TPI Composites, Inc.

Good afternoon and welcome to TPI Composite second quarter 2021 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Christian Eden, investor relations for TPI Composite. Thank you. You may begin.

Thank you, operator. I'd like to welcome everyone to TPI Composite second quarter 2021 earnings call. We will be making forward-looking statements during this call based on current expectations and assumptions which are subject to risk and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, tpicomposites.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures. With that, let me turn the call over to Bill Cywick, TPI Composites President and CEO.

Thanks, Christian, and good afternoon, everyone. Thank you for joining our call. In addition to Christian, I am joined today by Brian Shoemaker, our CFO. I'll briefly review our second quarter results in global operations and then give an update on our global service and transportation businesses, supply chain, and the wind energy market. Brian will then review our financial results in detail, and then we will open up the call for Q&A. Please turn to slide five. We had a solid second quarter in which we delivered net sales of $458.8 million, a 22.7% increase over Q2 of 2020, and and adjusted EBITDA of $17.4 million for 3.8% of net sales, a $14.1 million increase over Q2 of 2020. We hired Jerry Levine as President of Transportation. Jerry brings nearly 30 years of experience working with Tier 1 suppliers and major manufacturers in the automotive industry. Jerry served as Vice President, Product Development of Magna International, and Executive Vice President, Chief Program Officer of Dura Automotive Systems, and also served in senior engineering and technical roles at Ford Motor Company for over 15 years. We announced an expansion of our relationship with Nordex. In July 2021, we took over the production of wind blades for Nordex in Matamoros, Mexico. The wind blades are being produced on four production lines for an initial term of three years. We executed a two-year contract extension through 2024 with Proterra to continue the production of composite bus bodies for their electric bus line. The addition of the Nordex lines and the extension of the Proterra contract added approximately $460 million of potential future revenue under contract. We remain focused on operating our business safely while continuing to mitigate the impacts of COVID-19 and ensuring that we are prepared to deal with continued resurgences of the virus in any of our global locations. We have and will continue to adapt our operating procedures in order to enable our associates to work safely and continue to meet our customers' demand. Turning to slide seven, and I'll give you a quick update of our global operations as well as market update. During the second quarter, we continued to operate all of our facilities at normal levels, and we did not experience any significant production issues from COVID, including any material production stoppages. We continue to evaluate our global footprint to ensure it is optimized for our customers and the market. We are planning to consolidate our Chinese operations to reduce costs, streamline activities, and right-size our operations to profitably serve our customers. Our Yangzhou facility is world-class, and we have the ability to add more lines and handle both onshore and offshore blades. This prime location is the ideal place to consolidate our operations and efficiently serve our customers. As we discussed in our press release from July 22nd, our supply agreements with SGRE expire at the end of 2021, so we are currently planning to end manufacturing wind blades for SGRE on four production lines in Juarez, Mexico. Due to the current financial performance of these lines, we expect the expiration will be accretive to our margins in 2022. We are actively seeking to backfill these production lines with one or more customers over time, as we believe these operations will continue to be one of the best low-cost options for blade supply into the U.S. and Mexico in the future. As for Iowa, we are still in discussions with our customer regarding future production and are therefore evaluating our options for this site. We are also exploring new geographies with our customers for onshore, offshore, and combined. As we have discussed and I'll touch on again in a minute, the global wind market is expected to be significantly larger over time, and we are preparing now so that we can move quickly and be ready for this expected inflection point. On the service side of the business, during the second quarter, we completed our first offshore project in China. We continue to add new associates to facilitate our growth globally, and our business development team has been very successful in securing new work from OEMs as well as asset owners. To accelerate our growth in Europe, we are planning to open a European training center in Spain during the fourth quarter. This will complement our Americas training center located in New Mexico. On the transportation front, we are delivering production parts for a passenger electric vehicle manufacturer while continuing the collaboration with multiple OEMs on cab and body structures, along with other EV components. The addition of Jerry Levine adds the automotive depth and leadership that we believe we need to take our transportation business to the next level. His deep technical operations and commercial experience, along with the contacts and relationships he has developed over his 30-year automotive career, will enable us to refine and refocus our offerings to accelerate our growth in this business. As we shared in our press release a couple of weeks ago, our supply chain, like virtually every other supply chain, has been challenged during COVID. We have seen increased raw material costs, mainly relating to resin and carbon fiber, as well as increased logistics costs. While we are able to pass on a majority, and in some cases 100% of the cost increases to our customers, the portion we are not able to pass on has had a material impact on our margins, and we expect that impact to continue through the balance of 2021. Expectations are that we will begin to see market pricing improving by the end of Q4 of this year as the start of a slow and gradual downward trend as the market returns to balance. An early indicator of that is that the price of liquid epoxy resin stabilized from June to July, and this was after nine consecutive months of increases that drove epoxy resin to record highs. As always, our supply chain team is hard at work with existing suppliers and alternative suppliers, along with identifying alternative logistics solutions to minimize the impact of increased costs as soon as possible. Turning to the wind market. Since our last call, the Internal Revenue Service published guidance that extends the placed-in-service safe harbor to six years for facilities that began construction in 2016 through 2019 and extends the placed-in-service safe harbor to five years for facilities that began construction in 2020 and provides taxpayers more lenient standards to meet the requirements to obtain the production tax credit. President Biden and a bipartisan group announced an agreement on the details of a once-in-a-generation investment in U.S. infrastructure. In total, the deal includes $550 billion in new federal investment in America's infrastructure that will help the U.S. tackle climate change by making the largest investment in clean energy transmission and electric vehicle infrastructure in history, electrifying thousands of school and transit buses across the country, and creating a new grid deployment authority to build a clean 21st century electrical grid. Although the current deal does not include an extension of the production tax credit or any new tax credits for battery storage, conservation or transmission, or any federal investment in clean energy manufacturing or supply chain or a clean energy mandate, many believe those elements will be addressed through reconciliation or a larger spending package later this year. The International Energy Agency has released a roadmap for the global energy sector to reach net zero emissions by 2050. According to IEA, wind energy is expected to be the single largest generator of electricity by 2050, making up 35% of total generation and with over 8,000 gigawatts installed compared to approximately 740 gigawatts in 2020. This more than 10 times increase in installations is a huge opportunity for the wind industry and TPI. On the path to zero, the IEA expects that by 2030, 390 gigawatts of wind will be installed annually, or about four times more than the record set in 2020. The next decade is both critical and a great opportunity for TPI and the wind industry. As we shared with you a couple of weeks ago, we expect decreased demand for our wind blades from our customers during the remainder of 2021, in particular the fourth quarter. We believe this is short-term and due to the continued global renewable energy regulatory and policy uncertainty, as well as raw material cost increases. We believe that general optimism around the potential to extend the USPTC on a long-term basis is causing developers to reevaluate project timelines and and anticipation of being able to build projects at higher PTC levels and lower costs once the expected extensions are in place, and therefore developers are not purchasing blades or turbines to satisfy current PTC safe harbor requirements. Longer term, we believe the future for wind will strengthen significantly given the necessity to decarbonize and electrify to combat climate change. Therefore, we believe the opportunity for us and wind is significant, and we will update our long-term strategy and targets as we develop better clarity once the uncertainties around policy and legislation are resolved. Before I turn it over to Brian, we remain very focused on the health and safety of our associates while executing on our operating imperatives and primary ESG goals, which include safety, increasing the diversity of our associates and board, becoming a more inclusive company, and driving to become carbon neutral by 2030. We are pleased to see the improvements from our ESG efforts, including year-over-year improvements in our ESG scores across the major sustainability raters. Finally, we have been working with local authorities at all of our facilities to help our associates become vaccinated, including setting up vaccination drives directly at the facilities and local clinics. With that, let me turn the call over to Brian.

Thanks, Phil. Please turn to slide 11. All comparisons made today will be on a year-over-year basis compared to the same period in 2020. For the second quarter ended June 30th, 2021, net sales increased by 85 million or 22.7% to 458.8 million. Net sales of wind blades increased by 20.3% to 418.7 million. This was primarily driven by a 7% increase in the number of wind blades produced year over year and an increase in the average selling price due to the mix of wind blades produced. Q2 2021 ASP was approximately $164,000, an increase of 17% year over year. Startup and transition costs for the quarter decreased by $0.8 million to $10.1 million as we continue to ramp our India facility and transition lines to longer and modular blades in Mexico. Our general and administrative expenses for the quarter decreased by 0.2 million to 6.7 million, and G&A as a percentage of net sales decreased 30 basis points to 1.5% of net sales. Foreign currency loss was 6.5 million in Q2 2021 as compared to foreign currency loss of 1.9 million in Q2 2020. This increase was primarily due to net euro liability exposure against the Turkish lira. The liability exposure continues to be naturally hedged on a cash flow basis due to the Euro denominated revenue contracts. Approximately 22% of our revenue in Q2 2021 was denominated in Euros. Our income tax provision for the quarter was 28.9 million as compared to 49.3 million for the prior year period. We are forecasting our cash tax liability to be approximately 20 to 25 million for 2021. Net loss for the quarter was $39.8 million as compared to a net loss of $66.1 million in the same period in 2020. This decrease was primarily due to the reasons previously described. Net loss per share was $1.08 for the quarter compared to net loss of $1.87 per share for the same period in 2020. Our adjusted EBITDA for Q2 was $17.4 million, or 3.8% of net sales, with a utilization rate of 82% for the lines installed at quarter end. This compares to adjusted EBITDA of $3.3 million, or 0.9% of net sales and utilization of 70% in the same period in 2020. Moving to slide 12. We ended the quarter with $123.1 million of cash and cash equivalents. Net debt of $114 million and leverage ratio well below our two times target. For Q2, we continue to prioritize capital expenditures that focus on the health and safety of our associates and that will help us achieve our long-term goals. Turning to slide 13. For 2021, our full year guidance is revenue of between 1.75 billion and 1.8 billion. This reflects the decrease in demand offset by the additional four Nordex lines that we began production in July 2021. Adjusted EBITDA of between 70 million and 85 million. We expect our adjusted EBITDA to be impacted primarily by two items. First, approximately $28 million associated with the decreased demand for our wind blades from our customers during the remainder of 2021. Second, approximately $20 million due to the increased raw material costs mainly relating to resin and carbon fiber, as well as logistic costs which continue to remain at elevated levels and beyond our and our customers' initial expectations. We are forecasting Q3 adjusted EBITDA to be approximately 40% of the full-year adjusted EBITDA guidance. We updated dedicated manufacturing lines to 54 and wind blade sets capacity to 4,260 due to the additional four Nordex lines. Utilization of approximately 80%. ASP of between $165,000 to $170,000. This forecasted increase in ASP reflects the increase in raw material costs passed on to our customers. Non-blade sales of between $115 million and $125 million. CapEx of between $55 million and $65 million. Startup costs of between $11 million and $13 million. This increase is due to the startup of the facility for Nordex in Matamoros, Mexico. We're forecasting to incur a total of between $22 and $37 million of restructuring charges associated with our global footprint alignment in 2021 and 2022, with $15 million to $22 million forecasted to be incurred in 2021. 20% to 30% of the restructuring charges will be non-cash. These restructuring charges consider the actions Bill mentioned earlier. With that, I will turn it back over to Bill to wrap up, and then we'll take your questions. Bill?

Thanks Brian. Turning to slide 15. The health and safety of our associates and their families remain our number one priority. We continue to take the necessary steps on the COVID-19 front to ensure the safety of our associates and safe working conditions in our facilities while working to get all of our associates access to vaccines. We continue to aggressively work our wind pipeline and we are pleased with the level of activity and how it has picked up over the last couple of quarters. The significant progress we have made in growing our global service team and new service opportunities validates our commitment and investment in this space. With the addition of Jerry Levine, we will continue to build on our momentum in the transportation space and drive towards our long-term revenue and profitability goals. We remain focused on managing our liquidity to provide financial security and flexibility as we drive through the current environment and execute our strategy to capitalize on the acceleration of the energy transition. We continue to explore multiple opportunities to build out and add to our current technologies and capabilities to support the growth, expanding breadth, and strength of our business. Our overall mission to decarbonize and electrify remains unchanged. We will continue to optimize our global footprint while using the leverage our global scale provides for operating and supply chain efficiencies to continue to drive down or maintain costs, all while maintaining a strong balance sheet. Given the broader wind and electric vehicle industry tailwinds, our position in the market, and our relationship with our customers, we remain excited for the future here at TPI. Finally, I want to thank all of our TPI associates for their commitment and dedication during these challenging times. Thank you again for your time today, and with that, operator, please open the line for questions.

We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Laura Sanchez with Morgan Stanley. Please go ahead.

Hi, good afternoon, everyone. Can you hear me okay?

I hear you just fine, Laura. Thanks. Hey, Laura.

Perfect. Hi, thank you for your time. So I understand that there is uncertainty around the PTC extension in the U.S. and that that's impacting volumes in 2021. Could you please comment on what has changed for 2022 in regards to the wind market dynamics? I believe you had mentioned previously that 2022 was looking very strong, but now you expect the market to be flat in 2022. So any comments there would be very helpful.

Yeah, Laura, thanks for the question. I think we did comment on first quarter that volumes looked pretty good for us early on as it relates to 2022. That has not changed. I take those comments about the market being flat mostly from comments and discussions with our customers and our customers' customers. I think we've been pretty consistent with what the bulk of the market or the rest of the market has talked about. for 2022 and potentially 2023 as being relatively flat compared to 2020, which was a big year. And then, you know, once some of the uncertainty around long-term policy, whether that be in the US or how it's implemented in the EU is clarified, then I think we see some significant changes in volumes.

Understood. And just to clarify, flat versus 2021. That would be right, not 2020?

Yeah, I'm sorry. I misspoke. That's correct.

Okay. Okay. And then on the dedicated manufacturing lines, I see that now you have 54 lines for the end of the year versus 50 in the prior guidance. Can you help us understand a little bit the moving pieces? I know you have four lines with Siemens Gamesa going away and four lines with Nordics being added. So what's causing that increase?

Yeah, so it's a little – little bit of a technicality here it is technically 54 at the end of the period and so that would be at the end of the year and then because the the contracts that expire expire on 1231 at the end of the year so there are there are a number of contracts that are expiring at the end of this year so going into 2022 we will have fewer than 54 lines under contract We don't have a final number as of this point yet, but it will be less than 54.

Okay, understood. And last question, if I may. The average selling price is going up for the year. Wondering if this is purely driven by the new lines with Nordics or that in a combination of you being able to raise prices given supply chain constraints?

No, the primary driver of that is the raw material input cost going up, so that's causing the increase in the ASP just based on how our contracts operate. And then, yeah, a portion of it is the Nordex lines, but the larger piece is the raw material.

Got it. Thank you so much. That's all on my end.

Thank you. Thanks, Laura.

Our next question will come from Philip Shen with Roth Capital Partners. Please go ahead.

Hi, guys. This is Donovan. My first question is with the infrastructure bill and the potential reconciliation bill that would come at the end of the year, are you guys hearing anything? When we talk about infrastructure, we tend to think about things like roads and bridges and railroads, but I also think it occurred to me that buses could be a direct spend. It's a huge part of... I think it's actually the biggest source of public transportation. And so... Are you aware of any money or anything that was flagged or could be flagged just for municipalities or governments to purchase buses? And if that could benefit the supporters?

Yeah, there's a pretty significant amount of it that was aimed at transit and school buses in the bipartisan deal. And that's outlined in the deal, so there's a fair amount for that. From our standpoint, that's great news for us and for our customers, clearly. But the biggest part of the infrastructure bill from a wind standpoint is transmission. And there is, you know, upwards of, depending on how you score it, anywhere from $60 to $70 billion that has been allocated for grid enhancement over a period of time. So we're pretty excited about the fact that, you know, infrastructure does take a – or transmission takes a front seat here because, again, we need to get the electrons to where people are from where it's generated, and transmission is key to that.

Absolutely. That's great. So another question on Proterra and Nord – you – in the deck, you give $460 million between Proterra and Nordex for the incremental – for the contracts that you announced. Can you give us just a sense of the split between the two and over what time frame you're contemplating?

No, we can't. We can't give you the direct split between the two. But, you know, the Nordex deal is a three-year deal. The Proterra deal is a two-year deal, a two-year extension.

Right. And then just last question, Memorial, if I can. We're tracking through all the companies that we follow what's going on in terms of shipping and logistics. And, you know, it just occurs to me that you guys, or at least I know your customers are the ones who pay for the blades to ship them, but that will impact their level of demand and so on and so forth. So if we're looking at shipping costs and freight generally and trying to follow those trends, looking at indexes and such, is that a good proxy for moving a blade or are moving blades something meaningfully different where there could be a lag with other freight indexes or will this generally go with container shipment costs and bottlenecks?

Yeah, very different from a blade standpoint. So there are specialized ships and then there's obviously specialized rail fixtures as well as specialized truck fixtures. So it's really hard to compare it to a container. However, with that said, I mean, we are impacted by container pricing as well, right, as we bring raw materials from different parts of the world to our manufacturing facilities. That gets added into the overall cost of the product, and a portion of that passed on to our customer just like the raw material price itself would be. So, yeah, I mean, if you look at the overall impact, logistics is a smaller piece of the overall increase that we're seeing this year, but it is meaningful. as it relates to raw materials as opposed to blade.

Okay, great. Thank you. I'll pass it on. Thank you.

Our next question comes from Eric Stein with Craig Howland. Please go ahead.

Hi, everyone. I jumped on late, so I hope I don't force you to repeat anything. But maybe just on the raw materials, can you remind us, when or how the contracts are set up, when they maybe reset based on price, and then I know you've kind of got the shared pain gain set up that you've talked about. Maybe just talk about the current situation in that context.

Yeah, so we have one of our customers – is 100% responsible for raw material price increases. So that 100% of that goes to the customer. That just happens real time, you know, as pricing goes up or as raw material input costs go up, price goes up. With the, you know, with our other 50% of our customers, if you will, it varies, but, you know, our average is 70-30. So 70% of that cost would get passed to our customer, we would absorb 30% of that generally. Most of our contracts today reset quarterly. So you could have, you know, you could have inner quarter price increases and then they would get passed, you know, you would reset at the end of a quarter. In one instance, you know, we had set, we set price at the beginning of the year. So we happen, in that case, we happen to absorb 100% of the raw material increase. So that, That's kind of across the board. So some of it, 100% of our customer absorbs it. Other, it's 70-30, and it's reset quarterly. And in one case, we absorb 100% of that on an annual basis.

And I guess, I mean, this has been such an extreme situation. I mean, it seems like the model you've got in place works when things are quote-unquote normal, but this is obviously not normal.

Well, I guess I would suggest it works in both situations, right? If we're in a situation where commodity prices are going down, we benefit and our customer benefits from that reduction in price. If prices are going up, like with a couple of commodities right now, we also share in that pain. So us taking 30% of it is better than taking 100% of it. So we do limit our upside. by limiting, by, you know, reducing our downside. And that's kind of the nature of the contract and the relationship we have with our customers.

Yes, no, that's fair. Okay, maybe last one for me, just on the lines in China, I know, you know, working to fill those. And this has kind of been a question ongoing for some time, but any traction, well, first of all, just traction in potentially filling those, but then secondly, traction with some of the local OEMs in China? I mean, is there any interest or any possibility that they might fill some of those lines?

Yeah, I mean, we're still actively working those lines, if you will. It's a little bit tougher with the Chinese OEMs from a cost standpoint. We have had many conversations with them, and those continue. Nothing to report as of today. And then with our other, you know, with the Western OEMs, we're still working on different scenarios with them in different combinations in our facility. So nothing specific to report, but continuing to work it.

Okay, thank you.

Thank you.

Again, if you have a question, it is star then 1, star then 1 to ask a question. Our next question today will come from Steven Gengaro with Stifel. Please go ahead.

Thanks. Good afternoon, everybody. Two things for me. The first being, when you referenced your expectations for the market in 2022, and just curious, when you think about your business, your contracts, your market position, should you kind of mimic the markets? And maybe alongside of that, you know, given what's gone on this year, can you expand margins in a flattish market next year?

Yeah, it's a good question. I think, you know, in response to Laura's question earlier about lines under contract. So we'll have fewer lines under contract next year. We expect to have better utilization. next year. So even though, you know, we expect a relatively flat year, we do expect better utilization and with better utilization generally comes better margins. Along those lines, we have, you know, we've been working really hard over the last few years on reducing our overheads, reducing, you know, making more variable, more cost variable than fixed. And so a combination of better utilization and continuing to drive cost and lean out our organization should begin to pay dividends next year.

Great. Thank you. And then just quickly on the non-Windblade side, you had a pretty sharp rise in transportation sales sequentially. It looks like that's kind of a seasonal thing or a timing thing because last year, the second quarter was similar. Is there... Can you just kind of speak to the trend there on the non-wind blade side? Because I see your full year guidance, but I was just trying to think about how it progresses throughout the year.

Yeah, as you think about the non-wind blade sales, it's made up of, One, the transportation side, the field service side, and some other revenue in there. So all of those are kind of contributing. I mean, so you do have some seasonality with field services as we continue to ramp, especially you'll see some of that. So that's all going into those numbers right now.

Okay. Thanks. And maybe just one final one. And you did talk about the changes in wind blade, average selling prices, you know, and with raw materials being a big piece of that. But the underlying trend there, given blade lengths, et cetera, that should still continue to sort of trend higher over the next couple of years, just driven by blade designs and larger blades, correct?

Yeah. Yeah. Longer blades, more importantly, heavier blades, right? And then also the content of the blade. So as more blades go to carbon from pure glass, you'll see an increase in the ASP as well.

Great. Thank you, gentlemen. Thank you.

Our next question will come from Tom Curran with Seaport Research Partners. Please go ahead.

Good afternoon. Hey, Tom. How are you doing? Hi, Tom. Brian, when it comes to the measures you've been taking to create a more resilient, flexible supply chain, could you give us an update on localization?

where are you at now in terms of of what you've achieved and then what do you still aspire to do when it comes to that initiative yeah hey tom this is bill i'll take that one um it continues to be uh very in a very important initiative for us for a whole number of reasons i mean you know going through covid us you know having localized a number of suppliers the way we had prior to that certainly benefited us during that period And we will continue. I can't give you a specific number as to the percentage that's local versus not. But I can tell you for key commodities, we're continuing to work on more and more localization or regionalization for the very reasons. It's security of supply as well as price. So we're going to continue to focus on that. I can't give you a specific number on that one at this point, but suffice it to say that continues to be a priority for our team. That's fair.

Thanks, Bill. And then when it comes to the four lines in Juarez that will be getting relinquished by SGRE, at this point, just based on your current OEM conversations and indications, would you expect those to most likely be absorbed by an existing customer or a new one?

I would say probably an existing one, given that we've got the top five outside of China. I don't see a Chinese OEM coming in there. So I think it's more likely that it's one of our existing customers.

Right. Just wanted to see if there was anyone potentially new on the horizon looking to move into the U.S. And then last one for me, for field service inspection and repair services, Could you just update us on what your current customer mix is between turbine OEMs and then wind farm owners and operators and whether or not there's, you know, any notable changes occurring within that mix?

I would say it's probably 90-10, maybe 85-15 OEM versus asset owner. We're having, you know, we continue to have a lot of discussions and it depends on the region, quite frankly. In the U.S., it's, you know, it's primarily OEMs. Mexico might be more asset owner, China asset owner to some extent. So it just, it varies by region, but it's still predominantly OEM. Great. Thank you for taking my questions. You bet. Thank you. Thanks.

Again, if you'd like to ask a question, just star then 1, star then 1, ask a question. Our next question today will come from... One moment, please. Our next question today will come from Pavel Molchanov with Raymond James. Please go ahead.

Thanks for taking the question. I jumped on late, so I apologize if you covered this already. But in the context of what's happened with COVID in India, specifically in the last 100 days or so, Can you give an update on the status of your operations there and the personnel?

Yeah, actually, we managed through that very well, Pavel. Thanks for the question. It did impact us slightly from a production standpoint, more so from raw material availability because of suppliers. But again, managed it very well. We have a significant portion of our associates there are now vaccinated. And so it did not impact us material in any way at this point.

Good to hear. And across your global manufacturing footprint, so all five countries, are there any operations where there is capacity constraint on... either a regulatory basis or due to agreement with the union?

Because of COVID?

Yes, in the context of distancing.

Yeah, no, no union constraints. And again, as you know, we're unionized in Turkey and in Matamoros, no constraints there. And I will tell you in China, and this is very recent, We were on a voluntary shutdown in one of our plants in China for a number of reasons. It's likely we'll be shut down an extra week there because of what China would call an outbreak. There's like 32, 128 cases in Yangzhou City. So relatively small for the numbers we're used to in the U.S. and elsewhere. but they tend to shut things down pretty quickly there with their zero tolerance. So I would expect we'll be shut down for an additional week unplanned, but we'll not impact our overall volume for the quarter or for the year.

Perfect. Good to hear. Thank you very much.

You bet. Thank you. Ladies and gentlemen, this will conclude our question and answer session. I'd like to turn the conference back over to management for any closing remarks.

Thank you, and thanks everybody for your interest in TPI, and we look forward to our next discussion.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.