Q3 2022 Shoals Technologies Group Inc Earnings Call
Good afternoon, and welcome to shows Technologies Group third quarter 2022 earnings Conference call.
This call is being recorded and we have allocated one hour for prepared remarks and Q&A.
At this time I would like to turn the conference over to Megan <unk> General Counsel for shows technologies group.
You may begin.
Thank you operator, and thank you everyone for joining us today hosting the call with me are CEO , Jason would occur and CFO Domenic BARDA.
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 as you listen to these comments you should understand.
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 decreased demand for our products policies and regulatory changes industry conditions current macro economic events supply chain disruptions and availability and price of our components in the channel.
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, it can be no assurance that the results contemplated in the forward looking statements will be realized.
We caution any forward looking statements included in this discussion is made.
Made as of the date of this discussion and 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 Companys third quarter press release for definitional information and reconciliations of historical non-GAAP measures the comparable financial measures.
With that let me turn the call over to Jason.
Thank you very much Meghan and good afternoon, everyone.
I'd like to start off by welcoming shows new CFO Domenic bartos. So we're very excited to have on board.
Dominic brings over 30 years of global finance and accounting experience across multiple industries, including automotive retail and industrial services.
Prior to joining us Dominic was the CFO of Holly are publicly traded designer marketer and manufacturer of high performance products for car and truck enthusiasts.
I would also like to thank Kevin Hubbert for the tremendous job. He did as our interim CFO and his willingness to stay with us for an extended period, which gave us the time, we needed to find the best fit for the CFO position.
We are honored to have Kevin's continued support as we transition leadership of our finance team to Dominic.
Now turning to our results for the quarter.
I'll start off by providing a snapshot of our Q3 performance.
Followed by an update on our core product lines, and then wrap up with an assessment of current business conditions in the U S solar market and how we see them benefiting our business.
I'll, then turn it over to Dominic will provide an overview of our financial results.
Shell had a phenomenal third quarter delivering record revenue gross profit and adjusted EBITDA.
Revenue and gross profit grew 52% and 66% year over year, respectively.
Gross margin in the quarter was 39, 7% compared to 36, 4% in the prior year period.
Driven primarily by a higher proportion of revenue from the company's combined as you go system solutions, which carry higher margins and increased leverage on fixed cost as a result of higher sales volumes.
Adjusted EBIT on the quarter was $26 6 million, increasing both sequentially and year over year, even with sustained investment in SG&A to support our growth initiatives.
Demand for our products continues to grow and we ended the third quarter with record backlog and awarded orders of $471 2 million.
An increase of 74% year over year and 44% sequentially.
System solutions revenue increased 80%, while components were up slightly relative to last year consistent with our expectation.
The growth in system solution revenues reflects continued strong demand for our combined as you go system.
System solutions represented 77% of revenue versus 65% in the prior year period.
During the quarter, we converted four additionally, P citizen developers, bringing the total number of <unk> customers to 33 at the end of <unk>.
New products also contributed to revenue growth in the quarter with storage water management, and <unk> solutions experiencing particularly strong demand.
Earlier this month, we announced that shows have been awarded a one gigawatt contract to supply a BLA and storage solutions on a project that will be one of the largest solar plus storage projects in the U S. When complete.
Deliveries for the project are underway and expected to continue throughout 2023.
Well continue to ramp production to fulfill customer orders of our new water management products relative to a year ago. The opportunity for wire management has increased more than five times.
We remain on track to complete the certification process for BLA 2.0, and high capacity plug and play harnesses by the end of the year.
Initial customer feedback from premiums both products had already plus was very positive and we're excited to begin shipments one certification is complete.
As we touched on last quarter, we expect these products to further accelerate our growth.
As we all like to point out we will have a higher average selling price per megawatt than our current product and the high capacity plug and play harness will allow us to serve a new and fast growing application, where we do not currently have an offering.
We also continued making progress on our international expansion. Our sales team is having a number of advanced conversations now that our products are fully qualified.
We look forward to providing further updates in 2023.
Turning to our avian business, we made significant progress during the quarter receiving certification you all standards on our phase one above ground E mobility charging solution and completing our first deliveries of our full EV system solutions.
Importantly marches on these sales are at or above our corporate average as expected.
Our EBIT solutions have now been deployed in more than 15 states in the U S. Thanks.
Based on customer experience from these deployments, we're now able to validate that our solution offers a 20% 30% I'm in cost savings over traditional installation methods.
Much like we've done in solar we can leverage this data to establish the superior value proposition that our products offer and migrate customers from competitors products to ours.
We believe that the certification that you all standards and growing number of successful deployments of our solutions will result in broader adoption of our technology and create sales opportunities in public projects, because our solutions simplifies the permitting process for customers.
Order growth for <unk> solutions continues to exceed our expectations, particularly in the fleet and school bus segments.
And looking ahead, you all testing and certification of our drop over Raceway E mobility charging solution is in progress and we expect to be completed by year end.
Now turning to solar market conditions.
To your tariff exemption for Chinese panels there.
Recently passed inflation reduction act and higher energy prices has given our customers and end users the confidence to Reinitiate previously delayed projects.
Your commitments to invest in solar generation.
And prioritize product availability and performance over price.
As a result of the improving solar market conditions and our recent performance. We are raising the low end of our 2022 outlook, which Dominic will discuss in further detail.
While we're still waiting on further guidance from the treasury on certain aspects of the alright.
The Bill provides many demand drivers for shows in the industry.
First as we discussed in our last call. We believe the increase in extension of the investment tax credit coupled with new incentives for storage in Evs will accelerate demand for our products.
While we still don't know just how significant the effect on demand will be.
Initial reactions suggests that the IRA is the most significant piece of legislation for the solar industry to date.
In addition, the prevailing wage provision of the alright is expected to compound wage pressure in the U S market.
Which further reinforces the value proposition of our combine as you go system.
From day, one we set out to create products that can be installed by anyone as a response to the disproportionately high cost of installing equals.
Which can be equal to or in excess of the cost of the product itself.
In environments, where labor is more expensive or solutions are especially attractive.
As they take less time to install and are installed by generally.
We anticipate the prevailing wage for vision and will provide a significant tailwind for years to come.
Finally, the significant investments we made this year.
The build out of our new facility and expansion of engineering sales and HR head count.
We are confident we can meet accelerating demand and continue our strong growth trajectory.
I'll now turn it over to Dominic who will discuss our third quarter 2020 financial results.
Thanks.
Thank you Jason I'm very excited to be here today, and I look forward to working with you and the entire team at Shoals during our next chapter of growth.
Turning to the financials for the third quarter revenue grew 52% versus the prior year period to $98 million driven by higher sales volume as a result of increased demand for solar he boss generally and specifically our combined as you go system solutions.
Our third quarter revenue growth was also aided by the launch of our EV solutions.
Systems solutions revenue increased 80% year over year and components revenue increased 1% compared to the prior year period.
Systems solutions represented 77% of revenue versus 65% in the prior year period.
Gross profit increased 66% to $36.0 million compared to $21 $8 million in the prior year period.
Gross profit as a percentage of revenue grew 330 basis points to 39, 7% compared to 36, 4% in the prior year period, driven primarily by increased revenue and a higher proportion of revenue from system solutions.
Third quarter General and administrative expenses were $13 9 million compared to $10.0 million during the same period in the prior year.
This change was primarily a result of higher stock based compensation.
Planned increased payroll due to higher head count supporting our growth and product initiatives and public company costs.
Adjusted EBITDA increased 57% to $26 6 million compared to $16 9 million for the prior year period.
We are beginning to realize leverage on SG&A as planed and during the quarter adjusted EBITDA margin expanded more than 100 basis points year over year to 29, 3%.
As discussed earlier this year, we expect it to gain leverage on operating expenses exiting the year, which you've now achieved one quarter ahead of schedule.
Adjusted net income grew 43% to $16 $6 million in the third quarter compared to $11 $6 million in the prior year period.
As always we included a reconciliation of non-GAAP measures of adjusted EBITDA and adjusted net income in our press release, please refer to that for a bridge to our GAAP net income.
Moving to our balance sheet, having dug into the numbers, we have opportunities to optimize working capital, particularly inventory and accounts receivable in the coming quarters.
As of September 30th 2022 backlog and awarded orders were $471.2 million, representing a new record for the company and an increase of 74% and 44% versus the same time last year and June 32022, respectively.
The growth in backlog and awarded orders reflects continued robust customer demand for <unk> products.
Turning to our full year outlook based on current market conditions and input from our customers and team we are raising the low end of our previous outlook.
We now expect 2022 revenue to be in the range of $310 million to $325 million up 45% to 52% year over year.
On the back of our strong third quarter results and expectation of continued leverage on operating expenses.
We now expect adjusted EBITDA to be in the range of 80 million to $86 million and adjusted net income to be in the range of $48 million to $53 million.
As we move forward, we generally expect adjusted EBITDA margin will increase on a year over year basis. So the increase will not be linear due to the timing of spend and the potential for mix to shift from quarter to quarter.
Now back to Jason for closing remarks.
Thanks, Dominic I'd like to close by thanking all of our customers for their commitment to shows our employees for their contributions to our company's success.
And our shareholders for their continued support.
2022 is shaping up to be a huge year for <unk>. Despite the headwinds we confronted during the first half of the year.
With strong demand for solar in EV.
Well, new product and sales initiatives and a tremendous strength of our core BLA product I.
I'm incredibly optimistic about what we can achieve in the coming quarters.
And with that thank you everyone I appreciate your time today and we'll now.
Now open the line for questions.
Thank you.
We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
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You're using a speakerphone please pick up your handset before pressing any key to withdraw your question. Please press Star then two.
The first question comes from Mark Strouse of Jpmorgan. Please go ahead.
Yes. Good afternoon. Thank you very much for taking our questions.
Congrats on the strong backlog I wanted to start with that if I could.
Or are you seeing any change in your your order activity.
Activity as far as kind of the the timeline of deliveries.
We kind of look back over the last well since you've been public.
And kind of the ratio of what your backlog implies for the next 12 months or so is there any reason to believe that that that general ratio should should maintain going forward or are you seeing the elongation of any of your order activity.
Yeah, Hey, Mark Jason here, good to speak with you again and appreciate.
The comprehensive definitely a team effort here.
As we've talked about in the past.
Our backlog in ward orders generally represents I would say Tom period over the next nine to 12 months I mean, obviously, there is kind of like a bell curve right youre going to have some some spillover from.
From time to time, but generally speaking still in that same nine to 12 month period.
Okay good to hear.
And then just a follow up I understand the gross margins can fluctuate quite a bit with mix, but.
Any commentary Dominic you can you can provide on SG&A going forward just some of the investments that you've made year to date and kind of leverage going forward.
Sure. Thanks, Mark Yeah from a margin standpoint, one of the things that that we've looked at is yes. Some of the growth that we've had from our positions. The investments that we've made an incremental positions in some of the public company expenses, including our readiness to for our Sarbanes Oxley controls this year.
So from that standpoint, we did get some good leverage in Q3 from higher sales volume and the guidance range that we've projected out there does anticipate fewer production days in Q4. So you know the margins will fluctuate, but as we've guided to previously that 38% to 40% gross margin is a great target for us to have there.
Then you should see as we mentioned in the prepared remarks, some continued expansion in EBITDA margin overtime.
Okay I'll take the rest offline. Thank you.
The next question comes from Philip Shen of Roth Capital Partners. Please go ahead.
Hey, guys. Thanks for taking my questions and congrats on a strong quarter.
Wanted to checking with the strength in Q3, and four in and to see how much.
The volume May have come from projects that you're serving.
Don't have modules, but do you have tracker and and you were able to install that he boss on.
Despite the lack of modules.
Yes.
Good to talk to you again feels like it's kind of a two part question.
I'll kind of take the Q3 Q4 first first of all as we talked about during our Q2 call. Our expectation was that Q4 will be slightly stronger than Q3, but it turned out.
Q3, Q3 was exceptionally strong as we've just talked about.
One thing I do want to talk about from a Q4 perspective, because I think it's very important when you look at the midpoint of guidance that we have for the year you on calls for nearly 80% year over year revenue growth So still have.
A very strong Q4 itself.
And as Dominic also mentioned as we move throughout Q4 because of the holiday season.
There are definitely fewer working days as we go through the quarter and the year.
Specifically regarding the projects.
From a panel perspective.
There are projects that we will be serving.
I don't know that there are projects that we're currently serving but none of those projects that we will be serving or close to it.
That are going to be moving forward based upon.
Just back on panel availability in general Phil.
There's not that many out there that I can think of but there are quite a few on the ones that I know that do have panels that are affected are moving forward.
I guess, you could say as planned with construction based on any potential boundless.
Great. Thanks for the color, Jason and then a follow up here on the backlog question.
Ordered orders as well it looks like when you.
I parse out the difference.
Most of the increase in that category in the backlog and awarded orders came from awarded orders as opposed to backlog I think backlog increased from $195 million to $199 million and ordered orders went to $272 million from $133 million.
Just wanted to confirm.
Do you expect those awarded orders to be delivered.
In the next nine to 12 months I think I heard you say that and then also.
In your Q it looks like you have a $200 million worth of.
Contracts that have take or pay provisions and so wanted to see if you could talk through.
And you mentioned just now Jason a kind of a distribution of contracting type, but going forward would you expect to have more longer term contracts with.
With the same customer similar to you know maybe at first solar or somebody like that.
Thanks.
So quite a bit there Phil maybe I'll try to knock off a few of those.
One of the things that I can say is.
During our a plus.
We saw a pretty big change in sentiment regarding neill customers wanted to have more long term conversations.
Obviously, you know it takes a while to have those conversations to get things to complete.
Just wanted to make sure that customers have the ability to access our capacity was one of the heat topics that we had.
So who knows where that goes but definitely great conversation that spun out of <unk> plus directly along those lines.
What does that opportunity look like further out.
Specific on backlog and awarded orders.
I'm kind of referring back in Q2, everyone recall as one of the things that we said was we really didn't have a lot of coverage or a lot of spillover lessen the quarter.
Based upon that.
The extension or I'm, sorry, the moratorium on a two year.
Final tariffs.
So when you look at where we are from Q2, Q3, obviously youre, having a full quarter would that in play obviously, having some some strong support from our perspective.
Definitely allowed us to realize very strong growth in backlog and awarded orders, but I think overtime fill and this may not always be the case, but if you go back and you look.
Pacifically youll find that.
Youll get a pretty decent jump in awarded orders and then obviously the backlog chart eating away at that you'll get a big jump again so.
Definitely very excited about where we are very excited for what the future holds.
Thank you.
We would also like to remind all the analysts to limit themselves to one question and one follow up.
The next question comes from the heat and Loy of credit Suisse.
Please go ahead.
Hey, good evening, thanks for taking the questions.
Could you talk about the EV charging business, how much of the revenues in the quarter of the year.
Coming from that business.
How should we thinking about that contribution to the backlog and awarded all of those again. Thanks.
Yes, Hey, Jason here.
So at the moment, we're not providing breakout of E mobility or new products.
Storage of international but.
From an E mobility perspective, obviously very excited about what we've been able to accomplish marketing that product out.
What I can tell you is it is contributing to our backlog and awarded orders and expected that will continue to be the case and grow Madame feedback.
Feedback from customers has been nothing short of amazing.
And very excited that we've been able to accomplish not.
Not only a successful launch but launch over 15 different states.
With validating that value proposition that we're able to bring with that 20% to 30% savings on.
On installation time and cost while also maintaining our average corporate margin profile. So you know very very very exciting.
From that perspective, and obviously that continues to grow.
Yeah.
Got it and then maybe just one housekeeping.
One of the slides, where you talk about the product roadmap is show wire harness product probably has been pushed out by a quarter.
Just wanted to check what's driving that and does that impact.
Product revenues for 'twenty to 'twenty two for you guys.
Yes, when you look at the when you look at these.
<unk> backlog and awarded orders that we have I mean, a large portion of that.
It's going to be based upon current products that we have released out.
So when we talk about our water management product and our ability to point, we're still tracking alpha have certification complete on both of those particular products.
Which will allow us to finish off that commercialized commercialization phase. So we've already previewed those that already plus.
And those two products do work very well together and they're also very complementary so looking forward to finalizing the certification process on both sides of those particular products and.
And the opportunities we haven't promised as we move into 2023 windows.
Thanks, and just a clarification that certification for U S or Europe .
That's all for me thanks.
Yeah.
Yes. Good question Mohit, so right out of the gate, we're looking at our high impact product in our BLA 2.0.
So the initial certification that we're going after is going to be you all certification.
As for North America.
And then based upon that we will branch out accordingly, much like we've done with all of our other product lines.
So we will definitely keep you informed.
As we progressed throughout the summer.
Great. Thanks for the question.
Okay.
The next question comes from Brian Lee of Goldman Sachs. Please go ahead.
Hey, guys. Good afternoon, thanks for taking the questions sorry, if I missed this one but.
I think you have.
Alan about how <unk> ended up being stronger than expected and hence why there's a little bit of a sequential downtick into <unk> when we back out.
The new revised guidance for the year I thought it was a little noticeable.
The EBITDA margin seems to be declining.
Declining quite significantly from the EBIT margin you just posted in <unk>. It seems like much more so than the EPS and revenue declines at or inferred here. So.
Can you kind of talk about whether that's mix, whether there's some incremental costs like what's happening with the EBITDA line that is such a.
More pronounced quarter on quarter downtick versus the.
The other metrics you're guiding to here.
Sure, Brian Hey, it's Dominic here.
First of all we're absolutely very pleased with <unk> performance and some of that revenue pull forward did help us from a leverage perspective in the quarter aiding the margins.
A couple of things, yes, we do expect or with less revenue in Q4.
To lose a little bit of that leverage and then we also have modeled in some of the public company expenses and some of the incremental expenses such as myself and other staff positions that we have coming online to be increased in Q4 as well and so we're very pleased with the margins where we are we do think that it's very important to record.
And is that it has a slightly lower revenue period for us we do lose some leverage back off of that and as we've guided to earlier in the year. We do expect some SG&A expenses and investments to continue to grow quarter over quarter sequentially.
Okay. Thank you that's helpful. And then just going back to Phil's question about the mix of backlog and awarded orders I mean, the overall.
Performance there was quite impressive so kudos to you guys, but could.
Could you remind us Jason there's two kind of what takes an awarded order into official backlog status and then.
Whether or not you.
You mentioned during the prepared remarks, youre seeing a lot of customer demand for like multiyear investments and what have you are you seeing.
Sales cycles.
Or delivery cycles sort of elongate to any degree or just trying to understand whether some of this is forward booking.
Out your opportunities, which I know theres a lot of happening in the utility scale environment. When you look at some of your peers, particularly in the panel space that are booking multi multi years in advance. Thank you.
Yes, great question, Brian So a couple of things.
It's nothing like what you would expect on what Youre seeing on the panel side of things right.
Right now when we look at backlog and awarded orders.
It still represents roughly nine to 12 months period.
He was talking about earlier as far as conversations that already plus I think there's probably an opportunity where that may start to elongate out base.
Based on initial conversations that we're having with customers that are out there that really want to understand what we're capable of performing for them not only in 2023, but even beyond but again, that's not something we're really talking about today.
There are conversations that are happening.
Something like that were to transpire, we'll definitely update you accordingly.
And to go back and answer the original question number one.
Is it tied for opt.
<unk> opportunity.
To move into awarded orders and then ultimately flip over into backlog. So once you look at any opportunity that goes in the backlog itself when we have that.
<unk> itself with all agencies fully completed.
Everything agreed to and we are executing on that product. So when you look at awarded orders at some point at which we've been awarded that particular product.
There's multiple stages right you know if we have an MSA in place might be looking at specific site nomenclature. We maybe go on 13, please the new customers.
But really just buttoning up and going through those last minute details on that particular project and allow us to execute that and turn that directly into backlog itself Brian .
Alright, I appreciate that thank you.
The next question comes from Colin Rusch of Oppenheimer. Please go ahead.
Thanks, So much guys can you talk a little bit about the content of the bookings from a perspective of international bookings as well as EV.
Projects.
Yes, Colin Hey, Greg speaking with you again.
Looking at the backlog and what orders you know what I can say is that a meaningful portion of that is coming through with our full system cells.
Critically BLA itself.
But as far as the definitive breakdown.
Breaking that down yet when you look at international side of things and what are you looking at any mobility.
Okay.
And the second one is really just around the urgency of shortages.
Related to two electricians out in the field or are you seeing there.
That get more intense at this point for your for your customers and how is that impacting the sales cycle for you guys.
Yeah, it's hard to say exactly how that contributes but as we've talked about a lot in the past.
And from day, one and what we've done is we've set out to create our products and system solutions that can be.
All by anyone.
And that's really as a direct response or a disproportionately high cost of the boss.
Because some of the EBIT the costs and salary loss components can be at or even greater than the cost of the product itself. So obviously when youre looking at the prevailing wage revision that's an inflationary condition.
And that just further reinforces our value proposition of our combined should go or BLA products. So.
When you have environments like this where labor is more expensive or solutions will generally be more attracted so.
Pretty excited about that what I can say is that even customers that have utilized bill I understand that value.
Back out to really dive in and that much more detail to make sure that they are really capturing everything they can do it.
Definitely contributing to that but exactly how much that is it time to cycle.
Great Alright ill take it offline thanks guys.
The next question comes from Kashi Harrison of Piper Sandler. Please go ahead.
Good evening, all and thank.
Thank you for taking the questions.
So my first question is on BLA 2.0, I was just wondering do you think there is upside for projects that have already been signed and awarded in other words do you think that some of your customers that I've already said, Hey, we're going to give you. This business today for BLA, one may come around and say actually.
We want to upgrade to BLA to point, though.
And then we could see that that backlog and awarded move up Oh faster entering 2023.
Okay.
Yeah, Hey, guys can you, maybe maybe thinking about this a little bit different way.
I don't think that we have any customers out there that are holding off on orders waiting for BLA to point out.
But.
If things if history repeats itself.
When you look at the different generations of BLA, we have because as we've talked about in the past our current generation BLA is not the original BLA that we brought to market. So.
What I can tell you in the past is customers have proceeded forward with the most optimum solution commercially available at that point in time, and then whenever anything.
More viable they would take a look at that and find out is this really worth them, making that change.
And in cases in the past there were many cases in the past where customers like yeah. We can definitely do this if it doesn't impact the materials side of things. So there's definitely opportunity for that how that launch is really hard to say, but like I said I can foresee that happening on some projects.
If history repeats itself.
Oh.
That's helpful. And then maybe just as my follow up I think it was this quarter last year, where you where you indicated that the policy uncertainty was resulting in a significant amount of project redesign.
I'm just curious.
Based on what Youre seeing right now.
As of this call.
Or the how is the magnitude of redesign comparator last year is it about the same has it accelerated.
Celebrate it.
Uh huh.
As far as the number of project redesign I feel confident saying that it's definitely decelerated.
And I think there is there are several reasons for that just to clarify.
There.
For a lot of a lot of different projects, we still may carry.
Multiple different designs.
And Thats something that what you've found before what happened very early on in the project and then as that project progresses.
That would weigh down on very finite collections.
So those selections are not happening nearest equates to meet carried much further through the design cycle, which I think allows customers more versatility without going through what I would call a K a redesigned fire drill redesign.
And so I think it's really being smarter about where we've come from but definitely.
The number of redesign have decreased from a year ago today.
That's helpful. Thank you.
Yes.
The next question comes from Joseph Osha of Guggenheim Partners. Please go ahead.
Oh, Hi, there yeah, just returning to this issue of backlog again I heard you say nine to 12 months I'm wondering do.
Do you get the center can you tell yet whether the projects are being Oh, maybe pulled into 2023 or is most of this big increase in backlog just people pulling the trigger on projects that had already been planned but they they weren't sure if they could get panels war.
Yes, Joe.
Hard to say what all the different levers are that are being pulled I think obviously a couple of different things.
And then I've talked about earlier.
The two year moratorium obviously.
Which has brought a lot more certainty to the industry itself.
I don't know that I can say that there have been projects had been pulled in from 24 to 23, but what I can say in general is that customers are trying to get.
Projects back on track and are completed.
As quickly as they possibly can so.
I wouldn't necessarily breath that on any particular com like this is just the general conversation is let's get these near term projects completed and let's try to see if there were any projects that would derail and at some point in the past.
We can get them back on track.
Yes that makes sense and then just a more general question are you prepared to talk about from a capacity standpoint.
How how much you could theoretically yep.
On a run rate basis, now and looking into next year.
Yeah, we're not we've not released anything out specifically on the capacity side of things Joe but.
How we operate we utilized <unk>.
Very similar information.
<unk> backlog and awards and orders.
Obviously, you couple that with the pipeline that feeds into that Roger funnel.
You know as well as deal some industry benchmarks and we're trying to make sure that we understand exactly what our customers are asking of us.
And we do our best to stay ahead of pace from a capacity perspective, what I can tell you is I feel very comfortable right now from a capacity standpoint.
And if something were to change.
<unk> customers were to reach out or we're going to have a swing in industry and actually increase the management. Further then we would pivot accordingly, right to be able to support our customers but.
Amongst many other things, making sure that Youre dependable is extremely extremely important shoals, and we want to make sure that we're a very strong partner to our customers.
Yeah.
Okay. That's fine I'll, what I have a couple of follow ups, but I'll I'll take them offline. Thanks.
The next question comes from Martin Malloy of Johnson Rice. Please go ahead.
Good afternoon.
I wanted to ask you about slide 27, and the new product introductions.
L. A 2.0 the high capacity.
Product can you maybe remind us of what the impact is on the addressable on your addressable market relative to your existing addressable market with these new product introductions.
Yeah, So overall, not specifically one BLA to point out.
Our goal over time is for us to get to roughly three to three and a half since per watt right. So right now on average.
If you look at kind of where we were we benchmark debt that was coming off about two ships per watt. So add another penny to a penny and a half of additional opportunities through new products.
<unk> is definitely one of those contributors as well as the hot I'm passing harnessed itself.
And there was even many more outside of the four that we've mentioned on that page, you'll IC products and alike.
Some of which we'll talk about.
In 2023, as we roll forward.
But when I look at BLA 2.0, and I look at the high impacts the harness what I would say out of the four that are on that page.
Those bottom two do carry a more meaningful position towards going towards that additional clinical opinion.
Released that any exact specifics as to what BLA to point out Gary or.
Or hop capacity harness.
Great. Thank you I'll turn it back.
Thank you.
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.
Yes.
[music].
Yes.
Yes.
Mhm.
[music].