Q4 2020 Broadwind Inc Earnings Call
[music].
Greetings and welcome to the broadband and fourth quarter and full year of 2020 results conference call.
At this time all participants are in a listen only mode.
A brief question answer session will follow the formal presentation.
And if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
And it is now my pleasure to introduce your host, Jason and Bob Fishman, Chief Financial Officer of broadband.
Thank you Sir you may begin.
Good morning, and welcome to the Broadway and fourth quarter, and full year, 'twenty and 'twenty results Conference call.
And we begin the call today is our CEO, Eric Blatchford, and I'm, Jason and bond fit the company's CFO.
We issued a press release before the market opened today detailing our fourth quarter and full year results.
I would like to remind you that management's commentary and responses to questions. On today's conference call May include forward looking statements, which by their nature are uncertain and outside of the company's control of.
All of these forward looking statements are based on management's current expectations and beliefs and.
Actual results may differ materially.
For a discussion of some of the factors that could cause actual results to differ please refer to the risk factors sections of our latest annual and quarterly filings with the SEC.
Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during our call and their press release issued this morning.
At the conclusion of our prepared remarks, we will open the line for questions with that I'll turn the call over to Eric.
Thank you, Jason and welcome to those joining us today.
<unk> reported strong full year results.
Highlighted by significant growth and total revenue margin capture and free cash flow and adjusted EBITDA as.
And as total wind tower section sales approached multiyear highs.
While the pandemic related headwinds impacted both our supply chain and labor pool throughout the year.
We continue to advance the long term strategy focused on end market diversification.
Improved operational execution and cost discipline.
Concurrently we continue to pursue both new organic and inorganic growth opportunities that leverage our proven technical capabilities.
Please turnkey solutions and expertise in designing and producing complex fabrications across a wide range of industries.
The man fundamentals and.
And our core when the energy markets remained strong exiting the year.
During the past decade cost competitiveness of wind and improved materially versus other forms of energy with.
With the unsubsidized liberalized cost of wind energy and energy having declined 70% since 2009.
As the cost of wind energy has declined policymakers have set forth incentives to drive increased third party investment and wind technologies ushering, a new golden age for investments and renewable energy.
In December 2020 Congress approved an additional year of the PTC at the 60% subsidy level.
Together with the new 30% ITC for offshore wind.
Creating the potential for increased power demand over the medium term.
Longer term, we view of the recent decision by the by the administration to reenter the Paris climate accord and the potential for a new infrastructure spending bill together with the reintroduction of the Green Act.
And as favorable catalyst for the sector.
Given the success of last year's anti dumping trade case.
We believe the domestic wind tower manufacturers are uniquely positioned to benefit from these favorable market dynamics.
As we have done throughout the pandemic, we continue to produce and ship products to meet our customers' needs.
Our order rates of decline since the COVID-19 outbreak as our customers continue to manage through supply chain disruptions and economic uncertainty.
However, with our quoting activity, having strengthened for several consecutive months we anticipate.
And a gradual recovery in the first half 2021 order flow.
The full impact of the virus on our business and end markets remains difficult to quantify.
And we anticipate that market cash the current cash and availability on our credit facility.
We will continue to provide adequate liquidity to support our business during this transitional period.
Our fourth quarter revenue was $40 3 million down 18% year over year due to a number of pandemic related supply chain challenges and the delayed delivery of of tower order to a new customer.
And within our heavy fabrications segment, we experienced a 30% year over year decline and tower sections sold and the fourth quarter GAAP.
Kevin It and unusually strong OEM pre buy of cycle, we saw last year.
Ahead of and anticipated PTC exploration.
As we've discussed on previous calls orders and the towers business tend to vary from quarter to quarter.
However, fourth quarter orders were well above prior year fourth quarter.
Even as our backlog decreased.
And at this time of optimal tower capacity of more than 50% book for 2021.
And we are continuing and continuing discussions with our OEM customers to satisfy their tower demand for the remainder of the year.
Our gearing business continues to see pandemic related delays and customer activity, which impacted our fourth quarter results.
However, we are beginning to see improved demand activity through February.
But the backlog at levels consistent with the prior year period.
Revenue for our industrial solutions segment improved on a year over year basis.
As demand has increased and the natural gas turbine market.
As I referenced earlier, our full year performance was outstanding.
We sold 1150 tower sections and 2020.
And increase of 23% year over year.
Due to increased investment and wind installations.
Proud to have added two additional tower customers and 2020 positioning us to further capitalize on the favorable demand conditions within the domestic wind market.
We ended the year with an improved balance sheet with cash and credit line availability up 27% and of net debt to TTM adjusted EBITDA of two times all.
Now I'll turn the call over to Jason for a deeper look into our financial performance.
Thanks, Eric.
Fourth quarter consolidated sales were $43 million compared to $49 $3 million and the prior year quarter and.
Importantly, we started producing for a new tower customer in Q4, but the revenue was delayed into Q1.
We are continuing to see new orders from this customer and we are encouraged that we're producing for three of the four top line turbine Oems in 2020.
This expansion of our tower customer base positions us to improve tower plant utilization over the long term.
For the full year consolidated sales were $198 $4 million, which includes approximately $60 million of non wind revenue.
However, since the beginning of the pandemic, we have seen reduced demand from cyclical end market.
Mostly impacting our gearing segment.
And also our industrial fabrication product line.
New orders and customer off take up of notably weak and mining construction and oil and gas markets.
Despite this we believe our strategy of diversifying our customer base remains the best path forward.
Positioning us to diversify and market exposure, while optimizing our workforce and plant utilization.
As Eric mentioned in his remarks, we have begun to see customer activity levels accelerate.
Joining us for growth and the second half of 2021.
As you mentioned on recent calls we continue to experience significant disruptions and.
Our supply chain is due to the pandemic.
These disruptions have included situations, where multiple suppliers, where either behind schedule or could not meet quality specifications.
Together with labor labor availability issues and challenges.
These disruptions along with lower operating levels within our gearing segment led the gross margins of approximately six 7%.
For the full year gross margins expanded 50 basis points to nine 1% as increases and tower plant utilization, partially offset by the combination of supply chain and staffing disruptions.
Additionally, gearing volumes and performance weighted on consolidated gross margins by approximately 375 basis points.
Fourth quarter operating expenses as a percentage of sales were approximately 11%.
Up sequentially due to lower volumes.
Operating expenses declined compared to the prior year quarter by $900000, primarily due to the absence of accelerated amortization and the prior year and lower incentive compensation.
Interest expense declined to $300000.
From $500000 from the prior quarter due to lower debt levels, and a reduction and our borrowing rate.
Notwithstanding the pandemic headwinds, we generated $200000 of adjusted EBITDA and the fourth quarter.
A decrease of $1 $6 million versus the prior year period for.
For the year, we generated $8 million of EBITDA and $800000 improvement when compared with the performance in 2019.
Turning to slides six and seven for a discussion of our heavy fabrication segment fourth quarter sales were $29 $8 million compared to $37 $6 million and the prior year quarter.
A reduction driven by lower demand and delay and delivery on the new customer order.
Fourth quarter orders were $27 5 million.
<unk> to $5 $3 million and the prior year quarter.
As of this call we of approximately 50% of our 2021 optimal tower production capacity sold.
Industrial fabrication orders have been impacted negatively negatively since Q1 as mining construction customers deferred capital purchase and destocking of their inventory levels.
Average <unk> selling prices per unit were higher in the quarter, primarily driven by stronger commercial environment. When the orders are placed and the prior year together with the benefit associated with the production of larger more complex tower designs.
Notwithstanding lower sections sold and the current year quarter, the complexity of multiple design changeovers ongoing supply chain challenges.
And staffing constraints.
Segment EBITDA.
Increased to $2 $7 million.
From a full year perspective segment revenue increased 21% per million result of expansion of our tower customer base and increase in demand to support strong U S wind installation activities in 2020.
As a result of improved plant utilization EBITDA increased 115% to $14 4 million in 2020.
EBITDA margins expanded to nine 3% and 2020.
While this was an improvement year over year margins were impacted by several points due to supply chain disruptions throughout the year and.
And multiple design changeovers for three turbine Oems.
Turning to slide eight and our gearing segment.
As we highlighted and your last call we are continuing to see increased customer interest and quoting activities.
Which we then started to see flow into the order book in the fourth quarter gearing segment orders improved to $5 $7 million following two consecutive quarters near $3 million.
Following health of Q1 or order activity levels in 'twenty and 'twenty, we saw our customers constrained capital spending and reduce inventory levels.
These responses to the pandemic together with lower oil and gas activity led to a challenging year for the segment.
Our backlog was $14 $4 million as of year and flat on a year over year basis.
Fourth quarter segment sales declined to $4 9 million from $7 $6 million and the prior year.
Due to lower demand from oil and gas and mining customers.
As a result of lower plant utilization and manufacturing inefficiencies associated with lower sales volumes the segment realized a $1 $5 million EBITDA loss during the quarter.
We have and will continue to take actions to preserve margins and cash <unk>.
Including right sizing labor and deferring capital purchases.
While they are in this challenging environment.
We expect an improvement and operating performance in Q1 book.
And sales and EBITDA.
Turning to slide nine for a discussion of our industrial solutions segment.
The industrial solutions recorded $2 $7 million of new orders in Q4 down from $4 3 million compared to the prior year period, primarily a result of the timing of orders.
Trailing 12 months segment orders are approximately.
The $17 $9 million up roughly 9% over the prior year due to customer regaining share higher aftermarket activities and our progress expanding share within that customer.
Segment backlog ended the year at $7 $2 million down slightly year over year.
Our pipeline of opportunities remains robust and the expect to gain momentum and the first half.
Fourth quarter segment sales increased to $5 $8 million from $4 $1 million and the prior year.
Given the strength and gas turbine component demand and by the timing of customer projects.
And adjusted EBITDA was $500000.
The operating leverage associated with increased volume and effective cost management has resulted in full year EBITDA of one 4 million of.
A significant increase over 2019.
Moving to slide 10.
At year end 2020, operating working capital was $5 $1 million or 3% of sales.
And $8 $5 million sequential improvement.
Primarily due to the timing of receipts from customers.
DSO continues the trend favorably of 35 days.
And deposits and AP were modestly higher resulting and the cash conversion cycle of roughly 13 days.
Total cash and availability under our credit facility remains above historical levels with over $24 million of liquidity at year end given.
Given strong free cash flow and Q4, we reduced borrowings under Atlantic credit from $8 million and Q3 to $1 million at year end and.
Additionally, we had over $3 million of cash on our balance sheet.
And the.
Half of 2020, and we generated approximately $16 million of free cash flow.
As we highlighted on previous calls this year, we received approximately $9 million of proceeds under the Paycheck protection program.
We believe we met all of the requirements set forth by the treasury to apply for the loans and did so in good faith, ensuring continued and employment for our employees during a period of widespread economic uncertainty which continues today.
We are playing just a matter of forgiveness application to our lender and the SBA in Q1 the.
The U S. Treasury of previously announced that all borrowers that C. P. P O P loans and excess of $2 million will be audited.
However, the timeline for the audit remains unclear to the.
The extent of the PPP loans are not forgiven. The company is required to repay the loans over a two year period at a 1% interest rate.
Our net leverage declined to the lowest levels seen in several years ending the quarter at two times trailing 12 month EBITDA.
After netting out the PPP loans.
You believe we are well positioned to manage through the pandemic supply chain and weather related challenges given our low leverage profile and.
And healthy liquidity position.
Lastly.
Although we provide the first half 2021 guidance in late January we have chosen to withdraw the guidance due to escalating supply chain challenges.
As well as the temporary plant closure associated with the extreme weather conditions in Texas.
We are continuing to assess the impacts of these situations.
And we will likely reinstate guidance and the future as we confirm timing of critical supply chain deliveries.
And modify delivery schedules with our customers.
That concludes my remarks, I'll turn the call back over to Eric for an overview of conditions within our end markets.
In addition to some to some concluding remarks.
Thanks, Jason.
Turning to slide 12 for further discussion of our outlook for the domestic wind market.
As predicted 2020 was a robust year for onshore capacity additions.
The $16 nine gigawatts installed.
Expectations for 2021 remained strong.
With the anticipated drop off after the PTC expires.
While analysts attempt to predict future demand and a rapidly changing environment.
The major catalysts are likely to improve the long term outlook of wind energy.
We now have a renewable friendly administration.
It has already taken steps to drive renewable investment.
Including the recent PTC extension and the evaluation of the Green Act, which includes a longer term PTC incentive through 2026.
And the infrastructure Bill would likely include a build out of power transmission, which would connect new sources of supply to areas of demand.
From my point of view I support such legislation.
And believe it will get passed through Congress and signed into law.
It is bipartisan support and.
B and investment and our country's infrastructure, providing dependable low cost clean energy, while supporting thousands of good paying U S jobs.
And as turbine technology continues to evolve new more efficient turbines would further reduce the level of <unk> cost of wind energy and.
And to that point repowering of existing wind assets.
The leverage current when current turbine technology, it could provide a meaningful lift the demand.
The commercial and industrial buyers had been a major driver of wind power demand over the past several years and further ESG mandates would promote.
And development.
Offshore remains an attractive growth area for wind capacity additions and the U S primarily off the coast of the eastern states with more than 34, Gigawatts and the pipeline.
The source of clean power is key to meeting individuals' state initiatives designed to transition away from the use of fossil fuels and.
And the medium to long term.
As we look outside of wind and we continue to make progress across the number of diverse end markets.
Our customer diversification initiative remains central to our overall plan to optimize our factories as wind tower orders of vary from quarter to quarter.
While wind renewables and other forms of of clean power remain core to our business.
The increased our non when revenue by three times.
And the last four years with non wind revenue sitting at more than $60 million.
Annually.
Today, our fastest growing non wind segments include power generation mining and the industrial segment.
Which includes our penetration into the material handling and marine markets.
And 2020, we did see some pandemic related impact to the to those more cyclical markets.
But we anticipate a gradual recovery in those markets throughout 2021.
Looking ahead of.
Our focus remains on improving asset utilization and.
Increasing the efficiency of our global supply chain.
While growing market share and areas, where we see opportunities for profitable growth.
And our heavy fabrication segment, we're working to sell the remainder of our 2021 capacity and adding capabilities to improve our asset utilization and output.
We continue to evaluate the offshore turbine market and the U S where possible points of entry.
As we continue to expand our mix of complementary industrial fabrication customers.
And the gearing segment were looking to shift our sales mix toward industries, which tend to be less cyclical and offer a more balanced revenue stream and we will grow our customer gearbox business through more emphasis into the repair and upgrade category.
And the industrial solutions segment, we will continue to expand our market share both domestically and internationally by increasing content with existing customers and focusing on new opportunities and the EPC space.
I'm pleased to report another successful cross divisional sales effort.
And what's the industrial solutions segment is entering the wind tower internals market.
And just won two significant orders, which will be shipped later this year.
In summary.
The key participants and the global clean energy transition.
<unk> is well positioned for profitable growth.
We see of continued long term growth path for wind and the U S.
Given the more than 80 gigawatts of installations planned over the next 10 years, including new offshore opportunities.
Furthermore, the recent changes and the regulatory backdrop and such.
Such as reentering, the Paris climate accord, the PTC and ITC announcement.
And the reintroduction of the Green Act all point to increase third party investment and sectors we serve.
Creating the potential for a sustained increase in demand for our products.
Given the continued strength of our balance sheet, we are well capitalized to pursue both organic and inorganic opportunities that further support our growth strategy.
With that said I'll turn the call over to the moderator for the Q&A session.
Thank you.
And that will be having a question and answer session.
If you would like to ask the question and the press Star one on your telephone keypad.
One moment, please vote now poll for questions.
Our first question comes from Eric Stine with Craig Hallum. Please proceed with your question.
Hi, Eric Hi, Joseph.
Hi, Eric Good morning.
Good morning, So maybe if you can just start with wind I know you mentioned and 50% of your capacity is booked for 2021.
And I know that this is far from a normal year and given the COVID-19 related issues on the timing and the supply chain.
But maybe how you envision that playing out going forward.
And maybe compare it to what it is and a typical year at this point and the year and just the confidence that.
And then you fill that going forward.
Well Yeah. This is not and this is not a typical year typically and this year will be a little bit ahead of where we are right now as far as bookings.
When when projects tend to be spiky orders and when do tend to be spiky, we are working with with our OEM customers on particular orders to make certain that we satisfy their demand for the rest of the 2021.
The behind where we normally are and again as a reminder, last year. We were that far ahead, because customers placed orders well in advance of their normal cycle, because they wanted to secure capacity for shipment in 2000, and 'twenty and 2021.
I'll just add debt the materials could be the longest lead time to get the steel and to get the and.
And the internals for projects and those lead times are.
And the five months, so I think that still gives us confidence that we can sell of additional orders yet that can be that can flow into revenue this year.
Yeah.
Got it and then.
You mentioned a little bit about.
Offshore and how thats developing and I know.
And there continues to be some movement on the project front, but also read and maybe it's because of the timing of the you've got the ITC by 2020 or for 2026 or before 2026, maybe how all of those puts and takes.
And kind of dictate what you're doing or the.
Maybe the urgency of the trajectory of the activity Youre doing and advance of that.
Well there is 34 34 gigawatts of wind and plan for offshore.
And those those projects are all the way from Virginia, all the way up through through Connecticut. So we're continuing to monitor all of those and.
And they're in various stages of of completion. So I still think of lot of those are yet to be less even in terms of tenders and whatnot. The ordinance and discussions as I've mentioned before with multiple states to see if there's the potential location of where we might we might be able to work with with our customers and maybe developers and those states too.
Look toward how to look for how we would maybe enter that market.
I do remind remind you, though the we can enter that market not only through towers, but through all of the divisions as well. So we're looking at how best to take advantage of of that market. We do believe it's strong and bleed.
It's going to be strong for the next 10 years.
At least.
Right and it will be part of it okay.
Okay, and maybe last one from me just just on gearing.
You have talked about kind of cautious optimism that things are improving there and and maybe I'm reading into it a little here too much but it does seem like it's subtle but that you are a little more confident on that and and just curious I mean is that that you've seen the.
The order activity pick up and it's been a little bit more sustained.
The discussions with customers are or if I am correct on that maybe just a little bit more and depths on why you see more optimistic on gearing.
Yes, I think you are correct and that and it seems like the gearing business because of the industrial the debt.
We plan and in that particular business. If the industrials are slightly down and we tend to we tend to be down further than that if the industrial is tend to be up we tend to be up further than that so that dynamic we are seeing a lot of a lot more increases and not only.
And some of the markets, but really in all of our markets and.
Industrial.
Power generation steel utilities infrastructure, and even our oil and gas market and starting to come back a bit too.
So you are right and that we aren't we are of much more optimistic now than we would've been two quarters ago.
Got it okay. Thank you.
Thanks Darren.
Thank you.
Our next question comes from Amit Dayal with H C. Wainwright. Please proceed with your question.
Thank you good morning, everyone.
Just to make sure Greg.
Hi, guys just to make sure I heard this correctly.
Are you really moving the guidance for the first one each for anyone.
We are we did have the the.
The plant closure.
<unk> with the with Texas weather last week that impacted <unk>.
Production, obviously, and we are and it's also impacting our supply chain as well as weather disruption. So the plant is operational again.
Working through the schedules and the supply chain and as soon as we have that information, we will reinstate guidance for the first half.
As we were looking at.
And as we were entering the year, we expected Q1 to be very comparable with with our Q4 performance.
And now that some of the sort of there could be some delays and some of it and the timing of those revenues into Q2. So I think that just gives you a little bit more color of how we think the cadence will be.
The first quarter and the second quarter.
So if you assume.
More push outs versus and.
The losses and contracts and projects and central right.
That's correct no customer cancellations.
Thank you.
The roughly $93 million that you have in backlog and what is the timeline for deliveries.
On this.
There is approximately.
$70 million within our heavy fabrications business and.
And that is all related to 2021 production.
And with and then I would say the.
And most of it probably 95% of that of the gearing amount, which is about $14 million or so that will be that will ship in 2021, as well and then the balance of industrial solutions.
2021.
Okay. Thank you for that and.
And your January update you had dropped the ball.
And where did you read the news et cetera with this the weather issue of index is the disclaimer.
And the student play for you or.
And that issue addressed and now you have other demand that you are sort of dealing with.
I'm not sure I fully understand the question the.
Can you repeat the question I'm, not sure I understand that and where you're going.
So you.
You talked about certain push outs from the fourth quarter.
So the first.
And with respect to Tyler deliveries of I'm wondering if those.
And.
The new res took place and now youre dealing with other problems that given the.
And those ones the those ones that were pushed out the they they're shipping in Q1.
We're talking about is production in Q1 that we would have likely shift towards the end of Q1 that could slip into Q2 because of this the sharp we lost about a week of a little bit more than a week of full production in Texas, frankly, as most of the companies and Texas and the Oklahoma area did so that's why there is the uncertainty of <unk>.
Q1 into Q2.
And I would say in general since our last announcement and the supply chain.
Issues seem to be intensifying and.
And we just we want to be careful with our guidance and that we havent. Good understanding of when we're going to receive those parts that we can provide the thoughtful guidance and not have.
And be able to articulate the Q1 and Q2 performance.
That's understandable.
And just really one last question from me.
You're talking about sort of inorganic growth efforts do you have the potential targets and marine.
What are you thinking on potentially considering that.
And that part of the story.
Yes.
Yes, we definitely do have we have some targets in mind.
But.
But all of those targets.
Okay.
Would be in line with our strategy, we've got we've got a strategy too.
To look at inorganic growth.
Opportunities and maybe the.
$20 million to $30 million size range, it would be consistent with our president and core competencies, but aligned with our long term strategy, which is is to maintain our focus on clean tech of the renewables if it's possible.
So thats the key is to keep focus of ours.
So the two pieces to that to what Eric just talked about from a potential either acquisition or investments within our companies to build out within that space or in the and the offshore space as well as those opportunities emerge.
Understood.
Just one last one from me and maybe on the gross margin side should we expect 20 and for anyone to be reflective of screening in terms of of your gross margins.
Yeah.
I think we'll provide more more clarity on that once we provide guidance on the first half.
Okay understood.
That's all my other guys. Thank you so much thank.
Thank you.
Thank you.
Our next question comes from Justin Clare and with Roth Capital Partners. Please proceed with your question.
Hi, guys. Thanks for taking the questions.
Hi, Justin.
So I guess first I just wanted to understand the situation and in Texas, a little bit better. It sounds like you lost one week of production.
It sounds like things are back up and running at this point.
So are there any risks for losing more production than the one week.
Or is that really the risk just combine confine to that kind of time period.
Well our production of about one week, just like millions of other people.
People and companies and Texas, We lost we lost water and <unk>.
Gas and electricity for the better part of a week, but we are of Fortunately able to take down our operations carefully. So nothing was really damaged. So we were able to bring it we were able to bring it back up carefully so our equipment is functioning and we're back in operation.
The other side of that though is material incoming materials, we are receiving materials they are coming in and.
But we know that some of the some of the.
The suppliers there and in that area may have an impact as well so that could be of further drag on adjusted but for all intents and purposes, we're up and running now.
The employees, which were impacted their homes were impacted but they're all they're all back.
And safe and on the job and working.
I'll just add this is the this is a busy plant for us.
With seemingly.
A nice backlog and two to recover of those production slots is challenging and I view them as loss production slots for the year will certainly attempt to make them up but it's very difficult to recapture of that that weeks loss.
Mhm mhm, okay, Okay got it.
And then just on the supply chain issues. So it sounds like they are intensifying is that primarily related to issues in Texas or are you seeing this as more of a broad based issue and the.
And then is this impacting really the wind towers segment or are you seeing.
This effect gearing.
Industrial solutions as.
As well and.
In terms of the intensifying of the supply chain issues, yes.
That's the real good question Joseph and thank you for that so just.
And just to remind that the <unk> the towers business uses of our global supply chain and.
And about 25, 25% of those materials and in terms of value come from far east suppliers.
And when the pandemic started and in Q1 and Q2 most of those those internals, which is what we call them either on their way or in the United States as it moves through Q2 and Q3.
And those suppliers, starting sort of having trouble either with their own workforces.
They are their supply chains.
Or even list the logistics.
And we saw so we're seeing some things.
Such as port per.
The congestion.
Even to the point of even shorter.
Shortage of ships or shipping containers now that's starting to ease up.
But it's primarily on the towers side and primarily on the tower internals side with regard to the domestic production and in Texas and Oklahoma.
There could be some and could be some impact to the local deliveries, but we don't see that.
And as much of the challenge as the internals by way of the other divisions.
A little bit of impact to gearing, but really only if there are local sub suppliers that have pandemic related shortages of staffing.
But the primary impact will be on the towers business.
Okay. Okay. That's really helpful. And then maybe one more from me just on the offshore opportunity.
At this point.
I Wonder if you could.
Give us a sense for when the earliest.
Could be that you could make a decision on either of Greenfield facility or whether you are still considering the opportunity with your mandatory plants.
And then how has the introduction of the ITC for offshore win affected the conversations with customers.
And it looks like the opportunity is going to be bigger now than previously expected. So.
Could you be or are you contemplating a larger plant and then maybe previously.
When we certainly still remain bullish on offshore again as I mentioned earlier, the 34 Gigawatts.
Oh planned offshore and I'd say, it's over the next.
10, plus years is very enticing and very interesting to us.
Okay.
With regard to the with regard to the sizing sizing of our plant the sizing of of a plant would depend on on where it's located and if there were specific.
Content requirements for the state of the state that those that those would that that plant could perhaps satisfy.
So the earliest and we would make a decision on our plant.
Things seem to be moving out a bit just and I'd say over the next several quarters, we still have plenty of time to be able to take take care of that of the potential demand, but again in order for us to take to take a step in that direction. We would have to make certain we had we had some some line of sight to potential contracts with one of more customers to be able to justify that plan.
But again, we're still bullish on that and just as a reminder, towers would be would be the largest single single component to support offshore wind, but we've got the ability to support that from all three of our divisions now and we're looking at opportunities from all three to support the support that new market.
Okay, great. Thanks, guys.
Thank you. Thank you.
Our next question comes from Martin Malloy with Johnson Rice. Please proceed with your question.
Good morning.
Good morning.
Could you maybe speak about the status of the most recent trade case, where you are with that and the timing of any decisions we should look for.
Sure that trade case was filed in September 2020 by by the the wind turbine tower coalition with which <unk> is a part of by statute. Those trade cases must be fully resolved 13 months after the filing sometimes it's a bit earlier, but usually they and they take about that much.
Time, So we went and expect a final decision until as late as November of 2021, but it is moving its way through the ITC and the department of Commerce, and so far we've got good support through those entities for the case.
Okay.
And then could you just on the wind side could you maybe speak to any regional considerations on the demand that we should think about whether it's upper Midwest or.
South West, Texas sure I think I think the demand for poor for onshore wind.
It continues to be the strongest in the southern part of the of the wind corridor, but it's actually moving north of bit. So we're encouraged and.
The moves north to be able to take advantage of our both of our plants. The other dynamic we're starting to see by the way is a little bit of and eastern move.
And the new into New York, the a lot of Thats driven by offshore, but I think of lot of its driven by renewable.
<unk> portfolio of standards. So I think if you think along these lines from the from the the heavy demand and the subs and the southern states the.
The Texas, Oklahoma, Kansas area moving north.
Which is toward one of our plants frankly, and also and also a bit of and eastern move because I think that's again driven by.
And by desire from the individual states.
To replace our fossil fuels with renewable sources.
Okay, and if I could just ask a follow up on that.
As it moves north into the east.
Our U and a better market position is there maybe a little bit less competition.
Okay.
And in <unk>.
Well there are there are when they're of wind turbine power plants, and the south and in the north.
Think we are and very very solid position to compete for the for frankly the whole corridor.
But but as it moves north certainly that the project would be closer to our to our plant Wisconsin.
So we could see some more similar.
And in that plant, but there are other plants towards the towards the northern side of that wind belt as well.
And not just Brooklyn.
Okay understood. Thank you.
Thank you.
And there are no further questions at this time I'd like to turn the floor back over to management for any closing remarks.
Sure I really appreciate your interest and our company. We're proud of what we what we do here to support to support all of the markets primarily the the clean tech renewable market.
And to be able to present the CR.
Our results and our Q2 reported thank you.
Ladies and gentlemen. This concludes today's webcast you may now disconnect your lines at this time.
Thank you for your participation and have a great day.
Okay.