Anthony Rozmus - Investor Relations Steve Lockard - President and Chief Executive Officer Bill Siwek - Chief Financial Officer.

Paul Coster - JP Morgan Stephen Byrd - Morgan Stanley Philip Shen - Roth Capital Partners John Quealy - Canaccord Genuity Jeff Osborne - Cowen and Company Joseph Osha - JMP Securities.

Good afternoon and welcome to TPI Composites' Second Quarter 2017 Earnings Conference Call. Today's call is being recorded and we have allocated an hour for prepared remarks and Q&A. At this time, I would like to introduce your host Anthony Rozmus, Investor Relations for TPI Composites. Thank you, sir. Please go ahead..

Thank you, operator. I'd like to welcome everyone to TPI Composites' second quarter 2017 earnings call. In addition to our press release you can find our Q2 earnings slide presentation on our IR website.

Before we begin let me remind everyone that during this call TPI Composites' management may make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about future expectations, projections, beliefs, estimates, plans and prospects.

Such statements are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are described in our Form 10-K and other periodic reports as filed with the Securities and Exchange Commission.

The Company does not undertake any duty to update such forward-looking statements. Additionally, during today's call the Company will discuss non-GAAP measures which we believe can be useful in evaluating our performance.

The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. The reconciliations of GAAP to non-GAAP information can all can be found in our earnings release which is posted on our website at www.tpicomposites.com and is also included in our Form 10-Q as filed.

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

Good afternoon, everyone and thank you for joining our second quarter 2017 earnings call. I am joined today by Bill Siwek, our CFO. I will start with some highlights from the second quarter followed by a brief update on the wind market and TPI's progress on our strategy of strong and diversified global growth.

I will then turn the call over to Bill to review more details on our financial results. I will then conclude with a review of our 2017 outlook before we open up the call for Q&A. Please turn to Slide 5. TPI delivered another strong quarter posting record financial results which also exceeded our plan for the three months ended June 30, 2017.

Our net sales experienced healthy year-over-year growth increasing 27.8% to $248.2 million while total billings increased 17.8% to $231.1 million. Adjusted EBITDA for the quarter increased 47.9% to $30.8 million and adjusted EBITDA margins expanded 170 basis points to 12.4%.

The strength in adjusted EBITDA was driven not only by an overall increase in our volumes but as importantly by our relentless efforts toward continuous operational improvements and driving down cost across the board.

The estimated gigawatts generated by the Q2, 2017 sets we delivered once installed is estimated to be 1.6 gigawatts compared to 1.3 gigawatts in Q2, 2016.

Our financial performance over the last several years speaks volumes to the effectiveness and dedication of our employees, our deeply collaborative business model and the execution of our growth strategy.

As we discussed in our Q1 call in April, we announced a multi-year supply agreement with Vestas to produce wind blades at a new facility in Matamoros, Mexico which we expect will reliably and cost effectively serve the rapidly growing Latin America market including Mexico, Central and South America by truck and rail as well as by water from the Port of Brownsville, Texas.

Today, we announced the signing of a multi-year supply agreement to provide wind blades from two manufacturing lines at TPI's facility in Taicang port, China with production expected to commence in the first quarter of 2018. This agreement will allow us to backfill capacity in that region that will free up at the end of the year.

I'd also like to note that we were pleased we've completed our secondary public offering of 5.1 million shares in May which has helped us improve liquidity of our shares in the public market place and expand our investor base. Finally, we announced yesterday the appointment of Joe Kishkill, as our Chief Commercial Officer effective August 21.

Joe will lead our diversified growth strategy including all commercial aspects of the wind blade business and TPI expansion into new markets for advanced composite structures. We are excited to have Joe join our executive team.

His international business development and executive experience in both and conventional and renewable energy resources provides great tools to help us to continue to grow and diversify both our wind business and new applications for advance composite solutions around the globe. This is an exciting time at TPI.

We are pleased to have signed two new supply agreements as well as demonstrating our continued conversion of our robust demand pipeline. We are confident in reaffirming our target of 25% revenue CAGR, through 2019.

We will continue to focus on diversifying our sources revenue across customers and geographies and will continue to take advantage of the growth in the global wind market, long-term stability in the US wind market and the ongoing wind blade outsourcing trend.

If you turn to Slide 6, as of today we have 48 manufacturing lines of long-term supply agreements providing long-term revenue visibility of approximately $4.4 billion through 2023. This includes the two new manufacturing lines just announced and the seven lines for GE that will expire at year end.

While the minimum guaranteed volume under contract is approximately $2.8 billion, our contract structure encourages customers to purchase the maximum volume as their price increases, if their volume drops below the maximum. Our pipeline also remain strong as we had prioritized 28 additional molds to close over the next 24 months.

As blades increase in length in order to continue to drive down levelized [ph] cost of energy. TPI's revenue per year per line is increasing. Therefore we do not need to grow the number of lines by 25% in order to achieve our 25% revenue CAGR target through 2019.

As shown on Slide 7, annual installed onshore wind growth is expected to increase from 50.1 gigawatts in 2016 to 62 gigawatts in 2026.

This growth will be driven primarily by developing markets which according to data provided by MAKE will grow at a CAGR 8.8% during that period while more mature markets those with at least 6 gigawatts installed capacity at the end of 2016 will continue to grow but at a more modest CAGR of 0.4%.

During that same period, MAKE forecast that the annual share of overall installed capacity from developing markets will increase from 15.2% 2016 to over 28% in 2026. TPI is well positioned to serve these developing markets from our facilities in China, Juárez and Matamoros, Mexico and Turkey.

And we expect the growth of these markets will continue to drive the outsourcing trend we've seen over the last 10 years. With respect to the US onshore market, as you can see on Slide 8, the next four years are expected to be the most stable in the history of the US wind industry with expected annual installations averaging 9.7 gigawatts.

According to [indiscernible] across the US 29 wind projects representing a combined 3.8 gigawatts announced that they either began construction or entered advanced development in April through June, 2017 for a total of 25.8 gigawatts of wind projects currently underway that is up more than 7.5 gigawatts from the 18.2 gigawatts underway as of one year ago.

Also in the second quarter corporate customers represented 37% of total project capacity contracted with six major commercial customers including Akamai Technologies, Apple, General Mills, Goldman Sachs, Partners Healthcare and T-Mobile PPAs for the first time.

Additionally, two offshore wind projects in Maryland were rewarded offshore renewable energy credits, a key step in the development of offshore wind in the US.

We believe we're very well positioned in the US with our current customers accounting for 99.8% of the US market share in 2016 and an expectation that these customers will continue to garner a significant amount of US market share in the future. Turning to Slide 9, beyond 2020.

We still see a very strong market for wind energy both in the US and globally driven by a number of factors including overall competitiveness of wind energy. LCOE is at or near grid parity with natural gas in many regions on an subsidized basis and the industry is continuing to drive LCOE down through innovation and scale.

Commercial and industrial demand, currently 100 to RE100 companies have made a commitment to purchase 100% of their electricity from renewable resources including major corporation such as General Motors, Coca Cola, BMW and a recent addition to the list JP Morgan.

Utilities have identified large scale renewable as a key growth area and the rapid growth of the renewables is spurring investments in transmission, other grid technologies and cost effective energy storage that will ease the integration and expand their asset base.

Recent examples include the Wind Catcher Energy Connection that was recently announced by American Electric Power, that will include a 2 gigawatt wind farm in Western Oklahoma with 800 turbines and a dedicated 350 mile single circuit 760kb power line from the wind farm to enable to AEP to provide power to customers in the states of Oklahoma, Arkansas, Louisiana and Texas.

This is on the heels of Berkshire Hathaway Energy announcing 4 gigawatts of wind projects during the last year in Iowa and several Rocky Mountain states. Offshore; the recently recorded price trends in offshore wind indeed led to a dynamic revolution in the global landscape for offshore wind energy.

The increasing urbanization and economic development which have subsequently boosted electricity demand is also playing a major role in fueling offshore wind market trends. According to MAKE, the offshore market is projected to grow at 17% CAGR through 2026. Repowering will become a larger share of onshore opportunities.

In the US, MAKE estimates 7 to 8 gigawatts through 2020 and also estimates that 28% of global repowering will occur in the next five years with Germany, France, the Netherlands and the US accounting for 83% of that volume.

Decarbonization; the reduction of greenhouse gas emissions from the electricity sector as a response to climate change is driving decarbonization globally. This includes the rapid expansion of variable renewable energy solution for intermittency and the evolution of power market design.

Vehicle electrification; electric vehicles represent less than 1% of all new automotive sales in 2016, but EV sales are increasing and over 100 new EV models are poised to hit the market by the end of the decade.

Meanwhile, battery prices are declining fast enough to put EV purchase prices on par with traditional internal combustion vehicles during the 2020 and increasingly prevalent charging infrastructure will reduce and ultimately eliminate ranging anxiety as a barrier to adoption.

EV's considered as one of the largest sources of new electric demand especially in western markets that have seen minimal load growth for decades. Energy access; as many of 1.2 billion people remain without access to electricity severely handicapping their economic and social development.

More than half of the off grid population live in Sub-Saharan Africa which despite strong progress elsewhere retains an astoundingly low 45% electrification rate and much of the population in emerging countries with access to electricity still suffers from frequent unpredictable outages.

Providing affordable, reliable energy to this population is widely recognized to be among the most formidable and most important development challenges today. And the pace and manner at which energy access has provided the more [indiscernible] population will have dramatic impact on power demand, generation sources and greenhouse gas emissions.

As stated on our prior earnings call and you'd likely heard from our customers.

We believe the current market conditions that are impacting our customers including the general trend in many market of transitioning to auction based systems, US market demand shifts driven by the current PTC cycle and increasing competition from solar and many regions are putting pressure on the industry and our customers to continue to drive down LCOE.

These market dynamics will result in more product transitions in late 2017 and 2018 than initially anticipated. And therefore, likely reduce our year-over-year revenue growth rate in 2018 but expect it will lay a strong foundation for 2019 enabling us to deliver on our target of 25% revenue CAGR through 2019.

Let me now turn the call over to Bill to discuss our financials in more details..

Thanks Steve. If you turn to Slide 11. Net sales for the quarter increased by $53.9 million or 27.8% to $248.2 million compared to $194.3 million in the same period of 2016. Net sales of wind blades increased by 31.1% to $239.8 million for the second quarter of 2017 as compared to $182.9 million in the second quarter of 2016.

The increase was primarily driven by a 36% increase in the number of wind blades delivered during the second quarter compared to the same period in 2016 primarily from our China and Mexico plants partially offset by a decline in the average sales price of the same blade models delivered in both periods as a result of geographic mix and savings and raw material cost, a portion of which we share with our customers as well as foreign currency fluctuations in China and Turkey.

Total billings for the three months ended June 30, 2017 increased by $34.9 million or 17.8% to $231.1 million compared to $196.1 million in the same period of 2016 driven by a 26% increase in wind blades manufacturing.

The impact of the currency movements on consolidated net sales and total billings were reductions of 2% and 1.9% respectively for the quarter.

Gross profit for the quarter totaled $34.6 million an increase of $11.7 million over the same period of 2016 and our gross profit margin increased by 220 basis points to 13.9%, notwithstanding the fact that we had nine manufacturing lines and start up during Q2, 2017 compared to just three lines in transition in Q2, 2016.

The increase in gross margin was driven by lower cost of goods sold as a result of improved operating efficiencies, the impact of savings and raw materials and foreign currency fluctuations. Start up and transition cost in the second quarter were $10.5 million as compared to $3.1 million during the same period a year ago.

The increase in cost for Q2, 2017 are related to our new plants in Mexico and Turkey and the startup of new wind blade model for one of our customers in China.

Before the impact of the startup in transition cost, our gross profit margin in the quarter was 18.2% compared to 13.3% in the second quarter of 2016 reflecting continued margin expansion from our fully operational facilities.

General and administrative expenses for the quarter increased to 4.3% of net sales or $10.8 million as compared to 2.7% or $5.3 million in 2016. The increase was primarily driven by share based compensation of $1.7 million recorded in the 2017 period.

The cost of our secondary offering as well as additional cost incurred to enhance our corporate support functions to support our growth and public company governance.

Net income attributable to common shareholders was $13.9 million or $0.41 per share on a fully diluted basis compared to $9.1 million or $2.15 per share on a fully diluted basis in the same period a year ago. The increase in net income is a result of the improved operating results described above.

Adjusted EBITDA was $30.8 million compared to $20.8 million in Q2, 2016. Our adjusted EBITDA margin for this quarter was 12.4%, a 170 basis point improvement from our margin of 10.7% in the second quarter of 2016 again notwithstanding $7.5 million more of startup and transition cost in Q2, 2017 compared to Q2, 2016.

Before the impact of startup and transition cost, our adjusted EBITDA margin was 16.6% in the second quarter of 2017 as compared to 12.3% in the second quarter of 2016.

We invoiced 692 wind blades sets in the quarter compared to 551 sets in Q2, 2016 and the estimated gigawatts to be generated by Q2, 2017 sets once installed has estimated to be 1.6 gigawatts compared to 1.3 gigawatts in Q2, 2016.

At the end of the quarter, we have 46 manufacturing lines dedicated under long-term supply agreements with 39 lines installed off which 30 were in full operation and the remaining nine lines were in various stages of startup.

The dedicated lines that we announced today are expected to be installed beginning in early 2018 and bring our total dedicated manufacturing lines to 48 as of today.

Turning to Slide 13, cash and cash equivalent as of June 30, 2017 were $130.8 million and total indebtedness was $130.4 million resulting a net cash at June 30 of approximately $467,000 compared to net debt of $6.4 million at year end.

For the quarter, we generated cash from operating activities of $18 million while spending $9.8 million on CapEx resulting in free cash flow for the quarter of $8.2 million.

Consistent with our past practice, we will continue to finance a relatively modest portion of our CapEx for our new facilities and the balance will be funded with cash flow from operations.

We continue to be pleased with the strength of our balance sheet and our ability to continue to generate the cash we need to expand our global footprint and we believe we're in a solid position to continue to capitalize on the growth opportunities before us. I'll now turn the call back over to Steve..

Thanks, Bill. Please turn to Slide 15. Now I'd like to give an update on our guidance for the balance of 2017. We're going to provide some additional quarterly guidance to help you all to better understand some of the nuances of our production cycles and a slightly seasonality in our business based on holiday periods.

We are reaffirming our guidance for total billings for 2017 between $930 million and $950 million, with respect to sets, we will still be in the range of our guidance and expect to deliver between 760 and 770 sets in Q3 and between 700 and 710 sets in Q4.

ASP will be within the original guidance range, but trending towards to the top of that range during Q3 and into Q4. Dedicated manufacturing lines at year-end will be below the range for couple of reasons.

First; at the time we provided this guidance we did not anticipate that GE would choose to not extend our agreement with them for four lines in China.

Second; as the market dynamic such as auctions discussed earlier began to manifest our customers and potential customers have been looking in somewhat smaller deals, for example two lines with options for additional lines versus committing to four or six lines immediately.

Notwithstanding fewer lines being committed upfront as blades continued to get longer, the ASP on those blades continues to go up further more as we continue to drive operational excellence through our plans. We're able to keep throughput for the larger blades at or above historical throughput levels.

So our revenue per line will increase from approximately $25 million per year to approximately $35 million per year, [indiscernible] run rate. Therefore, the number of new lines needed to reach our target revenue CAGR of 25% through 2019 is lower than in the past.

So although transitions and starts up impact us in the short-term, long-term growth and profitability is ultimately enhanced and the flexibility we're able to demonstrate to our customers strengthens our relationships for the future.

Total lines installed at year end will be 37 versus our guidance of 40 driven primarily by the four lines for China that will be removed at or near year end. Given the discussion earlier about transitions and startups, we anticipate start up and transition cost to be at the high end of the range or slightly above for the full year.

We expect these costs to be between $13.5 million and $14 million in Q3 and between $11 million and $11.5 million in Q4. Capital expenditures, effective tax rate, depreciation, amortization and interest expense should all be within the guidance ranges. Income tax expense is expected to be higher driven by higher forecast full taxable income.

Share based compensation will be below the range as no equity grants other than two new employees have been made this year. We remain very confident in our global competitive position and the application of our dedicated supplier model to take full advantage of the strength in the growing regions in the wind market.

The trend toward blade outsourcing and the opportunities for market share gains provided by the current competitive dynamic. It was another successful quarter for TPI. To recap, we delivered outstanding results both on the top line and on an adjusted EBITDA basis. Signed a new multi-year supply agreement in China to backfill the expiring GE contract.

Expanded our relationship with Vestas with the new multi-year supply agreement for new manufacturing facility in Matamoros, Mexico to serve the Latin American market, completed a secondary offering and hired Joe Kishkill into the newly created role of Chief Commercial Officer.

We're very excited for what's to come and I want to thank the TPI employees for their hard work and our shareholders for their continued support. As a reminder we'll be hosting our first Investor Analyst Day on Friday, November 17, at The Roosevelt Hotel in New York City. Formal invitations will be sent out in the near future.

But if you have any questions or interest in attending. Please don't hesitate to reach out to our IR team directly at investors@tpicomposites.com. Thank you again for your time today and with that, operator please open the line for questions..

[Operator Instructions] our first question comes from the line of Paul Coster with JP Morgan. Please proceed with your question..

So in China, is it a new customer or existing customer?.

Paul, its Steve. Paul we're at this point not able to talk about the specific customer situation around the new contract for China. As you know our target is the top 10 global players, you can imagine the customer would be on that list. But we're not going to get out of ahead of them in terms of announcement and timing.

And so at this point, what we can say is more information will follow shortly.

But I think given the timing of this call, we wanted to make sure folks understood we have reached an agreement to backfill this is an important step for us as you know to backfill the lines it will be coming out of China, at the end of the year and I think that's what we can say at this point..

Is it sort of like-for-like swapping sense of the consideration of the blades or is it larger blades? You still have a couple more lines, don't you? So does it backfill on revenues and still yield opportunity for additional business there, just take us through that please..

No, thanks Paul. It's a good question. So as blades get larger, as we move into call it 65 or 70-meter class blades. Whereas some of the lines coming out and being transitioned within TPI are more in the older 50-meter class if you will. The revenue per year, per line is going up by quite a bit.

And so one way to think about it, as you know Paul we're not going to get into the specifics of one customers or one factory so much.

But I think generally, you could view it as something like what used to be seven molds could be replaced by something like four lines and that's in the case of - for example, when the blades are very large, if they're using more advanced materials, where the bill of material cost maybe a bit higher that's an example of what can happen.

So perhaps in the four to five mold lines would replace what would have been seven generically, as a way to think about it. Hope that's helpful..

Yes, it is. Just to confirm. You still had two lines available in China, even with this backfill current..

No I think the existing facility that use to be a four mold facility, we would not put four larger blades in, we'd probably put in three would be a way to think about it. So that facility probably has room for one more, but in that case three lines replacing what was the space for four, in that case..

Got it and you still have good prospects for backfilling on that final line as well..

We do. We converted two additional lines out of 28 mold backlog or pipeline as we described in our last call and added two more back in, so we're still at a pipeline of 28 molds and 20 of demand in Asia to continue to work on both backfill if needed and growth..

Okay and my last question. You talked at repowering and just causing [ph] mold product transition. So I think what we're inferring there is that, once again it's the next - existing turbines that having larger blades installed on the more different configuration and that means the mold is going to be swapped out.

Can you quantify the impact in 2018 for us and subset the transit number of lines that are likely to go through this transition? And then, can you just cap it by reminding us what the, you talked a bit - its 29% revenue CAGR to 2019. What's the expected adjusted EBITDA CAGR to 2019? Thank you..

Yes, Paul. Thanks. So couple of pieces there, so I think on the re-powering question. Repowering is helping to drive some of the gigawatts that are being installed or plan to be installed over the next few years, both in the US but then also outside the US.

And in some cases, you may remember Paul some of that replaced with perhaps only a portion of the machine, maybe just the blades are being swapped out. In which case, we may go backwards and build some older models, smaller blades than our standard.

And in other cases, the entire machines are being upgraded to brand new machines which to us looks just like new business. So we think of repowering a bit more as a market driver that helps to grow the gigawatts installed on an annual basis and it's one important it was on our list of market drivers.

It's one important driver that helps contribute to that. But what I would say about the product transitions just generally as there are couple of things that are driving that. One right now as you think about in the US market, the PTC cycle there is a need [ph] and auctions around the world as well as in the US.

There is a need for wind to continue to be more and more competitive and there is a competitive tension between our customers as they respond to those market conditions. So and you'll remember, larger blades and taller towers is one of the main drivers to reducing LCOE for wind turbine.

So our product transitions, I wouldn't say they're being driven by repowering, they're really being driven by this quest to continue to drive down levelized cost of energy because of the timing there are more transitions that are being queued up late this year and into next year than I think I would be normal.

It's call, just an abnormally high number of transitions. So there will be some short-term impact on revenue and profitability as we invest in those transitions.

The really good news is, we're driving for even stronger demand in 2019 and 2020, more competitiveness on behalf of our customers and then as the PTC phases out and we get into 2021 and beyond, wind is going to be that much more competitive. So we see it as a smart investment on behalf of our customers and ourselves to carry that out.

And then, Bill do you want to comment any more specifically about, the more specific part of Paul's question?.

Yes, Paul on the adjusted EBITDA CAGR. We haven't provided that in the past and don't plan on doing it today. We will likely touch on that at our analyst day in November..

Okay, thank you very much..

Thank you. Our next question comes from the line of Stephen Byrd with Morgan Stanley. Please proceed with your question..

I wanted to hit on, just a couple of things. Paul hit on a couple of key things. In terms of just at a high level, your customer usage of the facilities in terms of - you mentioned many times the natural incentives for them to go to the maximum output level under the contract.

Are you generally seeing any trends in terms of the utilization among customers? Are they sort of hitting on incentive are the reasons why they might not do so?.

Yes Stephen we're generally operating still on the high side of that range, if not at or even above at times to plan capacity on a global basis.

And the general reason when we're not - if we're not, is because of a transition so that's generally still the case, that's been the case and as we've grown you know so dramatically over the last number of years as you can imagine most all the factories have been basically sold out kind of ramping and chasing that volume if you will and remaining on the high side of the planned capacity, that's still pretty much the case.

What is changing a little bit here again is the or the accelerated transitions or the number of transitions that are happening at a similar time. Generally not otherwise, from time-to-time there will be a bit of dip in volume for one customer and one quarter, but generally speaking we're operating on the high side except for transitions..

Understood. Wanted to check on South America as well. It seems like an important opportunity in the long run and it seems like Mexico has served you well, but I did want to check. As the South America market gets bigger and bigger.

How do you feel about locations in Mexico relative to being closer in South America? I think there have been issues in the past with thinking about being directly located in places like Brazil. But I just want to check that, we should expect that Mexico could grow overtime as the South American market grows..

Yes, our plan for Matamoros is to serve the South American market. What we've described as the Latin American market, right. Mexico, Central and South America. But think of it Stephen as kind of ex-Brazil is probably the simplest way to think about it.

Brazil has local content, requirements, it's a big market at times but it's served generally locally from Brazil, for Brazil.

So for us, to build blades in Matamoros and work through the Port of Brownsville, we can touch the Southern Mexico, Central and South America very cost effectively by water and so you can imagine by truck and rail, we would serve the northern part of Mexico and then by water serving the rest of what's called the Latin American market on an primarily ex-Brazil, is the way to think about it.

And yes, it's growing and emerging region, it was the next significant foothold that we chose to build out and we're pleased to have Vestas as our anchor customer there. We do see it as an important growth region for us and another cost effective hub to grow from in Matamoros..

Great and then just lastly, margins were very good and one of the elements you mentioned was materials costs.

Are there any particular trends with respect to materials cost? Is that a longer term dynamic, we should expect or is it a more short-term benefit that you realized?.

Stephen I would certainly not call it a short-term. I mean we're - it's something we focus on every day because again this is one of the key drivers for us driving down LCOE as an industry.

So I see it as a longer term trend early indications from some of our work for this year would suggest that next year will be another good year for us from that perspective. And again, as we gain scale the volumes certainly help I think some of the consolidation in the marketplace will help us as well, as we become a larger and larger player.

So I think all of those factors are helping to drive the continued trend that we've seen on the downward motion..

Great. That's all I had, thank you very much..

Thank you. Ladies and gentlemen, our next question comes from the line of Philip Shen with Roth Capital Partners. Please proceed with your question..

I wanted to start with, I think Steve in your prepared remarks you talked about product transitions through the rest of 2017 impacting 2018. It seems like the US market is a bit soft given some of the commentary from other players in the wind ecosystem. And you mentioned that it might impact 2018 on your revenue growth.

So I know you haven't provided official guidance for 2018, but was wondering if you might be able to quantify the range of the potential impacts..

Yes, Phil for your question. It's a bit early I think for us to do that, we'll plan to provide some more clarity on targets in the analyst day later in the year.

I think the general way to think about it, is we do expect to grow in 2018 and the growth in product transitions number of lines under contract, number of lines we'll be bringing up along with the higher revenue per year, per line provides a really strong basis for the 2019, 25% through 2019 CAGR.

So we'll grow in 2018, but we don't think that growth will be 25% year-over-year. We're just trying to point out the 2018 number will be less than 25% year-over-year, but the investment that's been made there strongly supports the 25% target CAGR through 2019..

Great. That detail is helpful, thanks Steve. Again on the US softness, can you just help us understand how you guys are able to weather the softness in Q2, Q3 and due to the PTC cycle? When some of the other - your other peers downstream, if you will our experiences and challenges there.

I think I know the answer to that question, it may have been related to Steven's question earlier in terms of being able to be at high utilization so forth, but wanted to kind of ask that question directly because I know that's a topic on some investors' minds..

Yes, we're certainly a global company in each of our operations served as large and cost effective and addressable market as we can set them up to serve the Iowa factory is pretty much focused on the US market as you'd imagine, but all of our other plants around the world serve markets that are far beyond just the US market including our Mexico site for that matter.

So I think that just the first point is, our dedicated supplier model kind of overall volumes that are contracted for in volume based pricing in cost effective hubs, gives us a base to work from again. We become a bit more of a base load supplier in that sense and some of the swing capacity might be elsewhere at times.

But again, we've been working hard to diversify the sources of revenues geographically. I think that's paid dividends and when markets - any individual market is up or down in a short-term, we designed it to have less impact on our company and I think you're seeing those results.

Now those can also be, those soft periods can also be times to work through transitions and that is a little bit of what you're seeing, so we're utilizing with our customers a bit of that timing softness if you will, to make the investments in transition, so you're seeing some of that as well..

Great. Thanks for the color there. One last one, I'll pass it on.

In terms of the Siemens-Gamesa as they look to rationalize their product portfolio and optimize their supply chain post-merger, can you talk about your ability to maintain your relationship with them? And perhaps, just perhaps give us an update or some insight into how those discussions might be developing? Thanks..

Yes, thanks Phil. So as we've answered before, we're not going to get out of ahead of our customers in terms of giving planning details or information they might view as being sensitive or confidential.

I think suffice to say at this point what's public is that we have a strong relationship with the Gamesa side of the house, Ricardo Chocarro, a Gamesa person has been named the lead - the land based business on a global scale. We know Ricardo well and he and his team know TPI well.

We also have an agreement out of Turkey for one line with an option for one more line and Siemens Gamesa was awarded the Turkey tender last week as well.

so you can imagine those dynamics would bode well for our future, but we still see an opportunity for more outsourcing in general across the industry that GE-LM acquisition has been a bit of an exception to that trend as you know, but generally we're seeing more opportunities for those types of moves and we would expect and hope that we can earn more business out of it, the combined Siemens-Gamesa team going forward..

Great. Thanks very much..

[Operator Instructions] our next question comes from the line of John Quealy with Canaccord. Please proceed with your question..

First question on China, I'll try to go about it a different way. To the newer existing customer question, just maybe broader how are those conversations going with industry participants LM [ph] customers etc.

is the conversation progressing as planned or have you touched everybody you wanted to? Just broad strokes, I know you won't give us details but broad strokes how is that playing out for you folks?.

Yes, I think our dialog continues as you might imagine our target was the top 10 players before the GE-LM acquisition and our targets continues to be the top 10 players, John and we all know one another, it's a pretty small group and so yes, we continue to develop those relationships and nurture them and you can imagine as we've said before, the 28 mold pipeline that we have is a nice combination of existing customers in growth as well as new customers.

We'll continue to chip away and convert off of that 28 mold pipeline..

Okay, great. Thank you. Second, maybe for Bill just on FX in the weaker dollar here.

I know it was a sort of sounds like a rounding error for the quarter in the six months, but talk to us if you would about what your impact is expected for the back half of the year and remind us to get on the hedging policy that you folks have, if any?.

Yes, sure John. Sorry the hedging policy again. We don't have a formal hedging policy in place, where we're buying forwards or futures. But we look at natural hedges based on how we're buying raw materials, what are contracts are denominated and how we manage our debt at the local levels to manage FX risk from that perspective.

From an overall impact and operations that is actually been bit of benefit over the last six months, it's been helpful on the cost of sale side in China and Turkey specifically. It's a little bit hard, I don't have my crystal ball is maybe not as clear as everybody else's where rates are going to go in back half of the year.

But I would suspect that we will continue to see some benefit from those as we move forward..

Got you. Okay. Thank you. And then, two other questions from me.

First, on the bus relationships I know this is out year, but can you give us any updates on ancillary markets and movements in the transportation sector broadly I would say?.

John, we're continuing to make progress against the development programs that we discussed in the past and against our production customers in the electric bus and general business industry as well, continuing to make steady progress there. But have not made any addition announcements at this point..

Okay, that's fine and then my last question. The Chief Commercial Officer role, to talk about why the timing now for that role and maybe some of the soft targets or hard targets for the next 12 to 24 months, that might be little bit more interspacing [ph], but if you could just preview, what to expect from maybe some organizational things at TPI.

Thanks..

Yes, thanks John. So you'll definitely meet Joe at the Analyst Day and we're thrilled that Joe's agreed to join us. As with the number of the executive hirers we've made in the last couple of years. We're bringing on athletes, pros that have done what we're still aspiring to do and are going to do, as we continue to grow our business.

Joe ran a $3.5 billion revenue stream [indiscernible] solar industry for three years for First Solar. He has tremendous international experience as we've certainly become more and more international in our scope.

So we're just adding really solid athletes to each of the key position and John I've done and lead a fair amount of that executive market development work myself in the past, as we get bigger and becoming a public company with various role as we all have, as we evolved.

It was very important for us at this point in time to add another senior executive team, so that's the reason for the timing.

We'll continue to build out our team, both in terms of the wind, market development, function, program management, as well as the diversified markets piece of this it's very important for us to continue to grow and diversify as you've heard many times. So Joe will continue to help us build out that team..

Thank you. Our next question comes from the line of Jeff Osborne with Cowen and Company. Please proceed with your question..

Two of mine and most of been asked. Can you - there is a lot of detail about 2018 and I guess the growth there, but can you just remind us of kind of the cadence of what's going operationally, - recognizing that you're not going to be giving quantitative guidance maybe not now, but maybe at the Analyst Day.

But for example the lines in Turkey that Gamesa took down in the mystery customer in China, my sense is that those are kind of dead in the first half of the year and second half loaded.

What are operationally, what do we think about Matamoros in the first half of 2018, vis-à-vis the second half and Mexico too and Turkey to expansion will those be running at full speed in the first half. I'm just trying to think about modeling the second half of [indiscernible] versus the first half..

I'll hit, there are couple things in there. First of all, you mentioned Gamesa and Turkey that mold will great dropped into the facility at the end of this year, fourth quarter timeframe.

So you can envision ramp up first couple of quarters and then picking up kind of full ramp rate in the back half of 2018, we have a couple of Nordex molds going in Turkey. We are actually in the process of installing that first mold, right now the second one will go in towards the end of the year.

And so we'll be - we'll have production volume off of those lines in the first quarter, but again it won't be ramped up to kind of full ramp speed until probably the end of the second quarter as well.

The new lines that we announced for China as we mentioned in the call, we plan to begin production sometime in the first quarter likely towards the end of the first quarter. So you would expect to see kind of full production out of those two lines in the back half of the year, probably end of the third quarter beginning in fourth quarter.

And then as far as Matamoros goes, as you know we're building a new facility there. The plan right now would be to have molds in place towards the middle of the next year and then ramping those molds up to the balance of 2018. So you'll really see full production volume out of Matamoros, not until early 2019..

Got it.

And then for I know you don't like talking about specific customers [indiscernible] but for the extension that GE gave you through 2020, was there any indication of tip change or a redesign at the mold for the sub three years that's left of the contract or do you anticipate it, as far as you know to be pretty [indiscernible] same product [indiscernible]..

Yes Jeff, we can't get into the detail on one customer and their specific transitions at this point, if customers want to make announcements around their models, they'll do so but it's really not our place to do that..

Understand, just probably can you talk about cycle times, either one of you? Certainly China was impressive when I visited there, but can you just talk about some of the other facilities being able to report the cycle time to the goal of getting [indiscernible] 24 hours..

Yes, Jeff I think that we have made great progress over the last 18 to 24 months, Steve mentioned the athletes that we brought in, that have contributed significantly to that effort and driving operational excellence through all of our plants. I would suggest that with the exception the new lines that we're ramping.

For the most part, we're at or near that 24-hour goal. There are times when we're below, there are times when we're little above and there are some times that we slow down for various reasons.

But I think we've made great progress in that area, we'll continue to drive that and again part of Steve's prepared comments earlier about being able to drive throughput on the larger molds at the same levels as the smaller molds, that's perfect example of us driving that cycle time and really driving cost - driving cycle time also drives cost out of the operation that's some of the results of the margin that you're seeing in the last couple of quarters..

Jeff to put a little finer point on that, we mentioned our average run rate $25 million per year, per line as being a little bit of a historical number for us and the future being more like $35 million per year, per line.

Of course that's because of the larger blade, but to Bill's point, it's a combination of cycle time and higher and larger blade at the same time and we'll actually have some models running north of $35 million, just as in the past we had some models running a little less than the $25 million, but just to give you an average sense of it, if you will.

There is some models that were south of $25 million and other models now that will be north of $35 million and that's what helping us to achieve. I mean it's really an adjustment if you think about, as opposed to a reduction in guidance think about these numbers of lines as an adjustment to larger, much larger blades.

This idea of four lines replacing seven. I mean that's a pretty significant shift and the way we think about the number of lines required to grow our business is shifting as well. So hopefully that point came through as being a really kind of fundamental shift to larger blades.

It's driven in large part by this quest for LCOE reduction and to Bill's point, our cycle time management that's helping us get there. And a [indiscernible] progress..

No, I appreciate the detail, certainly accommodating your customers' innovation cycles and having to implement those. Maybe just the last question, maybe kind of reverse of innovation cycles and repowering you need to comment on that, much more appreciated.

But it's a bit unclear to me, just given repowering is only happening now, but will - how TPI will be exposed to that theme just given that, my understanding was that the bulk of the repowering of the older blades using legacy towers.

A; is it true? And then B; if it is, I guess what molds will be used so that you can benefit from the repowering theme given these will be 40 to 55-meter blades?.

Yes, I think if the answer is actually a blend of those two points. There are some examples in repowering where blades in the 40 to 45-meter range for example might be used and then others where the turbines are coming out with new turbines being installed and so to us, Jeff the brand new turbines look just like new business.

Even though, what's important there is the gigawatts being installed are driven by a repowering of something that was built 20 years ago perhaps.

So it's important even if load is not growing in a region as much, but if repowering is taking place and new machines are being put in, that helps drive demand for the new models, the new turbines, if you will. So there are some that are new turbines and then some that are smaller blades and we're doing some of both.

Again without getting into specifics by customer, we're doing some of both, I think - we've said this before but majority of TPI's business is installing new machines and that's still true, but there is a market support mechanism here for repowering that's helpful..

And Jeff, as you know probably know. Some of it is site specific, right? There are some older sites that will be restricted for height and what have you? There are other sites that are not.

So in the sites where they're still restricted on height, it might be a blade a 40 or 50-meter blade and in other locations where they're not restricted you might see entire farms being pulled out and multiple turbines replaced by single turbine.

So I think you're going to see a combination into that ladder case, that would certainly support Steve's position that it really wouldn't, we really wouldn't know the difference whether it was going to a repowering opportunity or to a brand new wind farm..

As we mentioned earlier this is not just to US issue, Germany, France and Netherlands or other countries that are participating, some of those poor countries are making up 83% of the repowering market over the next few years. So it's not just a US driver, it's also occurring elsewhere..

Thanks so much guys..

Thank you. Ladies and gentlemen we have time for one more question coming from the line of Joseph Osha with JMP Securities. Please proceed with your question..

So we've [indiscernible] recent news about the GE, Vestas IP lawsuit.

Now considering these are some pretty large customers [indiscernible] do you see this having any impact on future backlog?.

Yes, thanks for the question. So we've read the same news in the press that you all probably have. Again we're not going to get out ahead of talking about any of this, with respect to our customers business.

I don't think at this point that we see any specific risk to our business, but it's fairly fresh news and I think we all need to just see how that plays out..

And then thank you. And then with China's continued expansion, other renewable sector and build out of high voltage DC transmission capacity to the new centers.

Could you comment on how these developments will be effect into new growth within this segment?.

Yes I think in general what's been really interesting from our perspective to see is some newer markets open up a bit and the investment by utilities in significant assets, the wind farms and transmissions lines.

Assets that they can then build into their rate cases and help to grow their business, help the utility grow the utilities business, if you will through that work.

So it's good that some of these recent projects were not really on in the market forecast around the radar screen or some of the forecasters even a year or so ago, so it's helping to expand the market and it's helping just fundamental pull from our customers, customers on the utility side..

Great. Thank you for taking the question..

Thank you. Ladies and gentlemen that's all the time we have for questions today. I would like to turn the floor back to management for closing comments..

So thanks everyone again for your interest in TPIC. We look forward updating you on our progress toward our stated strategy of global growth, customer diversification and expanded profitability and look forward to seeing many of you at our Investor and Analyst Day in New York on Friday, November 17. Thank you..

This does conclude our teleconference. You may disconnect your lines at this time. Thank you for your participation..