Q2 2022 Shoals Technologies Group Inc Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the shelf Technology Group, Inc. Second quarter 2022 earnings Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad.
Should you need assistance during the conference call you May signal, an operator by pressing star and zero I would now like to turn the conference over to Megan Pete's General Counsel. Please go ahead.
Thank you operator, and thank you everyone for joining us Jay hosting the call with me are CEO , Jason political and interim CFO , Kevin covered on this call management will be making projections or other forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
And consider these comments you should understand that these statements, including the guidance regarding full year 2022 are not guarantees of performance or results.
Actual results could differ materially from our forward looking statements if any of our assumptions are incorrect or because of other factors.
These factors include among other things the risk factors described in our filings with the Securities and Exchange Commission as well as economic and market circumstances industry conditions company performance and financial results. The COVID-19, pandemic supply chain disruptions availability and price of our components and materials project cancellation.
It creates demand for our products and policy and regulatory changes.
Although we may indicate and believes that the assumptions underlying the forward looking statements are reasonable any of the assumptions could prove inaccurate or incorrect and therefore, there can be no assurance that the results contemplated in the forward looking statements will be realized.
We caution that any forward looking statement included in this discussion is made as of the date for this discussion and do not undertake any duty to update any forward looking statement.
Today's presentation also includes references to non-GAAP financial measures you should refer to the information contained in the company's second quarter press release for definitional information and reconciliations of historical non-GAAP measures.
Terrible financial pressure.
Let me turn the call over to Jason.
Thank you very much Meghan and good afternoon, everyone.
I'll start off by providing a snapshot of our second quarter performance.
Followed by an update of our growth initiatives and then wrap up with our take on recent developments in the U S market.
I'll, then turn it over to Kevin who will provide an overview of our financial results.
We delivered record revenue and gross profit in the second quarter, which grew 23% and 9% year over year, respectively. Despite the significant challenges and uncertainty facing the industry.
What's your perspective on that statement this quarter representing its sixth.
Second quarter.
<unk> delivered record year over year quarterly revenue and gross profit.
Gross margin in the quarter was 38, 9%.
Gross margin was lower this quarter than last year.
Quarter of 2021 benefiting from an exceptionally high makes them BLA sales royalty components.
This quarter was more in line with our historical mix.
We also had higher raw material and logistics cost as a percentage of sales this quarter and the prior year.
Adjusted EBITDA increased sequentially, but declined slightly year over year, reflecting our continued investment in SG&A to support our growth initiatives.
We're beginning to see a return on these investments and expect the year over year rate of growth of our SG&A. It's slow in Q4 of this year.
Demand for our products remains very strong and we ended the second quarter with record backlog and awards and orders of $327 2 million.
An increase of 63% year over year and 8% sequentially.
Backlog and awards and orders have grown even further in Q3.
Second to continue expanding through the remainder of the year.
Components revenue increased 97% year over year.
Driven by increases in shipments of battery storage products as well as shipments of solar products to a significant number of new customers.
New customers projects typically the zombies online systems and they generally start the relationship with shoals by buying components that will work with these types of systems.
Yes. Thank you.
Quality reliability installation timing and customer service. This shows offers.
They become open to trying are combining should grow architectural and Bob will be allowed.
Yeah.
Once customers make the transition this usually marks the start of a long term relationship.
There's some solutions revenue grew 11% year over year as a result of continued strong demand for BLA and market share gains.
During the quarter, we converted four additional EPC and develop our store system installations.
And had 29 exiting Q2.
Presenting at greater than seven fold increase in the number being like customers.
Many of our IPO last year.
Customer interest in our recently introduced products continues to grow with water management battery storage and EV charging products experiencing the greatest demand.
We continue to ramp our production with our new water management products to meet customer demand.
To provide more context backlog and awarded orders for water management products increased more than threefold since the beginning of the year.
While these products are relatively small contributors to revenue like carry high gross margins and add to our profitability.
Now all of our energy storage products also contributed to revenue growth in the quarter and backlog in that part of our business continues to grow.
We are on track to complete the certification process for our BLA to point out and high capacity plug and play bonuses in the second half of the year.
We expect these products to further exploit our growth has been like to have a higher average selling price per megawatt than our current product and the high capacity plug and play harness will allow us to start a new and fast growing application.
We also continue to make strides on our international expansion.
More recently subsequent to quarter end, we announced that we successfully transitioned our customer to be laying in Honduras.
This is an excellent proof point given on duration of low cost labor market and provides a powerful endorsement of the benefits of our system bookings.
Even in areas, where labor is less expensive than in the U S and Europe .
Bill I can reduce labor cost.
Safety increase reliability and reduce maintenance expenses.
In Europe , our products are fully qualified and our sales team remains focused on building pipeline and converting that pipeline into backlog.
We're also beginning to see traction in international markets, resulting from the Bob administration support of export import bank financing.
Now turning to our <unk> business.
Demand is exceeding our expectations.
And we're seeing rapid order growth largely due to the team's progress with commercial fleets and school bus operators.
We've recently completed you all certification for many of our products and expect the balance can be certified by the end of the year.
During the quarter, we received orders for complete charging systems for commercial fleets that are transitioning to electric vehicles.
These orders represent our first sales of charging system solutions and a key milestone in the commercialization of any product launch.
Prior to this quarter, we had only sold components.
We also received our first orders from school bus electrification customers are attracted to the affordability and ease of installation of EV charging Bronx.
Demand from this segment has accelerated following the E P. A $5 million Clean School bus program announced in May.
Now I'll take a moment to talk about the recent positive developments in the solar market.
The beginning of the quarter was marked by delays and uncertainty caused by the U S Department of Commerce's investigation of an ADC a unique claim on solar cells and panels supplied from certain southeast Asian countries.
A significant portion Dan 70 was alleviated when the White House announced a two year tariff exemption for solar panels.
Our conversations with customers indicate that the tariff safe Harbor worried about president minds executive action.
With an important turning point in customer sentiment.
And we've seen projects that have been delayed or placed on hold it back out.
While we cannot quantify the full impact of the recently passed inflation reduction yes.
We see it as a tremendous positive for the market.
The English and expansion of the L. P C.
Coupled with new incentives for storage anyways.
It accelerated demand for our products.
Although how much and how fast that's something we don't know yet.
Yes.
We've done a lot of work since the beginning of 2021 position shows to succeed in a challenging and <unk>.
I'm certain landscape baseball the solar industry in the first half of this year.
And we think the strong performance of the company reflects that.
Now that many of those headwinds are abating, we see the potential for upside to our market expectations.
The low capital intensity and flexibility of our manufacturing process allows us to address rapidly to changes in demand.
We are well prepared to meet increases in demand as the production ramp. It on April 30 is ahead of schedule.
And despite the tight labor market, we expanded our manufacturing head count, adding more than 100 hourly teammates in the second quarter. It will be essential as we continue to scale our production.
Finally, I'm excited to welcome Dominic bottles, as our new Chief Financial Officer.
Dominic brings over 30 years in global finance and accounting experience across multiple industries, including automotive retail and industrial services.
<unk> is currently the CFO Paul.
Looking through the designer marketer and manufacturer almost that much extra fallen sharply tasiast.
Dominic will start in the beginning of the fourth quarter and we're excited to have him on board.
Kevin has done a tremendous job leading the finance team.
Artist stepping in as our interim CFO , Kevin was a longtime consultant to our company.
And you will continue to support us in that capacity as Dominic transitions into our organization.
I'm also pleased to announce the addition of genetic meals and Robert Julian to our board of directors.
Robyn are both seasoned executives with a proven track record of successful corporate governance and leadership across a range of functions and industries.
G&A will be replacing Peter Journal, who resigned from our board concurrently with genetic joining.
I want to thank Peter for his service and valuable contributions to shows as a director and welcome Jamie and Robert to our board.
We are excited about the benefits of the generic Robert significant experience can bring to our company.
Now I'll turn it over to Kevin who will discuss our second quarter 2022 financial results Kevin.
Thank you Jason for the second quarter revenue grew 23% versus the prior year period to $73 5 million.
Driven by increases of 11% and system solutions, and 97% and components.
Similar to the last quarter the strength in components revenue was driven by the combination of battery storage shipments as well as the on boarding of a significant number of new customers, which can initially lead to more of a component level opportunity.
As we work towards converting them over to our system solutions.
Growth in system solutions reflects strong demand for Shoals combine as you go system system solutions represented 77% of revenue.
Quarter versus 86% in the prior year period.
69% from the prior quarter.
Gross profit increased 9% to $28 6 million compared to $26 2 million.
Prior year period gross.
Gross profit as a percentage of revenue was 38, 9%.
Third to 43, 8% in the prior year period.
As Jason mentioned the decrease in gross margin year over year.
Partially a function of Q2 2021.
Any particularly a high proportion of BLA cells relative to components, while Q2 2022.
More in line with our historical mix.
We also had higher raw material and logistics cost as a percentage of sales this quarter than in the prior year.
Second quarter General and administrative expenses were $13 3 million compared to $10 million during the same period in the prior year.
This change was primarily a result of higher stock based compensation plant increased payroll due to higher head count to support our growth and product initiatives and new public company costs.
Adjusted EBITDA for the second quarter was $19 8 million compared to $20 6 million for the prior year period.
As we have discussed previously we expect adjusted EBITDA to grow at a slower rate this year, reflecting the pull forward of several investments to support our multi year growth outlook and growth initiatives over the next several years.
We remain confident that the substantial growth we are experiencing will support expansion in our adjusted EBITDA margin.
As we get leverage on SG&A exiting this year.
Adjusted net income was $11 8 million in the second quarter compared to $14 7 million in the prior year period.
Please see the adjusted EBITDA and adjusted net income reconciliation tables in our second quarter press release for a bridge to our GAAP results.
As of June 32022 backlog and awarded orders were $327 2 million reps.
Representing a new record for the company and an increase of 63% and 8% versus the same time last year at March 31 2022, respectively.
The increase in backlog and awarded orders reflects continued robust customer demand for <unk> products.
Turning to our full year outlook based on the current market conditions and input from our customers and team. We are reaffirming our previous guidance and expect 2022 revenue to be in the range of 300 million to three.
$325 million of.
41% to 52% year over year.
We expect adjusted EBITDA to be in the range of 77 million to $86 million and adjusted net income to be in the range of 45 million to 53 million.
We expect 2022 capital expenditures to be in the range of 7 million to 8 million.
In addition at the midpoint of our outlook. We currently expect to generate 45% to 50% of our second half revenue adjusted EBITDA and adjusted net income in the third quarter.
Now back to you Jason for closing remarks.
Thanks, Kevin.
I'd like to close by thanking all of our customers for the amendment to shows our employees for their contributions to our company's success and our shareholders for their continued support.
The first half of 2022 is off to a strong start.
And we will not be facing many of the headwinds we confronted in the first and second quarters and the second half of this year.
That together with strong demand for stellar on Evs.
Success of our new products and sales initiatives and the tremendous strength of our core products get his optimism for what we can achieve for shareholders in the coming quarters.
And with that thank you everyone and I appreciate your time today.
We will now open the line for questions.
Thank you.
I'll now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request. Please limit yourself to one question and one follow up in order to accommodate everyone in the queue.
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Our first question comes from Brian Lee of Goldman Sachs. Please go ahead.
Hey, guys. Good afternoon, thanks for taking the questions I guess the first one was just.
You you talked about the backlog and awarded orders.
Growing here into through Q2, and then expecting it to extend through the rest of the year.
Jason can you give us a sense of what type of growth.
You're speaking to if there's any way to quantify that.
And then how do you typically think about backlog coverage at this point in the year and you know we're sitting here in mid August .
You sort of start to think ahead to the growth for 2023, like what where whereas the typical level.
You'd hope to be at in terms of coverage levels or do you think about the potential for revenue growth in the out years that I'll follow up thank you.
Okay.
No problem, Brian good to speak with you today. So when you look at backlog and awarded orders that we've talked about in the past. Our goal is for that always to continue to increase quarter over quarter.
We've also discussed there can be some seasonality there we've not experienced that in the past.
But very excited about what we're able to accomplish in Q2, especially considering the headwinds that we had in front of US you know prior to the announcement of the <unk> or the two year tariff exemption on solar panels.
What I can tell you is that Nielsen is that one of our customers.
Indicating that was definitely a turning point when you look at customer sentiment and the fact that we have started to see our order patterns normalized as a result of that.
You mentioned the recent announcement of the <unk>.
Alright.
So barring that as well, but you know argument back specifics right now Brian .
We've got nothing to share today on that.
Okay Fair enough and then I guess on the the margin targets here I appreciate the additional color.
It seems like the that the full year guidance implies that youre going to be at like 26% or so.
Adjusted EBITDA margin level for the second half of the year I think in the past you've talked about sort of 30% plus as being the right sort of target range for the company. So as you think about the pull forward and these investments are how how quickly should we see those translate into returns is this something where you get back.
To that 30% level in the first half of 'twenty, three or is it going to take longer than that maybe even into the middle part or second half of next year. Thanks guys.
Okay.
Okay.
Yeah, Brian when you look at the margin profile you know as we've talked about the growth that we saw in the backlog and awarded orders throughout the first part of this year and its also continue this trend.
It was very much snow pointing towards our core system solution, specifically could be alright.
As we've talked about our BLA do carry a higher margin profile in a matter of practice, we mentioned in our prepared remarks.
Look it took you a year ago, where we generated north of 90% of our revenue from system solutions.
Resulting in gross margins of almost 44%. So as we continue converting customers overcome a full system solution.
We expect our mix to continue and ultimately to improve and drive gross margins north.
Which is a flow through all the way to the bottom.
And as we look at the SG&A advancements as we also mentioned we do expect to start getting leverage on that as we move throughout the latter partnered here moving into beginning of next so very excited about what we've been able to accomplish.
On the full system Bill a solution side of things.
Okay. Thanks, a lot I'll pass it off.
Our next question comes from Philip Shen of Roth Capital. Please go ahead.
Hey, guys. Thanks for taking my questions first one is on the inflation reduction Act I know you just.
Talked about how things are accelerating a if there's any way you can quantify.
How the I R. A is impacting the business.
Outside that would be interesting, especially on the coding front and then also can you talk through.
You know what.
Benefits might be for you guys.
Unlike some other manufacturers.
It seems like you don't have necessarily a manufacturing and production tax credits.
And maybe the key benefit is the 30% ITC benefit and your customers.
Along with the bonus I T theaters, but was wondering perhaps if we miss something and if there's something else that you see that maybe in the EV business or elsewhere that ultimately benefits you guys and if you can quantify that that'd be great. Thanks.
No no problem at all Phil So as you can imagine like a lot of people would share that sentiment.
Talking about the prospects of that.
Inflation reduction creates you know for the industry as a whole.
I would say, it's actually arguably probably one of the most impactful pieces of legislation legislation that.
The solar industry has ever received thus far.
<unk> already started having customers reach out to us talking about your domestic manufacturing and alike.
Couple of things I want to point out Aneel, Phil as you know when you look at the impact from prevailing wage.
That will essentially continue to increase the value of our manufacturing process and the savings and we're able to provide.
Versus the labor in the field.
You're not making your Standalone Aten group of storage is definitely a tailwind when you look at our storage offering.
The EV side.
Fox credit was reinstated.
We removed the 200000 unit cap.
Coupled with about $3 billion being provisioned towards rectifying, the USPS fleet and obviously, that's going to require a lot of infrastructure.
When you look at as you mentioned right. When you look at some of the provisions that are out there I mean, there's a lot of provisions for panel manufacturers no external components and partners and the like but you know what I do want to point out on the.
Detail on appropriations are really yet to be defined and I think there still is an opportunity for us here.
Regardless as I said before it is a huge positive for the industry as a whole, especially with us being a domestic manufacturer.
Thanks. Thanks, Jason My second question is on the U F. L. P a detention situation.
The discussions have been going on since the end of June .
For some companies some key companies.
Hum.
If that situation sustains do you see any downside risk for your back half revenue or do you think your fully insulated from that situation and.
If anything if if that.
P. A situation resolves earlier than expected there could actually be some upside to your back half numbers. Thanks.
Yes, I think we've talked about before.
Our bottoms up analysis gives us comfort in being able to reiterate guidance today.
I don't want to discount in Europe , helping at all but effectively we're not really seeing directly in one of them being bought that daily.
And we still continue to support what I would call multiple E boss designs throughout the optimization projects.
And that's something that has been increasing but it hasnt really come into effect as a result of your L. P.
It was really driven more I think based upon what had transpired in the past in the past with <unk> and some of the 80 CVD things and I think.
The work at the industry as a whole has gone so far allowed most of the projects to move higher without any particular delight. So you are not seeing any change.
Changes in the industry as a direct result of here I'll be right at the moment.
Great. Thanks, I'll pass it on.
Our next question comes from.
<unk> of credit Suisse. Please go ahead.
Hey, good afternoon Monday here from credit Suisse.
One question just on the mix of what we saw.
Strong growth in the confidence in Q2.
Could you talk about what drove that.
Should we expect a similar mix for the second half we're going to keep for you guys.
Yes.
Jason here. So you know as we've talked about in the past.
Overtime, our expectation is that components will stabilize and if this would be relatively flat from.
From an absolute dollar perspective, a couple of things.
Consider as we bring on new projects.
Typically designed as homerun systems, and so our relationships with new customers and I'll start off with them buying components that will if we could.
To be able to work in that type of infrastructure.
And as I pointed out before you know throughout the first part of the year. I retired continued we've seen very strong growth in our backlog and awarded orders, that's really driven by the <unk> side of things. It does carry a higher margin profile. So that in combination with the fact that in Q2 of 'twenty, one we had an outsized.
<unk> four full circle solutions.
Compared to the components this year.
Do expect that with the backlog and award orders containing a meaningful amount of BLA itself that will ultimately continue to grow as components.
I'll start to remain relatively flat.
Okay.
Thanks for the clarification just on the cash position.
Got over $10 million yeah.
Can you talk about the cash.
You said the growth in the.
In the second half how should we think about it and.
Working capital issue you foresee if in case, a USO issue kind of tracks around over here.
Yeah.
Yes, yes. This is Kevin.
Working capital I mean, certainly we built some cash during the quarter, we used it to pay down debt as we really start to look at third quarter and fourth quarter, we see our inner.
Inventory starting to flatten out a little bit as we come out of Q3 and into Q4.
And then working capital needs should stabilize a little bit but keep in mind as we continue to accelerate growth, we're gonna be a user.
You know used cash during some quarters and borrow cash flow quarter. So we're gonna see some variability in that.
And then just a follow up could you remind us of the liquidity you have on hand right now.
Yes.
Well as of June 30, we had $10 million in cash.
And we had I think about $75 million under their revolver available.
Great.
I'll take the rest offline. Thank you.
Yeah.
Yeah.
Our next question comes from Colin Rusch of Oppenheimer. Please go ahead.
Thanks, So much can you talk a little bit about the competitive environment, and any sort of new entrants or evolution of that that backdrop that you're seeing here, especially in the last few weeks.
Yeah.
Yeah.
Yeah. So when you look at the competitive landscape in general right.
So it really remains very similar to what we've talked about in the past.
Still not putting any any meaningful compensation come in the form of our EV system solutions and the competitive landscape still it still really remains the same on the solar salt.
<unk> had not been any changes in that you know in the past or even in the most recent announced.
The announcement was made.
Alright.
Excellent and then when you look at your backlog you know are you able to break out how much of it is coming from the AG side or is that a 100% solar.
Okay.
Well, it's definitely not a 100% solar at this point were not breaking out backlog specifics whether it be.
New products.
New segments like E V or the international.
What I can tell you is we're very very excited about what we've been able to accomplish.
On the E mobility side of things, but when you consider we just literally released out that product offering.
Definitely ahead of plan based upon the sell in going after the <unk>.
Electrification of fleet as well as you know the school bus.
That are out there so.
Again, ive ability continues to increase as well as we talked about you know not only new products in the form of water management its already been released as well as the storage side of things.
Okay. Thanks, so much guys.
Thanks, Paul.
Our next question comes from Joseph Osha of Guggenheim Partners. Please go ahead.
Hello. This is actually Hilary on for Joe and most of my questions have been answered. So just one thing I kind of wanted to touch on and that was the international markets, particularly as you continue to gain traction.
The <unk> project announced this quarter, but I was just hoping you could give us some color on when we might start to see the international market start to it.
Account for a larger share of the business and any color you could share that would be great. Thank you.
No absolutely. So as you mentioned right and we've talked about on our prepared remarks, just recently awarded a BLA opportunity in Honduras, which just further solidifies the value that our product brings.
When you look at not only the labor side of things, but also quality reliability O&M over.
Over the life of the outflow from your perspective, you know our products as we've talked about in the past are fully qualified and our sales team focus today is really continuing to build out that pipeline and focus on converting that pipeline over to backlog.
The group is doing as well and we're also seeing I Wanna mention Neil further traction in international markets. How is the direct result of the <unk>.
Barton administration supportive export import bank financing.
And as you do look although we're not breaking out exact specifics right now, but as we continue to gain further traction on expanding our international side of things and other growth initiatives, we do expect our business to become more diversified geographically speaking overdone.
Okay. Thank you that's all I had.
Our next question comes from Kashi Harrison of Piper Sandler. Please go ahead.
Hi, good afternoon, everyone. Thanks for taking the question.
Maybe just a follow up on the heaps question.
As you move beyond 2022, and you think about just this business structurally you know 23 and beyond.
How do you think about.
Just the cash like a good cash conversion cycle for Shoals.
On a consolidated basis.
Okay.
Yeah.
Okay.
Yeah, when we think about just looking forward and where we're at on our free.
Free cash flow right certainly.
We consider a couple of things we look at our.
Keeping any purchase is really the other thing that we're obligated to is our distribution for the non controlling interest so.
From that perspective, the cash cycle really.
Moves forward and we expect to gain leverage on there and they really see a debt pay down from it as we go through the third quarter and the fourth quarter.
Okay.
And just.
Maybe not necessarily just the second half of the year, but as you move beyond the second half.
What do you think that number looks like is it 100.
Can you just just any ballpark would be helpful.
Okay.
Yeah, I think what we think about that just just moving forward in 2023, I don't think we've looked that far but well have to get back to you on that question.
Okay Fair.
Fair enough.
And then just just.
A follow up on the EV product Ah congrats on the launch.
You just just wondering when you expect to see.
A meaningful pick up in orders to the point that you know maybe you might consider disclosing.
Disclosing.
The proportion of your backlog that's associated with that new business. When do you expect your gains.
Significant momentum in the business.
Again, very very happy and excited about what we've been able to accomplish in the short term again, where you know what.
Well ahead of plan.
Based on our product offering and I think it just solidifies the opportunity ahead. When you look at the amount of infrastructure has been put in place and you look at the significant amount of savings that we're able to offer while increasing reliability at the time of install.
As with anything else you know when you look at the benchmark once once we gain additional traction.
And a little more stability is something that we're definitely considering breaking out but as of right now.
Not doing that today.
Okay.
Fair enough.
Quick housekeeping question.
How should we think about the mix them.
Systems to components for the second half of the year.
We have not released out a number but again, what I can say is not a meaningful portion.
Of the backlog and awarded orders that were booked at the beginning of this year.
It comes in the form of our full system solution, specifically be away and that trend.
Literally continues to grow as we speak so we would expect the BLA side of things to become a more outsized.
A contributor as we move throughout Q3, and Q4 and even into the start of the beginning of next year.
Very helpful. Thank you.
Our next question comes from Jeff Osborne of Cowen and co. Please go ahead.
Yeah, Jason I had two quick questions. Following up on Phil's question on the U S. L. P. A I was just curious with any of the new orders that you received in recent weeks since the June six announcement from present by.
Anyone.
Delaying orders or dictating that the orders are contingent upon clearing customs. So I'm just trying to understand sort of the mechanics with the potential uncertainty there is that leading to a little bit of a lull or no.
Okay.
Great question, Jeff Good to speak with you again.
How about U F L. P. A perspective or just in general, we're not seeing any orders or delayed.
As a result of that not candy follow orders that cancel as a result of that.
So yeah I'll, let Tom mentioned before we're not really seeing any what I would call a direct impacts.
You can attribute specifically to you have to help create a day.
Got it and then what what are lead times, you mentioned 100 additional staff with the expansion that's running at a time can you remind us like what lead times, where when you were constrained in the past and what those earn out or what you anticipate they'll be.
For BLA in Lea County.
Yeah, you know the lead time.
It does vary depending upon.
Exactly where that project is that I mean, we've not released out any exactly down volume because it does vary so much project to project I mean.
For example, you know Jeff I mean, you look at things as simple as you.
One of the sub components, we can integrate into the BLA final things, maybe a connected right which is a.
A meaningless portion from a Cogs perspective.
But when you have a panel manufacturer itself.
Gulf Coast Pacific connector.
We have to consume that meeting portion of that connector, which can drive lead time. So it really does vary quite a bit.
But again, you're pointing back to you know, there's something members were able to add.
Very very very happy.
Now to have them on board and that continues to grow as we continue throughout the year I am very excited about the plan that the company as a whole set forth to be able to accomplish.
Bringing those team members on and look forward to what we're able to accomplish in subsequent quarters.
Good to hear and just very quickly is there any transition from your customers with us.
2.0 version coming out like any training or are getting up to speed with that that might be something to watch in the coming months.
Yeah. So we are having some initial conversations.
Haven't.
You released out a full product launch, but now I definitely would stay tuned.
How that progresses in the coming months.
Great. Thank you.
Our next question comes from Brett <unk> of Morningstar. Please go ahead.
Yeah, Hi, maybe just staying on the BLA two point no. Jason I think you mentioned in the prepared remarks.
That that would maybe have a higher average selling price on a dollar per megawatt I was wondering if you could maybe quantify that anymore.
Well, we haven't given any figures out as of yet regarding bill I can point out, but again when you stand back and you see that the product that we're bringing to market as you know it does incorporate additional creatures.
The product itself. So windows features itself, we're going to come additional increase.
And ultimately allow us to have a higher potential revenue per instance, which ultimately equates to $1 per megawatt.
So in doing that that also provides additional value, we're going to be able to accrete back to our customer any form of the fact, when they deploy our product itself, you know coming where that fleet yourself.
Coming with the features that we're building into the BLA to one O will also allow them to capture an additional savings of like when the field simultaneously.
Okay, and then on the on the EV charging side can you remind me is your product there focus more on the level, two or AC market or on more of the fast charge D C market.
Yeah, much like all of our different product lines that are out there, whether you're talking about solar storage or EV.
We're really agnostic technology.
You look at the sites that.
We continue to work on and we serve a reserve in arm production on are there really a combination of both level too.
And level, three or our DC fast Chargers.
It really it really depends on the site specifics and we can work with all of the configurations.
Thanks, Jason that's all I had.
This concludes the question and answer session and today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.
Yeah.
Yeah.
Yes.
Yeah.
Okay.