Maxeon Solar Technologies Ltd. Q1 2023 Earnings Call

Speaker 1: Good day and thank you for standing by. Welcome to Maxian Solar Technologies First Quarter 2023 Earnings Conference.

Speaker 1: At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.

Speaker 1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Please go ahead.

Speaker 2: Thank you operator. Good day everyone and welcome to Maxiom's first quarter 2023 earnings conference call. With us today our chief executive officer Bill Mulligan, chief financial officer Kai Strobek and chief strategy officer Peter Rashan-Brother.

Speaker 2: Let me cover a few housekeeping items before I turn the call over to Bill. As a reminder, a replay of this call will be available later today on the Investor Relations page of Maxi on website. During today's call, we will make forward-looking statements that are subject to various risks and uncertainties that are described in the safe harbor slide of today's presentation. Today's press release.

Speaker 2: 6K and other SEC filings. We see those documents for additional information regarding those factors that may affect these forward the statements.

Speaker 2: To enhance this call, we have also posted a supplemental slide deck on the events and presentations page of Maxion's Investor Relations website. Also, we will reference certain non- GAAP measures during today's call.

Speaker 2: Please refer to the appendix of our supplemental slide deck as well as today's earnings press release, both of which are available on NAC's Young Investor Relations website, for a presentation of the most directly comparable gap measure as well as the relevant gap and non-gap reconciliations.

Speaker 2: With that, let me turn the call over to Maxium CEO , Bill Mulligan.

Speaker 2: Thanks Rob. I'm pleased to report that Maxion had a very strong first quarter executing well across the whole company and delivering financial performance ahead of expectation.

Speaker 3: On our last earnings call, we noted several internal and external factors that had the potential to accelerate our margin expansion.

Speaker 3: These factors helped Maxion exceed our Q1 financial projections and reach our corporate gross margin target of at least 15%.

Speaker 3: Our first quarter 2023 non-GAAP gross profit was $54 million or 17% of revenue.

Speaker 3: We also delivered adjusted EBITDA of $31 million or 9% of revenue. While the team is pleased with these quarterly results, we are still very much in execution mode focused on hitting our full-year targets and executing key projects that we believe will make Maxion one of the most profitable companies in the solar industry.

Speaker 3: and we'll conclude with Q&A.

Speaker 3: Our DG business was led once again in volume, revenue, and gross margin dollars by our European team and our unique direct to installer channel in that region.

Speaker 3: despite typical Q1 seasonality trends and increased overall industry supply volumes that created a more competitive pricing environment.

Speaker 3: This is another example of how Maxion has been able to consistently maintain significant ASP Premium through our differentiated product portfolio and unique channel strategy.

Speaker 3: Belgium and France were bright spots, both posting near-on-year volume growth of more than 40%. Our Italy team also exceeded their volume target in part due to growth in the commercial segment.

Speaker 3: Serving commercial rooftop demands through our existing dealers allows us to increase our mix of performance line modules, and in turn frees up IBC volume for sale in higher ASP segments.

Speaker 3: Overall, European ASPs were down sequentially in line with our expectations, but benefited from an AC module next north of 20%. We expect beyond the panel sales to increase over the course of 2023 with a higher attach rate of microinverters as well as sales from storage and EV charger products.

Speaker 3: Our United States DG business also delivered strong results with higher than planned shipments to SunPower as well as material gross margin contribution from our new Maxion residential channel.

Speaker 3: While demanding some segments of the US residential market has cooled, customer appetite for premium products from the same healthy, particularly in markets where the effective rising interest rates has been offset by increased power costs and where constrained roof space plays to our product efficiency advantage.

Speaker 3: We were particularly excited to begin the ramp of our new Maxion US residential channel in Q1. By moving closer to US end customers, we were able to capture the highest ASTs in the company's history, increasing our global blended DG AST by almost 3% in the first quarter.

Speaker 3: It will take time and considerable effort to build a leading independent presence in the US DG market.

Speaker 3: But we feel good about our prospects due to the long-standing reputation that our products enjoy in this market and considering our deep channel experience in other regions.

Speaker 3: Last year we began assembling a core sales and marketing team of industry veterans familiar with our product.

Speaker 3: This team is targeting premium installers incremental to the SunPower dealer network.

Speaker 3: We formally launched our multi-tiered channel program in April , leveraging many parts of the structure already built for Europe .

Speaker 3: Our first preferred partner signed up almost immediately, switching a majority of their module business to Maxion.

Speaker 3: The partner is in Massachusetts, a state where we have always loved doing business, doing part to tree shading conditions, favoring high efficiency systems, and also due to performance based incentives which elevate the importance of degradation rates and energy production over time.

Speaker 3: This partner is just one of 48 residential and scholars nationwide who purchased our product through Green Tech Glass Clutter. Look for more updates regarding our US channel development in future quarters.

Speaker 3: We have over 17 years of presence in both the European and the U.S. markets, a portfolio of highly differentiated solar panel offers, and increasing traction in our beyond-the-panel products.

Speaker 3: And outside these core markets, we are pursuing growth opportunities in Latin America, Japan, Australia, and in specialty applications. On a combined basis, these growth segments accounted for around 13% of DG revenues last quarter.

Speaker 3: Maintaining technology leadership is a key focus area for our management team, particularly in our DG business with Maxion 7 close to commercialization.

Speaker 3: In order to ensure the current and future projects meet our high expectations, we've added the position of Chief Technology Officer to our executive team and hired Matt Dawson, one of the world's leading experts in IBC architecture.

Speaker 3: I am thrilled to welcome Matt and look forward to working closely with him and his R&D team to continue driving technology innovation and maintaining industry leadership. Now let's turn to our utility scale business. We booked several new projects in the first quarter, all with repeat customers.

Speaker 3: of capacity allocated for 2026 and 2027 based on options supported by deposits.

Speaker 3: The U.S. utility scale market is dynamic, continues to be influenced by various regulatory and policy factors. We believe that Maxion is very well positioned in terms of our ability to supply this market with our 1.8 gigawatt North American manufacturing facility nearing full ramp.

Speaker 3: Given the opportunity in the US utility scale market and the strong demand signals from our customers, we are also evaluating a variety of expansion opportunities, including but not limited to a US solar cell and module manufacturing facility.

Speaker 3: Since our application with the Department of Energy loan program office progressed to the due diligence phase last quarter, we have expanded our negotiations with potential customers for product delivery through 2030.

Speaker 3: We regularly hear from utility scale customers that they appreciate our industry leading ESG profile.

Speaker 3: sun-powered days. And it is one of the reasons why our technology has a remarkably prominent presence among high-profile, corporate campuses and government buildings where sustainability requirements are paramount.

Speaker 3: We recently received two new important ESG recognitions.

Speaker 3: First, we saw our MFCI ESG rating increase from single A to double A, the second highest rating achievable for a company and at the top of our industry.

Speaker 3: Second, our IBC manufacturing facilities increase their cradle-to-cradle certification from bronze to silver, the highest status achieved in the solar industry and a meaningful competitive advantage for any project attempting to optimize a LEED rating. The energy level among Maxion employees today is high.

Speaker 3: Our people are energized by the company's recent progress, but still laser-focused on the execution work ahead, achieving the remaining elements of our annual targets and realizing our future expansion opportunities. With that, I'll turn it over to Kai.

Speaker 4: Thank you Bill. I will discuss the drivers and details of last quarter's performance and then provide guidance for the current quarter as well as updated guidance for the full year.

Speaker 4: Total shipments for the first quarter were 774 MW, up 6% sequentially and nearly 60% to take them year-on-year.

Speaker 4: We exceeded our guidance range of 730 to 770 megawatts due largely to the accelerated ramp of our new US utility scale capacity. Revenue for the first quarter was $308 million, near the midpoint of our guidance range of 305 to 345 million.

Speaker 4: which offset expected price declines in Europe .

Speaker 4: Blended global DG ASTs were slightly down sequentially due to a higher mix of specialty application solar cell sales.

Speaker 4: These carry an exceptionally strong margin percentage, but at a lower price per watt compared with module sales.

Speaker 4: Non-gap gross profit in the first quarter was 54 million dollars, up from 21 million in the previous quarter. This represents a 17% non-gap gross profit margin and is the highest ever for Maxion as a standalone company.

Speaker 4: The largest contributor was a favorable $12 million net utilization of provisions related to our US utility scale business based on lower cost or market accounting rules.

Speaker 4: Excluding this impact, our results still would have come in above the high end of our guidance range. The European team maintained a strong price premium and the expected market price declines were offset by lower input costs including poly and freight.

Speaker 4: And in the U.S., we expanded margin sequentially as a result of our new SunPower contract and additional high-margin revenue from our new U.S. residential channel.

Speaker 4: Production volumes at our facilities in Malaysia and Mexico for our performance line panels have been increasing and a reduction in Q1 COG combined with higher prices, growth margin improvement in our US mentality fairlaim.

Speaker 4: Non-gap operating expenses were $38 million in the first quarter compared to our guidance of $37 million plus or minus 2 million.

Speaker 4: Adjusted EBITDA in the first quarter was $31 million, significantly better than our guidance of 10 to 20 million, based on the previously mentioned favorable developments that impacted our growth margin.

Speaker 4: GAP net income attributable to stockholders came in at $20 million compared to a loss of $76 million in the previous quarter, driven primarily by a $35 million sequential improvement in adjusted EBITDA and a $42 million quarter-on-quarter swing in the mark-to-market valuation of our prepaid forward.

Speaker 4: first quarter with cash, cash equivalents, restricted cash and short-term investments of $304 million compared to $344 million at the end of the fourth quarter.

Speaker 4: Capital expenditures in the first quarter were $16.5 million, which was within our guidance range.

Speaker 4: A majority of the spend was for our Malaysia and Mexico performance line capacity.

Speaker 4: We are very pleased to have started 2023 with a strong financial performance, hosting gross margins ahead of our target model.

Speaker 4: While we recognize that our first quarter results benefited from roughly 4 percentage points of gross profit margin due to the previously mentioned one-time material effect, our teams are now highly focused on achieving gross margins of at least 15 percent.

Speaker 4: based solely on consistent one-rate contribution. We indicated previously that we expect to reach the smile zone linked in 2023 once our Malaysia and Mexico facilities are fully ramped and we have transitioned to higher price utility care content.

Speaker 4: We also anticipate improved costs from our performance line products for DG, offset in part by expected price decreases in Europe and in our rest of world markets.

Speaker 4: These catalysts are all still relevant and we expect them to play out across the next two quarters in a fashion that allows the company to maintain gross profit margins within striking distance of our 15% target, give or take a couple of percentage points.

Speaker 4: Heading into Q4, we expect to see further modest improvement in gross margins based on incremental enhancement of our US utility scale business as well as usual seasonality in DG. We expect to see further modest improvement in gross margins based on incremental adjustment

Speaker 4: With this context in mind, I now turn to our guidance of the second quarter of 2023 and an update for the full year.

Speaker 4: We project second quarter shipments of between 860 and 900 MW.

Speaker 4: The midpoint of this guidance represents 14% sequential growth and nearly 70% growth year-over-year, reflecting the continued ramp of our US utility scale capacity. We project second quarter revenues of $360-400 million plus and nearly 20% sequential improvement at the midpoint.

Speaker 4: driven in part by growth in USPG mix with higher ASPs, more than offsetting lower pricing associated with our growing utility scale mix.

Speaker 4: but based entirely on what we consider sustainable run rate metrics and driven primarily by the higher mix of USBG volumes at ASPs above our global average and higher DG volumes overall.

Speaker 4: non-GAAP operating expenses are expected to be 42 million dollars plus or minus 2 million.

Speaker 4: This includes a slight increase in our spend for Beyond the Panel and the US residential channel, both of which are expected to enable incremental top and bottom line growth.

Speaker 4: Adjusted EBITDA is expected to be between $24 and $34 million, driven largely by the improved run rate metrics impacting our gloss purpose.

Speaker 4: Second quarter capital expenditures are projected to be in the range of 20 to 26 million dollars. And for the year, our expectations are unchanged at 100 to 120 million for the completion of manufacturing capacity for performance line panels to be sold into the US market, completion of manufacturing capacity for our maximum six products.

Speaker 4: to finance primarily with the US Department of Energy loan and customer co-investment.

Speaker 4: Last quarter, we introduced 2023 annual guidance of $1.35 to $1.55 billion in revenue and $80 to $100 million in adjusted EB-DOT.

Speaker 4: While our 2023 year-end exit expectations are largely unchanged, we exceeded our expectations for the first quarter and thus our projections for the year are now also increased.

Speaker 4: We estimate 2023 revenues will be in the range of $1.4 to $1.6 billion and adjusted EVita will be in the range of $95 to $120 million.

Speaker 4: Our confidence in these projections is both start by the fact that roughly half of the revenues on fixed commercial terms are both volume and size.

Speaker 3: With that, I turn the call back to Bill to summarize before we go to Q&A. Thanks, Kai. As I mentioned last quarter, my goal is to help make Maxion one of the most profitable companies in the solar industry by driving aggressive manufacturing cost reduction and operational excellence.

Speaker 3: or extending our panel technology leadership and leveraging our unique global channel market. I'm pleased with our results this quarter and look forward to continuing to demonstrate the strength of Max Young's business model over the coming quarters. And I'm pleased with our results this quarter and I'm pleased with our results this quarter.

Speaker 3: our panel technology leadership and leveraging our unique global channels to market. I'm pleased with our results this quarter and look forward to continuing to demonstrate the strength of Maxion's business model over the coming quarters. Now let's go to Q&A. Operator, please proceed.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Please stand by while we compile the Q&A roster.

Q&A roster. Q&A roster.

Our first question comes from Julian Dumoulin Smith of BFA. Go forward with your question. Thank you, operator. Thank you, Tim. I appreciate the opportunity here. And nicely done, I got to say. teeth

Maybe just to kick things off, there's been some broader commentary through the earnings cycle here on channel inventory levels across various products and equipment to the residential space. Can you comment a little bit about what you're seeing vis-a-vis those concerns through the course of the 23? Obviously, we see your guidance to you today, but more specifically. Please.

How are those inventory dynamics impacting you and impacting your ability to price? And what are you assuming through the course of the year here specifically across the US and Europe ? Yeah. Hi, Julian. Bill here. Yeah, you know, we wanted through that pretty closely, but, you know, so far again, you know, we really compete in a somewhat different market with our highly differentiated product. So we're just not.

competing against all the material that's building up in inventory. And so, so far it looks good, our own inventory. I think it's solid.

I think on all inventory side, I do you can see that inventory is slightly up, so it's a quarter idea that I would say that probably more of a seasonal effect that we have seen, but we're pretty comfortable with the inventory level.

considering your commentary just now on channel, but also as you think about the the mix shift over time here too. What does that say and what does that mean for exiting the year as well?

Yeah, this is Kai. It's of course a pretty multifaceted question here, I would say. So let me try to unpack that a little bit. So if we look at the first quarter here from a gross margin standpoint, we had about 17% gross margin in the first quarter. And we commented that 4% of the point of that is because of that.

guidance we are guiding at the midpoint for about a 14.5% gross profit margin here so that's and of course there's you know a range around that as you as you have heard and then as I said in my

long-term financial model of 15% give or take a couple of percentage points here. And of course as you know our long-term financial model 15% is at least 15% so we expect that in the fourth quarter we're probably towards the end of the year can see a

uptick that may be related to seasonal patterns in the DG space, but also are shifting to higher price contracts on the US utility scale. So that's in a nutshell how we see at the moment the year unfolding here, and that's what all our guidance is based on.

Right, and the new app there being the higher price products that you're shifting to that you alluded to in the fourth quarter, that shouldn't be really carry over at least into 24 as you're alluding to.

We would expect some of those contracts to carry over into into 24 and as we have said we are booked out through 2025 for our US performance line supply chain here and some of those contracts are fixed right but also some of those contracts.

while we prepare the Q&A. Our next question comes from Brian Lee of Goldman Sachs. Please move forward with your question.

Hey guys, good afternoon. Kudos on the strong execution to start the year.

I guess my question first would be on the guidance. If I look at Q1, even if I just out the $12 million provision and then the Q2 guide, you're kind of already annualizing to the high end of the updated EBITDA guidance range.

I think in response to Julian's question, you said gross margins are probably going up through the year and with seasonality, I would assume volumes are also higher in the second half than they are in the first half. Maybe I'm missing something or there's just a high degree of conservatism baked into this news.

updated EBITDA guidance, but why wouldn't you have passed an even higher EBITDA viewpoint as you move through the year if those are the moving pieces, higher gross margins, higher volumes and already having kind of covered half of the top end of the range through the first half of the year if you execute to the guidance here for QQ.

Yeah, thank you Brian for the question. I mean obviously we want to put guidance out here that we have a high degree of confidence in. And secondly I think as I said in the next couple of waters there's going to be a few gifts and take.

confidence in our margin projection here and our guidance and We'll be very very focused to Execute according to that and where we see opportunities to outperform. We will try to see those opportunities Okay fair enough and then your second question on pricing

It looks like IBC ASPs were kind of at the highest level we've seen them in quite a long time and then you mentioned Europe pricing was down a little bit. Do you anticipate IBC pricing to continue to move up through the rest of the year or is this sort of a stable level we should be?

going forward? And then similarly on Europe , is there more pricing degradation as you move through the next few quarters or are we going to kind of stabilize at these levels you saw to start the year? Yeah, hi, Brian . Well, there are two different markets, right? Europe and the U.S. and Europe .

We do expect continued pricing declines and we've built that into our outlook. In the United States, as you probably know, we have a lot of our volume contracted at six prices. So we're feeling pretty good about that. And then in addition to that, we just recently launched the

the GreenTech channel and you know so far as we noted in our prepared remarks he's having a significant amount of AST uplift Akai, I don't know if you want to say anything else Yeah, maybe just two more comments one is the the new GreenTech channel with in the u.s. Start

we are anticipating and have baked in some price declines but also we use the reduction anticipated reductions in input costs. And if you look at the data that we put out in our donor chart you can also see that in IVC

we are seeing very, very high and encouraging biases here in the first quarter. Okay, that's great. Very helpful. Last one for me and I'll pass it on.

Recently, one of the solar peers in the space got final approval on a DOE loan guarantee, obviously a different scope from what they are doing. But our understanding is that you guys may have started the application process somewhere in the same timeframe as they did. So wondering if you had any updates as to how close you guys are to the new technology

As we reported last quarter, we are in due diligence with the DOE loan program office and you know, we're working working through that You know, the schedule is not entirely under our control, but I think we're moving forward expeditiously at this point so hopefully well, we'll have some news on that and

Okay, fair enough. Thanks, guys. Thank you. Please wait while we prepare the Q&A roster. Our next question comes from Philip Shen of RothMKM. You may proceed with your question.

Hi everyone, thanks for taking my questions. First one is on margins. It sounds like you have 23 margins well in hand. I would think a lot of the strength is coming from your fixed price contracts, especially with SunPower, given the environment that we're in. I'm sure that's helping. If you look up there, watch not everyone records their data from one built Pelaker. We take a quick look at them and see if everyone's involved with making sure everyone Frieza is running. We were talking about Oy while, by the way, the

How much risk is there to your 24 margins as the SunPower fixed price contract, I believe, converts to variable pricing? Can you talk about how you would expect that to be dealt with in 24? Thanks.

Yeah, I'll say a couple words, Phil, and then turn it over to Kai. We are sticking for 2024 with our long-term financial model of at least 20% year-on-year revenue growth and 15% gross margin. So we feel like we're on track with that.

you know, they're obviously puts in takes and in Kai you can say three more words. Yeah, I think we do you're pretty good about our Sunflower contract also for 23 and for 24 it's true that there are some variable changes, some variable components in the pricing.

but we do feel that it's a balanced contract and it enables us to stay on the long-term financial model and within that margin range. There are other things that we move into 2024 that are going to take a more significant part of the future.

something more significant. We have more dry powder also on the side of our HSPV joint venture where we can take more uptake from that side and also in 2024 we are going to have a fully ramped US utility scale capacity throughout the year which is still in the ramp stage here in 2023.

some things that we think are going to enable us in 2024 also to stay on that long-term financial model with regards to the margins and the growth.

Thanks for the color, shifting to the Green Tech relationship. You touched on it earlier. I was wondering if you could share how much volume you think you pulled through Green Tech in Q1? And then how much volume you thought you pulled through Green Tech in Q1?

Do you expect that to be in 2023 overall? And how is that comparing to your original plan before especially the inventory build and the module price declines that we've seen for a lot of other players? Thanks.

Yeah, we actually haven't publicly commented on our volume plans for 2023 with GreenTech. You know, it's a significant undertaking for both companies, and we're putting a really strong effort into this.

But, you know, we think it's going to be a really optimistic about this channel. We saw sort of the early benefit of the high ASBs. Feedback from customers has been decidedly positive. But yeah, we're not publicly disclosing volume plans yet for 2023. Okay. I can appreciate that. That said, was wondering if you could...

maybe falling short of that, and if so, are you?

finding other outlets for that Maxion panel, Maxion branded panel. For example, are you able to sell to back into the SunPower channel, you know, some of those Maxion panels, are you still, are you definitely keeping all the GreenTec modules in that?

through that distribution channel. Thanks. Yeah, well we're happy with the margin contribution that we've gotten so far. So I would say we're largely on track.

I just want to underline maybe one thing that Bill has said in his.

prepared remarks. So that US residential channel has actually increased our global blended DG ASPs by almost 3% in the first quarter. So that's pretty substantial and has made a...

substantive stand in the AFP that we discussed earlier. So just as a data point to show where we are with that and the positive contribution that we're getting from. Great. OK. Thanks and great job on the execution. And I will pass it on. Thanks.

in the ASPs that we discussed earlier. So just as a data point to show where we are with that and the positive contribution that we're getting from it. Great, okay. Thanks and great job on the execution and I will pass it on, thanks. Thank you, Bill.

Please stand by while we prepare the Q&A roster. Our next question comes from Graham Price of Raymond James. You may move forward with your question. Hi. Thanks for taking the question.

First one I had, just following up on the DOE LPL application question, now that you're in the due diligence phase, I'm wondering, does this change the nature of your discussions with potential customers? Do you have a little more certainty in those talks?

Yeah, well, as we mentioned in our prepared remarks, we're now negotiating off-take agreements with customers extending all the way through 2020. So it's very clear that customer interest is very high in this project.

Got it. Got it. Perfect. And then.

on the breakout by region as well.

Well, I would say, Graham, on the IBC side, we would still expect for the year to sell about one gigawatt of IBC. So we started with about 0.2 gigawatts, about 200 megawatts at seasonality. We don't give a...

scale. We would also expect further growth as we go through the year with the performance line products that come from our HSPB joint venture and go mostly into Europe and Australia among some other places. So there I would also expect some growth on the performance line probably mostly coming from the US and utilities.

Our next question comes from Andrew Prokoco of Morgan Stanley . You may proceed with your question. Great. Thanks so much for taking my question. On the prepared remarks you mentioned some cooling in the USDG market. I'm just curious if you're seeing any differences in demand trends between...

the SunPower channel and the channel you have set up with GreenTech? Yeah. Well, we don't manage the SunPower channel, so I don't know that we can comment on how they're doing there. The GreenTech channel – Okay.

It's a new channel. And SunPower of course has many years of experience selling through their channel. We're still ramping up our channel and rolling out our model from other regions where we've been successful that requires bringing on a new product.

the sales force, training them, training the dealers. So we're early on in the process, and I don't think it's like a word of situation where we can kind of compare the sales success of those two channels.

Got it understood. And maybe just one follow-up on that. How would you expect the mix of your US DG business to evolve between green tech and sun power over time? How will your healthcare firms English

Well, as we said in the prepared remarks, we're trying to do this as very much incremental to the sun power demand. So sun power should grow and I think green tech will grow incremental to that.

Well, as we said in the prepared remarks, we're trying to do this as very much incremental to the sun power demand. So sun power should grow, and I think Green Tech will grow incremental to that. Got it. Thank you.

Please stand by as we compare the Q&A roster. All right, next question comes from Donovan Schaeffer of Northland Capital Markets. You may proceed with your questions. Hey guys, thanks for taking the questions.

I wanted to see if we could get an update on the residential battery. I might be misremembering some of this, but I believe you initially rolled it out in Australia maybe a quarter ago, and it sounds like the launch is kind of underway in Europe . So just if there have been any incremental data points kind of from that process, whether it's you've actually been able to push it out to customers.

Australia. And so far so good. We've gotten some initial feedback from installations and it's been very strong. And we're in the late stages preparing to roll this out in Europe and several of our key countries in Europe .

In Europe , when would you expect like what quarter would there be, I know the de minimis in terms of amount, but just kind of to keep track of things, when would that kind of hit the shelves and start to translate into a revenue just as a framework like a reference point?

Yeah, I think we said that we expect our Beyond the Panel revenues to be meaningful by the end of this year. Okay, okay. And then one other question, you know, is probably – I like to ask some oddball questions just because sometimes it's stuff that people might think about, like, between when everyone's saying while most people say they have no theories.

and who knows, someday it could be, maybe it becomes material. So, one thing I've seen just from like a news alert is your cells, the IBC cells kind of get picked up and random.

products, because you've got, I think, some unique properties of the IVC around durability, some around kind of flexibility. So I've seen someone, a smaller company using your cells for the roofs of golf carts. And then most recently there was some company making, well, they're like magnetiles, these the cars. it.

if somebody is going to pay $100,000 for an EV Jaguar or something, they kind of like to trick it out with all that stuff. So for these uses, these kind of niche uses with IBC panels, is that something that could be interesting if you were able to integrate it and become a big supplier for cars or something?

And then can you get a really great ASP because it becomes more of this consumer product? Yeah, good question. So, yeah, in fact, we are in this market today. We're making a significant number of sales sales as we reported in the prepared remarks. I'll let Peter Aschbunner say a little more about the long-term market prospects. Hey, Donovan.

mentioned, our cells are kind of uniquely appropriate to some of these post-specialty applications because of the very high efficiency, the fact that they look really good, close and a consumer thought and say on the roof of the car. They're quite susceptible to bend a bit easily and you know, for dealing with the crack that a little bit, some reason become the compound curves. So all these applications are ones that were engaged with, they're still mentioned.

We had a strong quarter in Q1 with sales of those cells. We're typically constrained in terms of the amount we have available. But over time we plan to grow that business in a more meaningful way because there are a lot of these specialty applications knocking at the door now. And as we said in the prepared remarks, the gross margins on those cells.

As a reminder, to ask a question, you'll need to press star 1 1 on your telephone.

Thank you for standing by. There appears to be no further questions. Thank you for your participation to today's conference. This does conclude the program and you may now disconnect.