Q1 2023 Fluence Energy Inc Earnings Call
Okay.
Good day and thank you for standing by welcome to the fluent energy incorporated first quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one.
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Your question. Please press Star one one again, please be advised that today's conference is being recorded.
Now like to hand, the conference over to your Speaker today, Lexington May Vice President Investor Relations. Please go ahead.
Thank you.
Good morning, and welcome to fluids Energy's first quarter 2043 earnings conference call a copy of our earnings presentation press release, and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP .
GAAP financial measures are posted on the Investor Relations section of our website.
Energy.
Joining me on this morning's call are truly in Nebraska.
Evident.
Executive Officer mono.
Our Chief Financial Officer, and Rebecca Hall, our Chief product Officer.
During the course of this call management may make certain forward looking statements regarding various matters relating to our business and company that are not historical facts.
Such statements are based upon the current expectations and certain assumptions and are therefore subject to certain risks and uncertainties.
Many factors could cause actual results to differ materially please refer to our SEC filings for our forward looking statements.
For information regarding certain risks and uncertainties that could impact our future results.
You are cautioned to not place undue reliance on these forward looking statements, which speak only as of today also please note that the company undertakes no duty to update or revise forward looking statements for new information.
This call will also reference non-GAAP measures that we view I think important in assessing the performance of our business.
A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in our earnings materials on the company's Investor Relations website.
Following our prepared comments, we will conduct a question and answer session with our team. During this time to give more participants an opportunity to speak on this call.
Get yourself for one additional question and one follow up.
Thank you very much I'll now turn the call over to Julio.
Thank you next.
I would like to send a warm welcome to our investors and employees.
Participating on today's call.
This morning, I will provide a brief update on our business.
And then review our progress on our strategic objectives.
Following my remarks model, what we call her financial performance as well as our outlook for the rest of the people.
Starting on slide four with the key highlights Im pleased to report that we recognized $210 million revenue during the quarter.
More importantly, we improved gross margin from the acquired ballroom and adjusted and GAAP basis.
Our demand was strong across all three of our business lines.
One of those were approximately $856 million.
And by the drop of megawatt hour.
We are now we announce our December call.
Furthermore, our five ballpark.
December 31 was $2 $7 billion.
Rover acquire agrees with one up 20%.
Importantly over 70% of our backlog it would no longer dated bonds.
Yeah.
Lastly.
Our recurring revenue businesses, which consist of our furniture and databases of Ddos overall in the quarter.
Our service attachment rate.
11% for the fourth floor.
However, our deployed service attachment rate is right now, 90%, which is very good in our community center with sponsors right. After you start to deploy storage.
Most of them are off towards ways to sign February February is closer to the point, where the historic solutions coming online.
Yeah.
Certainly a lag between the start of our.
I'll turn the call.
We believe the drawing attachment rate is more reflective of our dual service attachment rate due to a contract with <unk> that I just mentioned moving.
Moving forward, we will be providing you with boat.
<unk> deployed a patchwork.
Additionally, our <unk> business by more than 800 megawatts of contracts since our fourth quarter, providing us flexibility if you need any additional future revenue.
Turning to slide five I would like to caution that 5% objective that we had guided on our last earnings call. I provided you provide you with an update on our <unk>.
First on delivering profitable growth.
I'm pleased to report that we are raising our fiscal year 'twenty three guidance for both revenue and adjusted gross profit.
As Rhonda will discuss in more detail, we're able to raise our guidance due to incremental demand on various supply chains.
Second we will continue to Laredo pros and solutions our costumed.
As such we're now ready to begin offering normal NMC batteries in our Gen. Six Skus. This provides our customers with more options that we're looking at storage solutions and helps deliver extra fire a battery supplier.
Jamie.
Sure we will convert our supply chain, if you could talk about pricing.
Yes.
I am pleased to say we are.
All of our fiscal year 'twenty three property require requirements either in golf.
Drive.
Thus, providing those helicopters for execution at the unit guidance as you may recall for about theater, what other challenges, we face with getting our rockers on that from a rock.
There were often delayed as a result, we incurred.
Alright.
We have gone through a bandwidth job mitigating this risk by ensuring that order of all three of these are within our book.
Where are we factually, we don't foresee supply chain issues that could derail our fiscal year 'twenty three expectations, we continue to implement our risk management processes are proceeding.
Look provider, whose high coffee.
Additionally, if we.
We identify any issues there.
Thoughtful to waiver from our planet, We would act swiftly to make to get to.
You may begin.
Samples.
Fourth we will use fluids DG thought as a competitive differentiator on the margin.
I'm pleased to announce full significant milestones in our digital leases first we exited the airport market without mosaic applications and have been aligning with the Easter concert, we got non related lower FTP annuity.
Equities had rapidly as part of the market and provides a significant number of opportunities for I'll say application.
I think now is in three markets, Australia and California.
Can you just talk about fire.
Looking to expand to four additional markets in the next three years.
Additionally, we have now successfully launched expense.
<unk> historically.
These operating now provides most comfortable with renewal asset portfolios and the opportunity to utilize one asset performance management platform for all of their outlets rosin multiple clouds.
And finally, our principal objective is to work with.
We're continuing to see success on executing on our transformation include enhancing our risk management capabilities, improving our project execution and optimizing our cost structure, which I will touch on a little late.
Turning to slide six.
Demand for historical data is stored.
In fact, our pipeline now stands at more than $10 3 billion nearly four times our garden backlog.
Superfast.
As you can see from the sharp our fiber reflect some early projects that are favorable to the nutrition reduction.
We expect we will be we will see some of these projects starting to sign contracts beginning in the second.
Of this year.
Additionally, our product leads are at an all time high which is a good leading indicator application of our portfolio.
As such we expect.
To drive our U S revenue growth in 2000, or 24 to 40% to 50%, but also driving consolidated revenue growth was 35, two forward predicated on a timely issuance of guidance.
While the exact timing of the Eric I can be clear we're <unk>.
<unk> got some really some commentary will be released.
Continued with amendment what.
What we are targeting increasingly in part by the auctions that Goldman Sachs, probably in our view.
Earlier this month, the European Commission to build Greenfield infrastructure.
The change was to increase the spending and reduced regulations are great.
To accelerate the expansion of review.
This is David.
While it's still early days are details of the Dragon multi chart, we applaud the efforts of the vehicle, which I think they see the steps or securing the entity defenders by increasing the share of renewal revenues grew by 30 Avenue starch.
On slide seven we are highlighting some of the reasons why our customers choose us to provide the MDU storage solutions.
Firms are looking for someone who can provide them with a phased growth.
We're proud to be one of the market leader, we can say on Apple products or Bob Daigle to service.
Nine of our customers.
The phase II.
Were selected in new stores.
We will continue to make safety our highest priority.
Additional sublease.
Second performance.
Our customer demand.
Pro or one that performs.
To that point, we're pleased to have deploy the worlds fastest install new battery storage facility.
<unk> has achieved the market response times.
Longer than 15 seconds.
Since that ROI.
Secondly, faithful faithful purple.
Sorry about that.
This is critical to our customers as they look for project finance.
74 of the larger projects, which are very carbon boarder more calm.
<unk> financial institutions have told our customers therefore, often in order.
Lighting project with fluids.
The storage solutions in fact in December heavy air quality cycle, either use sort of assisted self serve.
Does that report would be Mds or made a 185 million is two parties.
One other sort of request that participants who runs that are carrying the DLC infinite right.
Providers, we're proud to be ranked top for heavy.
Reflected our successful track record.
Okay.
Supply chain change of churns.
Our customers want saltwater who will be able to lever their projects on time.
Please cut me off only with efficient supply chain.
I'm proud to say that we have all of our vascular need further repeat there are a few spots here either.
This significantly reduces the risk.
Our track record.
Performers are funded with battery tunnel of lenses.
Absolutely updated to significantly reduce supply chain risk allows us to continue attracting some of the world's largest energy infrastructure players as our customers.
Yes.
These customers are seeking.
Long term relationship that begins with our storage solutions and open ups and helping solve their portfolio for long term.
And digital clusters that provide recurring.
This is having a greater than 90% or a community stores in Florida.
As a long term service costs.
Turning to slide eight.
We continue to expand our digital offerings in order to help our customers maximize their brokers.
We have officially exited the aircraft market I will say muted application.
This is now the third market almost eight with all of those are being Australia Amendment guys.
More importantly, we have been awarded our first contract in America.
We signed a framework agreement with a not related global IBP annuity.
Optimized <unk> brought online in the next three years.
<unk> totaled 289 megawatts.
These have significant award I assume these viruses are brought in a new market with a blue chip customer.
Tegra <unk>.
I believe you mentioned, we have officially launch of directly revenue storage R&D for asset performance management platform. This is a major milestone.
Is power platform.
Platform as one of the first Atms in the world to be redeployed into all four major review all asset classes, we solar farm.
Our battery storage.
The fair additional battery capability. These include providing real time monitoring of Iraq.
To date, our performance on our results for the season and peak.
For us.
Yeah Rochus of the Sperry brand is that many of our customers.
More than one renewable asset class.
I'll now provide you with one APM for all renewable assets in the portfolio.
If there are always different Aps.
For each asset class they cannot just one coordinate darko.
Similar to our more steak offerings yogurt, all objective rguest pay approach is to maximize our customer problems.
And asset performance management platform.
To help lower the total cost of one or two part question.
<unk> increased our customers.
Turning to slide nine as is evident from our financial results, we're making tremendous progress.
Sure.
Okay.
Briefly discussed on our last call our transformation focus on three main areas.
The first is enhancing our risk management.
We have put in place a set of managerial and commercial initiatives to ensure we identify all categories.
Our feeling is that one we can manage more efficiently unaffected.
Sure all the rates are quantified and litigate two examples with appropriate locations.
The more robust risk management allows us to be more confident on our prospective financial result.
As all of these processes have measures continue to mature we will continue to provide further clarity of their prospects.
There is still some way to go in our endeavors, alright, I'm confident in our ability to continue with this platform.
Second improving our execution.
A major driver of our execution as a program.
We recently revised our pro growth might be Liza deep red breaking down our probe the available projects into smaller units.
Moving away from the concept of generation milestone.
We concentrated on improving improvements Brian Nagel.
The smaller projects are easier to manage BARDA efficient and faster to market.
Our recently established fixed it.
<unk>.
Allows us to attack each new improvement system that.
We're able to drive a chill issue.
Rectify broker before going to the customers.
Sir Arthur.
Optimizing our cost structure.
As we mentioned on our last call we have been increasing our resources R&D technology systems, we have undertaken a competitive workforce driving that review of resources in high cost countries and increased resources.
Okay.
As part of these we are utilizing our inkjet technology center to provide necessary support pharmacy until we do our digital platform.
I'm pleased to report that we've made significant progress in this endeavor and plan to double the number of intuitive easier by the end of our fiscal year.
With salt.
It's easier to retrofit back to 50% of our products, which provides us with the necessary resources for our significant growth.
By focusing on our resources in lower cost countries like India, we're able to reveal our operating leverage as a private operator Akamai rules later touch on.
Overall, I'm pleased with our achievement of the first quarter, although we're mindful theres still a lot of work do we don't we.
We will look to continue that momentum as we progress through the remainder of the year.
This concludes my prepared remarks, I will now turn the call over to Linda.
Thank you Elliot and good morning, everyone.
I will begin by maybe even a connection performance for the first quarter, and then discuss our outlook and guidance for fiscal year 2023 East.
Please turn to slide 11.
In the first quarter efficiently with having the highest order quarter in our history, we delivered $310 million in revenue, representing an increase of 78% year over year.
We continue to effectively manage our global supply chain and execute on our backlog, including working through our legacy backlog.
Later than 95% of our first quarter sales was made up of legacy backlog and we expect to be complete by the end of fiscal year 2023.
Moving to gross profit I am pleased to report that we generated positive gross profit in the first quarter.
We continue to strengthen our contract compliance control and risk management practices.
And our gross margin number in the first quarter includes the recovery of net gains was $18 billion. We have made against one of our battery suppliers that we've previously disclosed.
It was accounted for as a reduction to cost of goods sold.
The important takeaway is that we are instilling a stronger contract compliance procedures.
To enable us to recover damages.
Contracts, we've done <unk>.
Okay.
With regard to operating expenses adjusted EBITDA.
First quarter operating expense, excluding stock compensation was approximately $54 million, which is in line with the fourth quarter of 2022.
As Julie mentioned, we are executing on our plan to optimize our global workforce.
Through leveraging our India Technology Center.
Our previously communicated model, a coordinate operating expense growth to less than 50% of revenue growth is intact and we expect full year 2022 operating expense spend as a percentage of sales to represent the high watermark.
This model helps create operating leverage and will drive the improvement in adjusted EBITDA that we expected 2023 and beyond.
Turning to our cash balance we ended the quarter with approximately $460 million of corporate cash and short term investments and restricted cash. This figure is in line with our comments on our Q4 earnings call.
Rounding out the balance sheet discussion.
Inventory increased by approximately $400 million.
Versus the prior quarter as.
As a risk mitigation strategy to provide us with supply chain assurance.
Great Great for your revenue guidance.
Truly a metric.
All of our factories, but great great three are now either country or in transit from China.
The inventory build in the first quarter significantly derisked.
Turning to revenue guidance.
Significant portion.
Goodbye customer advances and milestone payments.
Given our planned first quarter inventory build we expect that gas usage in the second quarter to be slightly higher and in the first quarter. Furthermore, we do expect inventory turns to improve.
We think 2023 and <unk> liquidity due to the $500 million cash balance and Undrawn revolver in line with previously communicated cash framework we.
We do not believe we need to raise any additional capital to meet our needs.
Please turn to slide 12.
Okay.
As we briefly mentioned we are increasing our fiscal year 2023 guidance for both revenue and adjusted gross profit.
Now expect our total revenue to be between $1 6 billion and $1 $8 billion, which is up from our previous revenue guidance of $1 $4 billion to $1 7 billion. Additionally.
Additionally.
We now expect our adjusted gross profit to be between 85 million got it at $115 million. This.
This is up from our previous adjusted gross profit guidance of $60 million to $100 million.
The guidance increase is due to the incremental demand and better supply chain visibility, we've provided more detail in our appendix similar to last quarter.
We are coming into the second quarter with 99% of.
2023 expected revenue in our backlog providing.
Providing us high visibility to achieving that guidance.
In terms of revenue seasonality, we still expect to see a split of approximately 40% in the first half and 60% in the second half of our fiscal year.
Could you briefly touched on we expect the Iia buildings to benefit auto growth in the second half of 'twenty three with the benefit to top line revenue and gross profit.
Mostly operating at 24 and beyond.
We have not included any impact 2023 revenue and gross profit guidance.
Before I have gone back to <unk> for final remarks.
I would like to reiterate that we are committed to and on track to be adjusted EBITDA positive in 2024.
I found that.
Bought back over to <unk>.
Thank you Michael in closing I want to reiterate what I consider the main takeaway from this quarter results.
First we have a strong quarter in terms of our financial performance.
With our highest ordering thank you prune history, providing us with a solid base from which we can.
For which we can launch the strong growth, we foresee for our company.
We continue to make significant progress on our risk management.
Most notably for this quarter, reducing our supply chain to race through several actions.
Reflected in.
Order 2023 battery needs in country oral drugs.
We continue to expand our offerings.
It's very hard efforts in developing new products and solutions that create value for our customers, especially relevant this quarter the newly sped up battery management software.
All the Air Force scores at today's call provides us with high confidence to increase our total revenue and adjusted gross profit guidance for fiscal year, 'twenty, two and achieve positive EBITDA positive EBITDA in 2024.
This will conclude my prepared remarks, we are now open it up for questions.
Sure. Thank.
As a reminder to ask a question you will need to press star one one on your telephone.
Your question. Please press Star one one again, please wait for your name to be announced please standby, while we compile the Q&A roster.
One moment for your first question.
And our first question comes from the line of James West with Evercore ISI. Your line is now open.
Hey, good morning, guys.
Hey, James James Good morning.
Alright.
I would say really strong order intake this quarter and raised guidance are very positive.
Moves there Im curious what youre seeing in terms of pricing because demand is running well ahead of supply in the market.
Thinking about your drive here you are it is drive to.
<unk> growth.
Second growth of profitable growth.
Are you at the point, where you can exact some pricing power on to the market.
We see pricing.
You said that.
One is strong.
We see pricing supported our 10% to 50% margin.
What we have said to the market so.
What is that range. Some sentiments are so so.
I will let Brian so segment or the lower side, but generally.
Cameroon back in that range.
All of them.
Okay. Okay.
Understood. Okay, and then you can start to see that's in the new deals we are signing.
No doubt.
Thats right.
Yeah.
Okay. Okay makes sense and then maybe a follow up for me.
A little bit unrelated, but on the software side of the business.
It was a good uptake on Mosaiq.
In the spirit has seen some some progress here as well what's the go to market strategy with those software packages to sell them as a package. So they go individually what's the I guess how is that process.
Yes.
As we've communicated in the last earnings call one of those things are where lloyds integrating our sales channels better.
Right. The reality is that that is fair.
<unk> is a global growth. So we can sell it all around the world in all our raptors wherever they're located will save Submarket probe that work in Australia and California.
And now as that.
So.
They're not <unk>.
I didn't take rate the total weather because.
They are different in the brains of the reserve case that each of our customers all while we're integrating with our offering to make it to be a lot more efficiently milinkiewicz balance so that's the way.
Youll see I think a grocery integration role our APM, nor would be fair to offering into our product sales. We continue to move for US. It is abnormal opposed the same about our products.
Okay understood Scott. Thanks, Harry Please go ahead.
Thank you well thank you James Thank you.
Thank you one moment for our next question.
Our next question comes from the line of George <unk> with Canaccord Genuity. Your line is now open.
Hey, good morning, everyone and thank you for taking my question.
Sure.
Uh huh.
I'd like to ask about gross margins and I don't want to put the cart before the horse, but you've done a really good job getting them back into the mid single digits and previously you had guided for.
Hardware business to be somewhere in the mid teens I believe is that given there have been multiple structural changes to the way your contract.
Is there potential upside to that mid teens gross margin target long term.
I think as I said I think we're still seeing this.
It's been in 15, you know lower teens.
So mark is doing better some markets doing a lot tighter.
Our view hasnt changed or not.
Generally we're in a thoughtful.
Clearly always stop into my ourselves being to assure we looked on the segments, where we can capture better margins fluctuate wildly what results.
So Carlos.
Carlos why don't we are not seeing that in our results. As you know we are getting out of our legacy cultures.
We probably will be out completely or legacy contracts by the buy side with growth. This fiscal year unusual see sitting or improvement of margins. During the year on what you will see the new car E. Commerce in 2000 2024 look forward.
Okay.
And maybe as a follow up.
Continue to read about auto companies not only obviously building sells battery cells, but investing in lithium mines and I'm curious as to.
Just when you think strategically over the next couple of few years I know you have enough supply currently but is that is getting deeper into the supply chain something that's of interest and or do you have to maybe partner with.
More deeply partner with a cell manufacturer long term.
Thank you.
Last quarter, we announced woven into volume production, which is a little bit of a further vertical integration.
With our way of thrive or without objective of Commoditizing the shell so amortization.
Albeit off the people with a bias from accelerating the diamond, which we can integrate sales.
You're getting a stronger position in the cell in our supply chain is strong.
We don't have plans to go further down but.
That's essentially what we're doing I would think that.
Our current view is that the software ultimately not gone further down.
If not it is not it will not be it will not be efficient or effective.
Okay.
Thank you.
Thanks, Alright, Thanks George.
Alright, our next question will come from the line of Mohit.
Matt <unk> with credit Suisse. Your line is now open.
Hey, Mark.
Hi, everyone. Thanks for taking the question Chad.
Hey, good morning, guys.
Yes, absolutely.
Maybe just to start with could you just talk more about the.
The supply chain improvements you've seen in care.
Is it something you're seeing throughout the year here.
From a timing perspective.
How should we think about that like kind of going into next year and could we expect then.
Just going back to the gross margin question, but like do you expect an earlier.
Foster ramp to your gross margin target again.
Yes.
Yes.
One of the reasons why we're able to raise our guidance for the year as I would feel more comfortable on our supply chain.
When we last year at the end of last year, when zero tolerance policy in China.
We knew that the.
We wouldn't mind enter into similar situation level, we will.
When Covid started remember.
Well that made us make the official title accelerate.
Knockoffs be wasn't required a lot of working capital we could do it Saturday hour hour battery.
Module them out.
Other Apple doorsteps.
The bulk con.
But the reality is that we have seen no disruption.
That's a reality Greg option, we will feel it makes of recovery.
Further assurance to lead our guidance, but we have seen no delays.
Our supply chain seems to be normalized.
Hi.
Logistics will resume issue a year ago no longer a niche there.
The prices all around for adult moving things around and not back to pre pandemic prices, but are in line with what people consider normal. So we're happy hour scheduled. This is my view of this.
Absolutely.
Our view of the world.
Cognex with our financial guidance below Mark.
The world improves.
And if we improve store point, but we believe that we will do better we will communicate at drilling a little delay in that.
And but we're very very confident in the world as it is today and where was that there are risk management tools.
Lead of tool.
Yes.
Range in terms of gross profit and revenue it set for ourselves for this year.
Okay.
But having said that and we really are optimistic.
Domestically if awards are maybe coming back to heartbeat.
Thank the markets, where Mac is rolling.
Not more supply, giving us exact overseas is cheaper so.
Headwinds at that prove our world view later on but I think that where we are today the world as we see today leads us to the guidance we're providing.
And hopefully I didn't know anything.
You depreciate.
<unk> narrowed the range and up range in gum supply revenue guidance that's on the Max.
Backlog confidence perspective, and supply chain and then.
Provide more gas on our floor of how to think about from a revenue perspective.
Also driven by the fact that BT confident about our supply chain.
Shortens going into 2000 2041.
Got it that's really helpful.
And maybe just.
Manufacturing.
Sure.
Yeah.
<unk> talked about all the benefits from Miami, but can you just remind on the.
The module manufacturing you guys were talking about on the last call.
Yeah.
Okay.
Yes, Hi, Greg.
So thank you Brett.
Yes.
<unk>.
As we said last last time, we are in the process of developing the technology and put it in place to manufacture our views and we'll be ready sovereign 24. So.
It's growing well.
Yeah.
Milestones are met.
<unk>.
Yes.
Well, Dave looks very very.
Very very happy.
In the process of which will be able to start manufacturing that are out of our facility manufacturing facility here in the U S.
Third before us.
Earnings.
Very happy.
Gotcha, alright, thanks for the update.
I'll jump back in the queue. Thank you.
Thank you. Our next question comes from the line of Brian Lee with Goldman Sachs. Your line is now open.
Hey, Brian .
Hey, guys good morning.
Okay.
Good morning.
Our execution here.
He might have a couple of questions from me I guess.
Really appreciate all the.
And the additional disclosure and color around.
The guidance here and even Canada.
First look at 2024.
I know most of it is focused around kind of volume demand revenue upside.
If you factor in the impact of IRA I. Thank you.
I alluded to also embedding some impact on profit margins can you maybe elaborate a little bit on what you're assuming.
In 2024 in terms of impact of IRR, whether it's pricing.
On the Cogs side, just it sounds like Theres some margin.
Uplift youre, assuming and just trying to get a sense of what youre embedding in there and also.
Where were the puts and takes or if you could see even more versus what's your base case right now.
Okay. Thank you Ryan.
Our current view on the Iras that is today.
We are embedded in our view of the market well communicated to you is it volume.
So we are feel more confidence that we can give you this guidance.
On 35% to 40% increase in revenue for next year.
That will be profitable EBITDA profit adjusted EBITDA profitable for political.
In line with what kind of communicated in April .
What is that if volumes today housing.
A stage, where we are today that we can give you that we've got committed or embedded in our guidance increases in March.
We continue as I said 10 to 15 sub segments or sub segments on the lower side.
In line with what we've been telling the market.
So we're not at a point that we have spun or margin effects of that.
Okay Fair enough, we'll look out for more color I guess second question for me and I'll pass it on is on.
Contracted backlog healthy number here $2 $7 billion.
You clearly have the revenue guidance.
In your crosshairs for 2023 can you.
Remind us sort of how you define backlog the $2 7 billion why wouldnt it translate to potentially a higher revenue.
Opportunity in 'twenty three versus the one six to one eight youre guiding to today and then also the mix of the backlog if you could kind of articulate what the $2 7 billion is comprised of thanks guys.
Yes, sure so just.
Some are leaning in.
The remaining.
Three.
Three quarters of the yard.
Pick a midpoint to our first quarter accident, that's roughly one 1 billion.
Honors, sorry, with $2 seven $1 4 billion. This translates into the year typically from a cycle time perspective backlogs translates into revenue between product trying to 18 months and some maybe a little longer maybe.
Towards the lower end up to 12 months. So I think that's been a normal kind of transportation backlog somehow.
From a revenue perspective going into 'twenty three inquiry for Luke.
No guidance.
<unk>.
From an execution perspective, and a supply chain perspective is it possible that some of that backlog that we have articulated for kicks back into rates.
And gets us closer to the top end of our guidance.
Yes.
That's certainly something that fairly straightforward, but from a guidance perspective and from a color perspective your comps.
<unk> reduced.
We have narrowed the range and increased the midpoint of $1 $7 billion and we've kind of provided a farmers looking to upgrade or number of revenue guidance would be 35 to 40.
What we are seeking to backlog and more importantly, what we expect to see coming down the pipe in the second half.
The IV.
Yeah.
Okay Fair enough I'll pass it on thanks, guys.
Hey, Brian .
Thank you. Our next question comes from the line of David Peters with Wolfe Research. Your line is now open.
Good morning, Hey, good morning, everybody.
So on slide six just youre pointing to the IRA driving revenue growth of 40% to 50% in the U S.
And then just on the consolidated top line growth and you're pointing to I think that implies international growth just above 20%. So just.
On the international piece curious if you could speak to the visibility there at this point.
As most of that coming from from Europe or Asia.
I think it's a combination of both both markets are are similar in size from our point of view some of the markets are.
Move at some point faster as moderate as we move forward not Cavalier way.
I think on a pump.
So there.
There are other markets, where we see the most growth.
K Australia.
Probably the ones where growth is the weak die.
Taiwan, the Philippines that may not drive good markets. We're also we're present in Germany with a transformational projects are proving to be a good market for local I think that long term is to market sure sure.
Units represent roughly the same size.
<unk> brought in our numbers a little bit smaller but.
We see significant growth going forward.
Okay, Great and then just specifically with with what.
You need clarification on from the IRS by April or the spring I.
I guess just to ensure that 2024 gross expectation in the U S materializes.
Specifically.
You need clarification on.
This is more I would say that it won't affect in any way to revenue it could affect some timing in 'twenty four.
We are fairly confident.
I think the clarification for while we are waiting for some of the things to ensure that we can have you manufactured content and then.
Out of them and if.
We continue to look.
The option to sell more of our some of the value of competitive pressure up to now that we can capture more of that.
I will say that he is very alive.
Sure.
Okay.
The guidelines will affect what we're telling you from clinics.
Okay.
Okay, great. Thank you.
Thank you.
Our next question comes from Ryan Levine with Citi. Your line is now open.
Hi, good morning.
<unk> go to market strategy.
Regarding the mosaic entering into the ERCOT market can you speak to how the product differentiated or ERCOT Earth queso and should we be looking for.
Additional markets that you've been hearing in the near term on that product.
Okay.
Yes.
Our approach has its main.
Global frame it.
Very good foresight there related to proceed with it.
Attracted to what's going to happen in the markets and the iron manganese and that average for every market you'll need to really you know to really work with that.
We will have numbers, you'll need to ensure your database at your artificial intelligence tools are working.
So thats why its HIV outcomes that don't provide the same.
Hi on where the market is going to play in terms of volumes and price going forward sold.
In terms of growth what we have at least cost in our last call. We are re platform the mosaic.
Why.
Have proven that it was it will stick and that it was too costly too cumbersome the process, although the architecture. Neither total improvements to ensure that we can move on.
That into new markets and more reasonable cost.
Clearly that there really isn't a matter in California.
Because these are very very attractive market very deep with a lot of areas, but as we go into markets that are not as great.
Can I sneak with we really needed to ensure that we manage the cost of the page.
Patient two new markets going forward, where is that process, we announced in the last call of re platform as a tool and our plan is to one disruptive platforms on which we are this year early next year.
Our objective will be within the next three years.
Thanks, a lot.
Yes.
That's how we're thinking.
We have not set date specific day for weeks language module gone but.
With respect that.
24.
And as that product continues to evolve are you seeing certain types of customers.
A more appropriate for this type of software package in terms of type of research generation.
Various in them.
The initial asset classes that you identified through the IPO.
I think we are.
Just given with the same with the same.
<unk>.
Global <unk>, who are driving their stocks so that hasnt changed.
We're working with time.
It might change as we move into new markets for <unk>.
<unk>.
The same type of customers.
Okay. Thank you.
Thank you Ryan.
And our next question comes from the line of Ben Callow with Baird. Your line is now open.
Alright, Thank you guys good quarter. Thanks.
Hey, just on the supply chain could you talk to us remind us about your your cell supply.
How you are with your current relationships.
Yes.
If there is one on expanding those relationships.
How you'd think about geographic risk on the supply chain from that front.
I have a follow up.
Thank you.
As you know.
We're currently five modules, we're not running Scott I will start by themselves. Once we have our own more looking for the silver up 24, So we're buying models.
Sure.
So in terms of.
Today, we are actively looking to diversify the brands we work with.
Yeah.
Repeat all players.
Significant Florida, the great majority of our supply chain as possible.
We are working hard to diversify it to Europe with the Norwalk.
So we're doing our work and we saw.
Some other markets, where we are.
So Korean production, but generally what you looked at it today, it's mostly China as we move forward I think we will continue and I guess I'll ask a question. We will continue to work with some will it be booked that we're working today.
As we start buying sales, we will expand significantly.
We can buy sales fall on a weekend and I figure it will expand.
Not only for all the companies, but also geographic.
So I'll ask kind of where we are.
We are actively looking.
Depreciation is the rule of the game and we have set just to our view of our company is that scale is fundamental for the company because scale is the only way to diversify at an optimal level. So our style.
Yes.
Yes.
I'll tell you that's where we are.
Okay. Thank you.
Seven did you talk about bake ability I'm just wondering if that.
The leadership you show here.
That.
Makes a bigger difference.
Beyond that what the IRA ITC.
Equity perspective, thank you.
Yes, that's a great great great question. Thank you.
Thank you I mean, it is very very important, especially for the bigger in the U S market.
<unk> are bigger.
They are required in some cases more.
Complex stocks functional or have a strong case to make it work. So we see us we'll see some times that we are one of the few of our call to discuss as part as we go there.
They are not that many players who can build visa for the project.
Right.
As reflected in the fact that we're already seeing.
They are.
Reflected in our in our <unk>.
And as we said that we should see that higher or 24.
Probably not all of that so.
So clearly a competitive advantage and something that we take care of and ensure that we're always the way we structure our deals within what we think our approach to ensure that we keep that leadership position with the bakery.
Thank you.
Okay.
Thank you Ed.
Okay.
Thank you.
I'll follow up final question comes from the line of Julien Dumoulin Smith with Bank of America. Your line is now open.
Hey, Julien.
Good morning, Hey, guys. Good morning, it's Alex we're able to actually on for Julien, but thanks for taking our questions here I appreciate it.
Sure.
So apologies here this one's probably for me, it's a little bit in the weeds, but just trying to make sure we understand.
When we look at the deployed I guess gigawatts looks up pretty modestly versus the Rev recognition coming up quite a bit but I saw I guess unbilled receivables kind of shot up as well. So just trying to understand maybe the nuances there between a rev rec and kind of deploy number as well as whats reflected in the.
Contracted backlog versus Rev. Rec, if that makes sense.
Just trying to square all those pieces.
Sure so let.
Let me give you a couple of comments and then we have more BPM definitions on slide 15 of our banks and then there's a little bit more on our metrics.
But just the way to think about it right. So it is deployed.
As we talk about that.
Sure.
Our projects are solutions that have achieved substantial completion.
Hi.
On an average basis as we as you know we do.
Do percentage of completion revenue recognition perspective, and therefore, there is some portion of it.
<unk> megawatt hours back to be recognized as we call. The reason we gave you.
<unk>.
Megawatt hours.
Tied to revenue recognition.
Volume metric tied to our revenue.
I think thats, one way to think.
FICO bucket that really you can think about how we are doing in terms of volume pricing just makes modeling easier.
And this also is also a key metric that shows the operational progress on a particular project so but a variety of these investigate metrics products can have a conversation on but we do give you the deployed megawatts or megawatt hours to show what projects have achieved substantial completion.
That's why our contracted backlog.
He's got a number that is tied to the value of the project and the layering in of that contracted backlog revenue garners.
Between the fiscal years 'twenty three 'twenty four.
<unk>.
Is influenced in part by <unk>.
The percentage of completion.
That's our methodology on how we book our revenue so significant TV may recognize revenue on a project in 2000, great team. That's mi achieved substantial completion in pretty quick.
So hopefully that was helpful. We can clear up any of the photo ops in alcohol mix.
Yes, no I appreciate I know, it's kind of in the weeds question, maybe one that lesson that we had been let's just talk about you.
You guys, obviously sourcing more and more dark pools I think it is really impressive actually that you say everything in country or in transit.
Sort of line of sight, there on that backlog I mean, when do you think about more let's say non China sourcing.
And sort of this higher rate demand to edge on the other end.
When we think about backlog do you have a I guess, a broad heuristic as far as line of sight that you anticipate whether it's one year two year or a lot longer in there.
It is clearly it's evolving but I think that the tea leaves and point towards you guys could have a lot more line of sight that you have historically on that piece of the business. So just curious how you think about that.
I'm not sure.
<unk> completely the question I mean I do.
Yes.
I will turn it over to Hal I seek out or the <unk>.
Our looking forward.
Supply chain <unk> reviews of the <unk>, we can create clearly our strategic plan is to capture the IRS. So.
Yes.
Molecules and then by U S manufacture cells.
Our manufacturing approach there.
In terms of what we're seeing today.
I will say, while within our even while we've got Ci side to do that with our backlog is essentially broke ground in line, what we were doing.
We are not reflected in our U S on a popular product.
To reflect that.
Those will come off as we move forward, we've got secure the raptors, we can secure the supply chain. So we can get these forward so.
That will allow us clearly.
Another point of upside on another maybe another point of volumes.
Potentially.
Our interview or a different view on our markets.
But I don't know if im answering your question, but.
That's how I would think of it. So today, we're very confident in 'twenty three.
We're very confident on the topline and 24.
For.
Placebo technical lead on what we're seeing.
Let me just bring this to a close as to how I kind of a question similar to what we will insert.
We've got great supply coming on and off Capex, We said.
Backlog locked up as well.
34.
Good line of sight, both from a top line perspective.
Right.
Comments in this call.
Mr Blacksnake perspective behalf.
Great line of sight of print books, which gives us the confidence to get to the range, we provided of 35% to 40% largely under Backstops the growth in.
Yeah.
And then from a diversification perspective, we think about diversification has been going up its game and making Idaho.
Yes on a module and then.
<unk>.
<unk> also provides us a source of Star Wars, because you did talk to you on top of our minds and there are multiple angles to it.
Like we articulated both in terms of making items systems as well.
Thanks.
Sure.
No that's helpful.
Apologies, if there was a little bit confusing I will take the rest offline. Thanks guys.
Thank you.
Thank you I would now like to turn the conference back over to Mr. <unk> for closing remarks.
Thank you February thank you everybody for participating.
<unk>.
We're very very happy with the quarter I mean, I think that we have seen the show.
The effects of our turnaround there is a long way to go there is a lot of where we need to we need to continue maturing.
Gotcha.
When we set our objectives continue growing this company to where we can.
<unk>.
Capture the value through.
At scale.
Supply chain de risk and diversify and capture that.
I am continually relevant probes are going with the market's uncertainty offering their customers the products.
Hi, Steve.
And so there is a lot of work.
Rafi.
Probably we'll celebrate today, while the acceleration will be more robust.
And imports to book These awards, that's where work is so great. Thank you all for participating and I hope to talk to you over the next few weeks.
Alright.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
The conference will begin shortly to raise and lower Johan during Q&A you can dial one one.
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Okay.
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