on to slide 12.

We ended the quarter Hunter 9.5 million of cash in cash equivalent.

Principal amount of debt outstanding of 207.

Net debt of 97.5 million compared to the net debt of 71.8 million at the end of the year.

For the quarter, Yeah, net cash provided by operating activities of 2.6 million plus spinning 27 million on cap x., resulting in negative free cash flow for the quarter of 24.4 million.

As a reminder, we withdrew are 2020 guidance on April 23rd 2020, due to the rapidly evolving nature magnitude and duration cobin 19 and and.

A variety of measures implemented by governments around the world to address its effects and the impact our manufacturing operations.

Oh and I'll provide an update on our current liquidity position on slide 13 in April we drew down into additional 30 million of our revolver and 9 million of Unsecure debt.

As of May 1st we had cash in cash equivalent of approximately 154 million and our total availability under various debt facilities was approximately 34 million.

This gave us total liquidity approximately 188 million.

Our focus remains on liquidity to ensure the long term viability of T.P.I.

We are forecasting that are huge you working capital will be significantly impacted by Los volume at our Turkey, Iowa in Mexico facilities due to the temporary suspension of production, while continuing to pay our associates an increase in inventory levels as we proactively increase safety stocks of key materials to mitigate any short term supplied.

Corruption cause my covert 19, and warranty remediation campaigns with one of our customers.

We continue to push our out <unk> and focus on essential capital expenditures that are critical to our operations and required to me customer commitments.

We have run multiple stress test scenarios to model the potential impact of additional or extended production suspension of our plans around the globe.

Based on our current forecasts, we have adequate availability to liquidity to a stand pro track to shut down of our plans with that I will turn the call back over to Steve to wrap up and then we will take your questions. She.

Thanks, Brian turning to slide 15, the health and safety of our associates in their families as well as the communities in which they live is our number one priority as you've heard today, we're taking many proactive steps on the cope with 19 front.

For continuing to execute on our operating imperatives, while mitigating the negative impacts of coping 19 on operations. During this time and we're focused on managing our liquidity to provide financial security and to emerge stronger as we drive through the current environment.

Our overall mission remains unchanged, establishing 18 gigawatts of global when blade capacity over the next few years to drive $2 billion of annual wins revenue along with $500 million of annual transportation revenue and achieve double digit adjusted <unk> levels with an estimated 75 gigawatts.

Global combined onshore and offshore wind market, we expect to have approximately 20% global market share. We plan to continue to drive for more speed during transitions leverage our global scale for operating in buying efficiency you use to continue to drive down costs, all while maintaining a strong and conservative balance sheet.

Thank all are dedicated to T.P.I. associates for their commitment to our mission Decarbonise and electrified.

Competent we will emerge stronger from the current environment and remain very competent and our multi your game plan and we'll stay that course.

I want to especially thank bill for demonstrating exceptional leadership as president this last year and congratulate him as he steps into the C.E.O. role Bill has been a trusted partner at T.P.I. for seven years, and it's more than ready to leave this company to the next level of success I look forward to providing any assistance.

In in my next role as Board Chairman.

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

Well now begin to question or not session.

To join the question you you may price star than one on your telephone keypad.

Hear a tone and how junior request.

Using a speaker phone please pick up your hands that before pressing <unk>.

We're going to question he's plus taught him too.

Oh paused for a moment, that's called is trying to queue.

Yeah.

Well. This question comes from both then with <unk>. He's go ahead.

<unk>.

Well, maybe or yeah.

I move onto the next question Huh.

But that's the question that's one thing with quake home <unk>.

[noise] hi, everyone.

Hey, Eric how are you <unk>.

<unk>.

I'm doing well how about you.

Just fine thanks. Thanks.

Good good.

So I'd love to just get your thoughts on transitions and and you know make sense I get it on in the near term your O.M. partners wanting to push those out but I'm curious I mean, there's there's something where.

<unk>, you potentially could see a structural change to that and.

Timeline to me, if I think about it.

You know pushing them out for 2020, and if you're going to make up all the volume sort of the industry potentially makes up for all the loss volumes and 2020 and 2021 that would seem to imply that.

You know it it'd be more structural and it could be a push out of those transitions longer.

Than just a couple corners here in response to cold.

Yeah, Hey, Eric Thanks for the question, Yeah, I think <unk> some of the transitions. We've been talking about are are pushing further than just into 2021, so you're you're correct there.

I think you know you you might have recently seen some public comments from some of our customers about.

Maybe slowing down new product in or introductions, a little bit the consolidating some of the.

Some of their platforms.

An effort to you know to minimize transitions if you if you'd look at.

No L.C.L., we has come down and came down nine per cent last year, and that's primarily for moving to the larger platforms up to the four megawatt platforms.

With a with a longer blades were already buildings why you know we we've always said, we we hope and we look forward to the time on transitions slow we're not suggesting that there that they are yet that you know this is not quite a trend yet, but we are seeing a little bit more time in between transitions Ah.

Somewhat brought on by Cobin, but I think also just by.

The sheer cost of them for both us in our customers in recognizing the economics of running played models longer and having fewer platform changes than we have in the past.

Mhm.

You know maybe along those lines I mean, just looking for you know so maybe unanticipated consequences or changes in the wind industry and just.

There's there's something you think changes.

You know or strengthens the trend towards outsourcing you know that maybe it's a higher percentage as as as O.M.'s think about just diversifying the locations where they are having glades manufactured.

Yeah.

You know I'm I'm I'm not sure if I would go that far I I think we continue to see the trend of outsourcing, though I mean that has not changed [laughter]. So and again I think as as you as you look into where the significant growth in the market is occurring and and quite frankly over time the offshore mark.

So if you think about offshore market you can almost think of the U.S. as an emerging market for offshore as we would think of of of some of the other onshore markets like Middle East store, you know, Turkey, and and in Latin America, So I think as.

Production or I'm, sorry, as growth continues to accelerate in the emerging markets. I think it's still is still is a great case for outsourcing from an overall capital efficiency standpoint for our customers.

Yep got it and then last on for me just just on the new the new transportation opportunity you there on the tooling. So just just so I'm sure I understand that so.

This is building the tooling rather than you necessarily elevating in are calling it a new program.

Is that the right way to think about it in is that if that is is that something that could advanced at some point do be to becoming a new program for you.

Yeah. So so the first step is always building the tooling right and then as as you get through that process. Then the next step would be a a production type of deal and so we are again. This just demonstrates the attraction, we're making a in this effort of diversification.

And.

We would you know we would expect that this would would move into a production agreement you know by the end of this year.

<unk>.

[noise], okay. Thanks, a lot.

[noise] banks are too.

Well that's the question comes from Michael Weber with Webber Research you just go ahead.

Eight afternoon, guys how are ya.

Good afternoon How're you.

Oh, good when did you get on the the wind transitions again, you mentioned in your prepared remarks that those are driven by your.

Your customer base in most of those customers have also withdrawn guidance. So I guess is the is.

The scenario here that they like we operate on the minimum side of those contracts before we see transition to accelerate again or can you can you give it a bit more color about how how those conversations went and and it gets maybe specifically whether whether there's any reopening of terms associated with with that process that.

Would give you maybe an opportunity to to augment or change things might it might have.

We're dynamo might have changed.

Yeah sure no no change in terms, if you well. It's it you know part of it is a decision, whereas as we have factories that get temporarily shut down or are we suspend production for a time period in our in our customers are having the same challenges.

So they're looking at Okay demand has not changed from their standpoint right. They are asking for as much as we can reduce this year. So it's just the opposite of operating at the minimum <unk>. So by pushing out a transition you're able to you know you don't lose the volume during a transition or they have a mature blade and then a ramp up.

They have a brand new blade. So if you think about the volume more losing in our plants that are that have been temporarily shut down or are still in shut down being made up during throughout the balance of the year by not transitioning.

We we don't expect you know, we expect our utilization from on a year over year basis to be about the same as we guided to earlier before we suspended guidance, but I I will tell you are it's not a volume issue here, it's more of the timing issue from from blade option standpoint, and end up.

<unk>.

Okay, and it's it's it's effectively mutual deferral, it's there's no there's no reopening of any material terms.

No. It's it's it's a mutual fund for all right. That's true that's driven by our customers.

Right just to to follow up on on the the I guess.

Kind of a similar question, but if it is really what to think about this kind of like almost like a feat program and then I you mentioned essentially turning into to do a larger.

Larger production program is that would that would you have a a roofer on that or would that be something that would be be available are kind of <unk> tender might be the wrong term, but would there be competitive dynamics associated with with with that transition to but the murrah busts opportunity.

Yeah. So so we're building the tooling for our.

Pilot production line in more more in Rhode Island.

So the tooling as being built for the equipment that we are putting in place and warn Rhode Island.

So that that tooling would logically be used to build production parts overtime.

External okay, just one more for me on.

On Mexico.

And I think you know eight and in late April it looked like one of the three wars facilities. This temporarily shut down and now it looks like all I think it looks like all three are and then the other is running and 50% capacity I I know it it seems like visibility is pretty tough there, but if if you can just give a bit a color on what changed in between things April 23rd and today and then you know your best guess.

Set a timeline for when you think you'll have some clarity from from the Mexican side around how the then this will be treated in terms of whether they're a critical.

Yeah. So.

Primarily driven by the the order that was issued by the labor department in whereas to shut down to one plant, which by the way. We've we're challenging that we don't think that was properly done.

In the last as bad as that kind of spread through the rest and the <unk>. The order stated that we were not an essential industry.

And so as the rest of our associates learned of that as well as growing fear in in the Mexican the war as area about the code that virus in in the extent of it and the fact that they hadn't gone through their peak, yet became more and more difficult to to keep the plants fully staffed.

So a number of our employees decided that they would rather not work until we were just <unk>, we were deemed as essential.

So that's been that's been the challenges as I mentioned the prepared remarks. We've you know we've got a definition ended a decree that is very ambiguous.

And and so we've been working with the Mexican government, both state and federal to to help clarify that and or to provide us with parameters under which we can a restart those operations. So it was more of a employee driven as a result of.

Our first facility being shut down that kind of cascade it into the other facilities and as far as clarity.

You know there there is some discussion with the Mexican government that they would begin to open factories up again by May 17th there was a meeting between the president and his cabinet last night other continuing that meeting again on Monday as I understand it so.

You know we are still working to to get the plants open prior to that but that's probably the near term date that we've seen from the government as some time in the middle of me at this point.

But but yeah, but measured measured in in weeks at worst in this morning.

Yes, correct.

Okay.

But I think the time guys alternative.

<unk>.

The next question is where Michael legs with benchmark. Please go ahead.

Good Thanks, guys could you talk a little bit about the lower price of oil and the longer term impact to you you might see or how you view that thanks.

Yeah, <unk> interesting. So again, you know less than 3% of the World <unk> energy is produced by oil.

So it it it's not a huge generator of of of energy. So I think it doesn't change the demand for renewal.

I I also think that the low.

Price of oil could.

Move more dollars for investment into the renewable side, because as as investors look at what kind of returns can they earn a and oil or gas as opposed to renewables I think that gap is shifting or reverse so I actually think it can be it can be helpful. For the renewables. If you look at many of the signal.

Tories to the Paris accord or the Paris agreement, you know, they're calling for the recovery to be based on renewable for a whole bunch of reasons. So.

No if that answers your question and it really doesn't impact any of our material feedstocks or raw materials into our product.

In any significant men or there's no real correlation so.

That's good that's that's fine it just a little more on Mexico could you talk a little bit you. All you are engaging albright consulting how are you dealing in communicating with the government. There what you know is it.

Sporadic or <unk>.

The what type of.

Yeah, it's it's not sporadic by any chance. It's it's daily we have our local government relations team in war as that is working the time leave this government that Chihuahua government, which are the states that are two factories are located in as well as.

Different folks at the federal government, we've had direct conversations with the secretary of the economy.

With some folks and am lows cabinet direct conversations with them as well plus we are utilizing A.S.G. to help in some of that with contacts with the C.D. ambassadors from Mexico, and the U.S. as well as our customers and we're working in collaboration with our customers because.

We are critical to their supply chain and there's a very vested interest there. So we're hitting it from multiple angles and that's on on a daily if not hourly basis.

And then and I I don't when we talk you mentioned something about the union wanting to put in some other restrictions is that an additional issue was that just something that's.

Part of the whole government relations.

No that the Union is only in Matta Morris and.

Again for the same reason up this designation of essential the Union wanted the plant.

To be shut down effectively and and we negotiated with the union that if if they want it to work because the health practices and safety practices, we put in place, where you know at or above C.D.C.W.H.O. or Mexican federal government standards would they be you know could they work in the end the unions.

Said, yes, and so although many plants were shut down we've been operating as I mentioned, 30% to 35% during April 50 per cent now with more coming back kind of on a weekly basis. So so they want to work because they're willing to work are workplaces are safe.

So that's that's the union aspect of Mexico.

They're just one last question if I may.

Well can you talk a little bit how that stranded versus the first quarter or you're going to stay away from that.

<unk> April.

Yeah, Yeah, I I think I think in our prepared remarks, we kinda went around the globe unless you know what what factories were open or not or partially open. So I think you can kind of get a picture from that.

Okay.

<unk>.

Hey, Mike just to add to the Mexico comment. This is Steve per minute to <unk>. They are a lot of this is in the press you can keep tabs on what's going on more broadly, but as bill described there are essential designations for some companies or some technologies in the U.S. and in Mexico, better a little more straightforward.

In Mexico renewable energy has not been broadly deemed to be essential but it has in the U.S.

And there are critical supply chain.

Tensions pressure if you will building you know what we would describe as being a constructive way and again just read about what's going on on the automotive side of things if Detroit, it's going to reopen at a certain time bin May then Mexico automotive supply chain needs to open to feed it and.

So there are good kind of constructive tensions building. If you will on this balance personal health and security and economic security, Mexico's and a little bit of a tough spot at the moment given when they expect to cope with cases to peak and so the government is challenged in the in the very short.

Term really and I think you said weeks I think that's that's right kinda challenged within a week or two here, but then we hope and think that things ought to ought to start to become.

A bit more flexible a bit more open for those that are meeting the new safety protocols and.

The health Ministry issued a new set of safety protocols for the government up Mexico as well over the weekend, we're meeting those and so you're you're starting to see some some traction there that should be helpful.

Okay, great. Thank you guys.

Yep Thanks, Mike.

The next question comes from Austin or with kind of course. Please go ahead.

Good afternoon, guys <unk>.

But.

Hi, I just wanted to introduce myself since we're on a news story here so.

As far as urban air more <unk> mobility contract.

It's kind for you guys and and so you have been done anything on passenger vehicles or urban area mobility previously crap.

I'm sorry repeat the question.

Passenger U.V.

The passenger or the commercial vehicle.

The the passenger vehicle.

Oh, Yeah, Yeah. So you you.

Yes. This is the first this is the first things that we've announced publicly related to a passenger easy that's correct.

Yeah. This is a passenger ground based electric vehicle and we thought we heard you say air vehicle <unk>, maybe we misunderstood, but and work horse for example, as the companies working on some other things that you might be referring to but this is the first passenger automotive.

Production tooling contract that we perceived if you will as bill describe we do have been our development portfolio additional passenger E.V. programs, one with general Motors, which was a development program. It's been made public some time ago, but this is the first passenger.

For T.V. production tooling contract that's true.

Okay, and so once you get to tooling set up for about a from Rhode Island factory do you expect that should be an open production line, but you can utilize for other projects in the in the space.

No not <unk> not initially initially the the tooling is being is being built specifically for this customer for that production line.

Is is that good that tooling be interchangeable for other manufacturing certainly, but initially it's it's being set up specifically for that program.

Okay go on it and then on you know you bicycle power supply side and shocking no oh demand side shop going on here with the the cobin endemic so.

In the Mexico facilities are brought back on line into China facilities, and everything else or or fully brought back up to capacity. It's somewhat school in the next couple of months here at that point, well you consider reissuing guidance.

Yeah. So just just to be clear the the China facilities are up in operating at full capacity.

So so that's fine.

I think when the unseen when when we get through <unk>, that's uncertain period and when it becomes clear what the ultimate impact is for the year given the number of uncertainties that the industry's dealing with then we would certainly consider a re a.

Putting out at new guidance, if you will.

Okay.

Thank you guys.

Thank you. Thank you.

Yeah.

That's a question so so sad.

<unk> capital partners.

<unk>.

Hi, guys is Donovan shave her on fulfilled today, thanks for taking our questions and sorry about earlier were navigating five five earnings calls all the same time right now.

As I missed the beginning apologies if you already have dresses, but one question. This has been very important to investors is the g. lines that are expiring at the end of 2020, I know is sort of talked about this in the past <unk> give us kind of any update on that.

Yeah I think.

I'll <unk> I'll repeat what we said in the in in our prepared remarks is that we are.

Very confident that we will extend the contracts that make up the bulk of those lines that are set to expire at the end of 2020 very very short order.

Okay is there any thinking of changing the facility where it was yeah. I know challenges are Newton and there's not a more or less is closer for shipping purposes.

Is that on the table discussions.

Mm no it's not.

Okay.

This second question, how do you expect the industry structure to evolve guys. We trends as they move you know from beginning to end in this in this market downturn.

[noise].

You know I think for for.

You know, we built a very strong balance sheet for a reason and it's it's to deal with times like this but as we said earlier.

We haven't seen a change in demand from our customers in the near term and we have not had any indication of demand changes for next year. I think there are too many uncertainties to predict exactly what the ultimate fall out is that at this at this point I don't see any major structural change I don't know see if if.

See it differently, but I agree you know, we're we're continuing to see in the industry. Some forces of then again. This is a broader comment not just to cope with comment but broader forces of consolidation broader forces of when to being adopted for economic purposes is.

<unk> with the renewable energy aspect and climate change driven aspect of what we do and what our customers do so there's a lot of healthy kind of fundamental poll on d. industry in the markets, but there are some shorter term effects of policies that come and go a little bit. So for example of U.S. market. This.

Year, if some projects slip into next year, they'll either probably qualify under force majeure, excuse excuses excuses or perhaps extensions to have a safe harbor gets treated.

So we don't see that as a structural change as much as it may be a delay as bill described in the prepared remarks about some yeah go watch being installed next year as opposed to this year. So it will continue to see those kinds of project based puts and takes if you will but those two are mine Dar structural changes <unk> bigger.

Picture, if you will.

And similar.

Issues around the World Yeah, you know, what's economics being a big driver customer selection being a big driver, but individual government policies are temporary tariffs you know those types of things impact individual project timing or decisions. They don't tend to impact the bigger fundamental market.

As we see it.

Okay. Okay. Last question, then then I'll hand, it off I'm, just curious to the Newton <unk> the facility in Iowa.

I thought it was very interesting and just maybe even comment increment genre perspective, as more and more companies are doing manufacturing and putting safety measures in place. The I think 20% infection rate you know at least on the face of it seemed kind of hi, and that's a challenge.

But I was wondering is.

That's something that you think was people contracting from within the facility or was this from people outside the facility in their daily lives it'd be very interesting I think <unk>. It's good color if say hypothetically you and you you know institute policies, but the virus was contagious in spite of that or so.

And I'm curious yeah, Yeah, I think I think that's a challenge for any company I mean, if you look at the the practices that we put in place that we put in place in early March we had a head start because we were in China and we understood you know what those practices should be post the issue in <unk> in our.

Kinda factories, and so we put those those practices and plays very early.

We've done is much contact tracing as we can do there is no you know hardcore evidence that there was any transmission with in the plant. We do believe you know our our our rates are pretty consistent with the rates in the surrounding communities and counties within Iowa.

So again, it's hard to control it our associates are doing when they go home as much education as we can provide as much P.B.E. as we can provide them to use with their families outside of the factory that we've done but you know that that's a that's a tough question about you know given what we've got in place we believe that that was more.

Immunity spread related than anything that was transmitted within the within the four walls of our plan.

Well, that's that's fantastic news Super out <unk>. Thank you guys.

Yep <unk>.

Once again they have a question please by far than one.

The next question calls from Kabul, most haddow with when I'm paying.

<unk>.

Thanks for asking the question, we all we talked a lot about deem Mexican locked down and the impact on your many factoring.

Do any of your customers in in never various jurisdictions have the physical turbine installation disrupted as a result of the locked down for example, Italy, France and and somebody you watch states.

I I think I think there have been construction delays.

Multiple countries as a result of cup at 19 travel restrictions.

There have been challenges getting a certain of the equipment to different locations, depending on border crossings and what have you. So clearly there have been some challenges.

With respect to logistics in construction as a result of it is it was that what you're asking for though.

Yeah, right and and I guess.

Is it be regulatory restriction that that's more impactful in slowing down.

<unk>.

Or is that labour availability, and and just frankly fear on the part of the workforce.

I think it's a combination quite clearly any border crossings or lockdowns on moving enough people.

Country to country are within countries that can certainly impact the actual construction in in the wind farm.

There there is there's the human factor as well with the fear part I mean, I think we saw that in in Mexico, clearly with with our workforce, but yeah I think it's a combination of both of them.

[noise] understood Lafley.

Lot of the renewable energy trade groups in the U.S.R. pushing for an extension I.D.I.T.C. or I should I should say a further extension that's part of one of these <unk> stimulus spells kind of what what's your take on you know what what you guys would like to Seattle, Washington D.V.D. industry.

Yeah, Pavelic, Steve I think the most critical ask is for Safe Harbor extension, Oh, one year each on the 2016 and 17, a safe harbor consideration so that would affect this year next year and basically give projects that were due to be completed by the end of this year the opportunity to be done in the next.

Year, and then likewise I in 21 for 22, if you will that's been the number one ask and if you think about it that's no additional money from Treasury. It's the benefit of the bargain. It's the way the P.G.C. was structured last time. So that's the highest priority. There are some groups that are concerned about.

Ability of tax equity and are interested in seeing some direct pay component that's being discussed we'll see how that proceeds and then two year a little more directly to your question.

In the context of a stimulus discussion so if we get to a pure stimulus related discussion.

Then if we're asked what could stimulate additional spending additional tax credits could stimulate additional spending it it doesn't mean, it's needed for the industry to survive or to to do well, but it could be a part of a stimulus related request.

Thanks very much.

Thank you and 10, just cavalli as you know I mean, the biggest thing the industry needs is a level playing field. If you think about it if if other technologies are given preference.

Wasn't necessarily the deal the the basis on which the page down at the P.D.C. was negotiated so to me. This is more now about for the future more about parody.

About level playing field.

And then again to the extent that stimulus is the ask there may be a tailored stimulus related package.

Yeah.

Mm.

The next question <unk> pasta with J.P. Morgan.

Go ahead.

Mm.

Yeah, Hey, this is a mark straw <unk>. Thanks for taking our questions. Most of them have been addressed already but Steve I'm wanting to go back to the the non blade business. You you you again highlighted you're.

A year long term growth targets for a business and it's obviously good to see the the new tooling contract I'm just kinda curious.

If you can touch on your discussions with other folks that may not be as far along in your pipeline. How those discussions are evolving due to cove. It if if people are hitting the pause button or if you know it's actually the opposite and this is making them kind of more interested in outsourcing.

Yeah, Mark I'm not I don't think we're seeing a significant change in the transportation related work from <unk>. There are as you can imagine short term impact so more work by video calls and an email then in person visits but honestly that hasn't stopped.

Solve from continuing to do an awful lot of good work remotely with our customers within our teams globally. So nobody's waiting to get back in person to to push things forward on the development programs or on co-operative engineering as it relates to that it it will be interesting just.

See how some of the to the extent there were stimulus infrastructure related packages over time does that help support a larger E.V. market. He you know are charging infrastructure, we'll see how all that develops but from our perspective.

We're staying the course and and really no significant changes.

Good traction is bill said on the current tooling contract will continue to demonstrate attraction as we have been.

But no real change.

Okay. Thanks, Dave and then Bill just real quick follow above the.

The 52 lines that are currently installed can you just remind us how many of those are in a matter morrow somewhere else.

So in matter more us we have sex in n., whereas we have.

13.

Okay.

But for US Thank you very much.

<unk>.

Mm.

This includes the question and answer session.

Problems back over to the minus 20 closing remarks.

Yeah. Thanks, all very much we appreciate you're joining appreciate your continued interest in T.I. composites. Thanks again, thank you.

Listened to today's conference call you might just connecting lines. Thank you for participating and have a pleasant day.

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