Q3 2023 FTC Solar Inc Earnings Call
Speaker 1: Hello and welcome to FTC SOLA third quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Hello, and welcome to L. T C solar third quarter 2023 earnings conference call.
At this time all participants are in a listen only mode.
After the Speakers' presentation, there would be a question and answer session.
Speaker 1: To ask the question during this session, you can need to press start 1-1 on your telephone. You within your automated message advising your hand is raised. To withdraw your question, please press start.
Asked a question during this session you will need to press star one on your telephone.
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I would now like to hand, the conference over to Bill Michalek, Vice President of Investor Relations you may begin Sir.
Speaker 1: I would now like to hand the conference over to Bill Misielek, Vice President of Investor Relations. You may begin, sir.
Okay.
Thank you and welcome everyone to <unk> third quarter 2023 earnings conference call.
Speaker 2: Thank you and welcome everyone to FCC soldiers third quarter 2023 earnings conference call.
Speaker 2: Before the call, you may have reviewed our earnings release and supplemental financial information, which were posted earlier today. If you've not yet reviewed these documents, they're available on the investor relations section website at fdcsolar.com.
The car you may have reviewed our earnings release and supplemental financial information, which are posted earlier today.
Not yet reviewed these documents they're available on the Investor Relations section of our website at FCC solar Dot com and.
Speaker 2: I'm joined today by Sheikhar Sadasivam, Chairman of the Board, and Patrick Cook.
Im joined today by Shakers, Hadassah I'm chairman of the board and Patrick Cooke.
Speaker 2: the company's chief commercial officer, and Kathy Bainan, the company's chief financial officer.
Company's chief commercial officer, and Kathy vein, and the company's Chief Financial Officer.
Before we begin I remind everyone that today's discussion contains forward looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current date.
Speaker 2: Before we begin, I remind everyone that today's discussion contains four-looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current state. As such, these four-looking statements include risk and uncertainties and actual results and events made different materially from our current expectations.
These forward looking statements include risks and uncertainties and actual results and events may differ materially from our current expectations.
Speaker 2: Please refer to our press release and other SEC filings for more information on the specific risk facts.
Please refer to our press release and other SEC filings for more information on the specific risks risk factors.
Speaker 2: We assume no obligation to update such information except as required by law.
We assume no obligation to update such information, except as required by law.
Speaker 3: As you expect, we'll discuss both GAP and non- GAAP financial measures today. Please note that the earnings release issue this morning includes a full reconciliation of each non- GAAP financial measure to the nearest applicable GAP measure. In addition, we'll discuss our backlog and our definition of this metric is also included in our press release. With that, I'll turn it over to Shaker. Thank you, Bill, and good morning, everyone. I spoke to you.
As you expect will discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes a full reconciliation of each non-GAAP financial measure to the nearest GAAP measure. In addition, we'll discuss our backlog and our definition of this metric is also included in our press release.
I'll turn it over to sugar.
Thank you Bill and good morning, everyone.
I felt it was important to us.
Speak with you directly.
On behalf of the board of directors about the leadership transition, we have announced today.
Speaker 3: about the leadership transition we have announced today. FTC soared as a
FTC solar as a company with a great team of employees.
Speaker 3: and innovative and compelling technology and services that customers enjoy.
And innovative and compelling technology and services that customers enjoy.
With the start of 80, CVD and supply chain disruptions.
Speaker 3: with the start of ADCVD and supply chain disrupt.
Speaker 3: Our growth trajectory was interrupted. And much of the last two years has been about repositioning the company.
The trajectory was interrupted and much of the last two years has been about repositioning the company to be in the right markets with the right technology and cost structure.
Speaker 3: to being the right market, with the right technology and cost.
Speaker 3: We have made progress on that front and improved our positioning. Let's try to...
We have made progress on that front and improved our positioning.
The tractor market is healthy and profitable.
Speaker 3: and FTC Solar now needs to accelerate our progress and achieve and enjoy healthy profitable growth. At the board level, has to be evaluated.
And FTC solar now needs to accelerate our progress and achieve and enjoy healthy profitable growth.
At the board level.
<unk> evaluated our opportunities and growth plans ahead.
Speaker 3: The Board agreed that now is the right time to bring new leadership to FTC's soul.
The board agreed that now is the right time to bring new leadership at DC solar as.
As we enter <unk>.
Speaker 3: as we enter our next phase of growth and execution.
Pace of growth and execution.
As you saw from the press release this morning.
Kathy Bannon who has.
Speaker 3: Kathy Bannon, who has served as a company's chief accounting officer.
Serve as the company's Chief Accounting Officer. Since 2020 has been named our Chief Financial Officer on an interim basis.
Speaker 3: since 2020 has been named our chief financial officer on an interim basis.
Speaker 3: Kathy has more than 20 years of financial leadership experience, including CFO and Accounting Partner Role.
Kathy has more than 20 years of financial leadership experience, including CFO and accounting partner roles.
And has made significant contributions to the company as Chief Accounting Officer, and a member of the executive team.
Speaker 3: and has made significant contributions to the company as chief accounting officer and a member of the executive.
We are excited to have Kathy take on this expanded responsibility.
Speaker 3: We are excited to have Kathy take on this expanded response.
The combination of Kathy and her fellow executive leadership members, Patrick Cooke, our Chief commercial officer, and Suzanne Amman for our Chief operating officer will provide steady leadership.
Speaker 3: The combination of Kathy and her fellow executive leadership members, Patrick Cook, Achieve Commercial Officer, and Sassan Amanpur, Achieve Obdating Officer, will provide steady leadership of the day-to-day management.
The day to day management of the company.
To further ensure a smooth transition for the company and its employees and customers during this transition.
Speaker 3: to further ensure a smooth transition for the company and its employees and customers.
Speaker 3: Board will provide increased oversight of those leaders and be engaged on a regular basis. In particular, Ahmad Shatila will regularly assist in
Paul will provide increased oversight of those leaders and we engaged on a regular basis and.
In particular.
Much of dealer.
We will regularly assessed.
And facilitating communication between management and the board.
Speaker 3: to monitor key activities and initiatives in an audit to accelerate profitable.
Monitor key activities and initiatives.
Harder to accelerate profitable growth.
We are confident that this team and structure has the capability along with the right blend of organizational history, and new perspectives to ensure that not only do we not miss a beat but there'd be accelerate toward our long term goals.
Speaker 3: We are confident that this team and structure has the capability, along with the right blend of organizational history and new perspectives to ensure that not only do we not miss a beat, but that they accelerate toward a long term goals.
While today's news represents a change it also represents a tremendous opportunity for us to accelerate our momentum.
Speaker 3: and also represents a tremendous opportunity for us to accelerate our moment.
Speaker 3: With that update, I thank you for your time, and I'll turn it over to Patrick to discuss the highlights from Q3 and the progress you did.
With that update and thank you for your time and I'll turn it over to Patrick to discuss the highlights from Q3 and the progress you gave me.
Speaker 4: Thank you, Shachar, and good morning, everyone. As Kathy will discuss, our third quarter results largely came in as expected, net of benefits to gross margin and a charge to operating expense that were not in our guidance.
Thank you <unk> and good morning, everyone as Kathryn will discuss our third quarter results largely came in as expected net of benefits to gross margin and charged to operating expenses that were not in our guidance as we look to the fourth quarter. Our slate of projects in aggregate is getting a later start than we previously anticipated this customer.
Speaker 4: As we look to the fourth quarter, our Slate of Projects in aggregate is getting a later start than we previously anticipated. This customer's continued to experience various project delays. As a result, the guidance we are providing for the fourth quarter is down from Q3. We expect this to be followed by a much more significant revenue growth in the first quarter of 2024 as the delayed projects ramp. We continue to feel good about our future and overall long term growth prospects.
We continue to experience various project delay as a result, the guidance, we're providing for the fourth quarter is down from Q3.
We expect this to be followed by a much more significant revenue growth in the first quarter of 2024 as the delayed projects ramp we continue to feel good about our future and overall long term growth prospects.
Our confidence is based on our improved competitive positioning and supported by our large and growing backlog I'll briefly read the positioning improvements that we discussed last quarter.
Speaker 4: Our confidence is based on improved competitive positioning and supported by our large and growing backlogs. I'll briefly review the positioning improvements that we discussed last quarter.
Speaker 4: First, we believe our manufacturing cost is now in line with our leading competitors. We're more competitive than we've ever been on that front. It will continue to prove with scale.
First we believe our manufacturing cost is now in line with our leading competitors or more competitive than we've ever been on that front. It will continue to improve with scale.
Speaker 4: Second, our average new project margins put us on track to meet or exceed the targets we provided in the past.
Second our average new project margins put us on track to meet or exceed the targets we provided in the past.
Speaker 4: As you may recall, we have previously targeted getting to the 10% to 15% gross margin range on $100 million in quarterly revenue. The fact that we were able to approach the low end of that range, or about 9.5% on a normalized basis on only $30 million in revenue in Q3, is an additional proof point that the cost reduction actions we've taken have borne fruit and position us to achieve profitability as we grow revenue and see additional cost absorption.
As you May recall, we had previously targeted getting to the 10% to 15% gross margin range on a $100 million in quarterly revenue.
Fact that we were able to approach the low end of that range or about nine 5% on a normalized basis on only $30 million in revenue in Q3 as an additional proof point that the cost reduction actions, we've taken have borne fruit and position us to achieve profitability as we grow revenue and see additional cost absorption.
Speaker 4: Third, we are now in the market with our one piece solution, Pioneer.
Third we are now in the market with our <unk> solution pioneer.
Speaker 4: We believe the 1P market has done better in this time of restricted module availability, and we didn't have a solution until recently.
We believe the <unk> market has done better in this time of restricted module availability and we didn't have a solution until recently.
Speaker 4: We have had great customer response to Pioneer and our 1P backlog is growing very nicely, including quite a few project additions following RE Plus trade show in September .
We have had great customer response to pioneer and our <unk> backlog is growing very nicely, including quite a few project additions following <unk> plus trade show in September.
Fourth we continue to grow our international business, we're gaining traction in new regions. Most recently, adding awards in Spain and Italy.
Speaker 4: Fourth, we continue to grow our international business. We're gaining traction in new regions, most recently adding awards in Spain and Italy.
Speaker 4: We've also seen larger awards in existing regions like South Africa and now have awards in a dozen countries outside of the U.S. Our One Piece solution will only enhance our prospects internationally.
You've also seen larger awards in existing regions like South Africa, and now have awards in a dozen countries outside of the U S. Our <unk> solution will only enhance our prospects internationally.
Speaker 4: And fifth and lastly, our backlog has now grown to approximately $1.6 billion with approximately $60 million added since August 9th.
Fifth and lastly, our backlog has now grown to approximately $1 6 billion with.
From a $60 million added since August nine.
Speaker 4: On our last call, we outlined a number of projects that were added, which include deliveries in 2024, including in Spain, Italy and South Africa. We also announced the award of a 1 gigawatt project in Idaho.
On our last call we outlined a number of projects that were added which include deliveries in 2024, including in Spain, Italy, and South Africa. We also announced the award of a one gigawatt project in Idaho.
One project, we Didnt mentioned at the time, but was added to our backlog last quarter was another 600 plus megawatt project in the U S revenue on this project will ramp here in the fourth quarter and continue into next year.
Speaker 4: 1 project we didn't mention at the time, but was added to our backlog last quarter was another 600 plus megawatt project in the US. Revenue on this project will ramp here in the 4th quarter and continue into next year.
Speaker 4: The continued growth of our backlog, including the recent additions, allows us to continue to be optimistic about our growth prospects, and our goal is now to ensure we're adding more business and converting to purchase orders to support future growth.
The continued growth of our backlog, including the recent additions allows us to continue to be optimistic about our growth prospects and our goal is now to ensure we are adding more business and converting to purchase orders to support future growth.
Speaker 4: So, in summary, we were pleased to do well relative to our 3rd quarter targets and demonstrate continuous gross margin improvement. Some 4th quarter projects are starting later than anticipated, but we expect to improve revenue performance in the 1st quarter along with margin improvement. We're positioned with a product cost structure that will enable our gross margin expansion to continue and reach new highs as revenue grows.
So in summary, we were pleased to do well relative to our third quarter targets and demonstrate continuous gross margin improvement some fourth quarter projects are starting later than anticipated, but we expect to improve revenue performance in the first quarter along with margin improvement.
Our position with a good cost structure that will enable our gross margin expansion to continue and reached new highs as revenue grows.
Speaker 4: We'll keep a cap on operating expenses while investing for future growth, and we expect to cross profitability in 2024. With that, I'll turn it over to Kathy.
We will keep a cap on operating expenses, while investing for future growth and we expect to cross profitability in 2024 with that I'll turn it over to Kathy.
Thanks, Patrick and good morning, everyone I'll provide some additional color on our third quarter performance and our outlook beginning with the discussion of the third quarter revenue came in at $35 million.
Speaker 5: Thanks, Patrick, and good morning, everyone. I'll provide some additional color on our third quarter performance and our out.
Speaker 5: Beginning with the discussion of the 3rd quarter revenue came in at 30.5 million dollars. This revenue level represents a slight decline of 5.6% relative to last quarter and an increase of 84.3% relative to the year ago quarter.
This revenue level represents a slight decline of five 6% relative to last quarter and an increase of 84, 3% relative to the year ago quarter.
Gross profit benefited from higher project margin, a better mix of materials logistics and a couple of nonrecurring benefit specifically, our GAAP gross profit was $3 4 million.
Speaker 5: Gross profits benefited from higher project margins, a better mix of materials versus logistics, and a couple of non-recurring benefits. Specifically, our GAAP gross profit was $3.4 million, or 11.1% of revenue, compared to $2.2 million, or 6.8% of revenue in the prior quarter.
Our 11, 1% of revenue compared to $2 2 million or six 8% of revenue in the prior quarter.
Speaker 5: On a non-GAAP basis, gross profit was $3.9 million, or 12.8% of revenue. That does include a couple of non-recurring benefits totaling $1 million that were not contemplated in our guidance and related to better-than-expected margins on a closed project and lower-than-expected inventory costs that we don't expect will reoccur in future periods.
On a non-GAAP basis gross profit was $3 9 million or.
Our 12, 8% of revenue that does include a couple of nonrecurring benefits totaling $1 million that were not contemplated in our guidance and related to better than expected margins on a closed project and lower than expected inventory costs that we don't expect will reoccur in future periods.
Speaker 5: If those benefits were excluded or on the same basis as our guidance, non-GAAP gross margin would have been 9.5%, still above our guidance range of 3 to 9%, supported by mixed and improved cost structure. This represents our fourth consecutive quarter of gross margin improvement and our third quarter of positive margin since our IPO.
If those benefits were excluded are on the same basis as our guidance non-GAAP gross margin would have been nine 5% still above our guidance range of 3% to 9% supported by mix and improved cost structure.
This represents our fourth consecutive quarter of gross margin improvement and our third quarter of positive margin since our IPO.
These figures compare to a non-GAAP gross profit of $2 6 million or eight 2% in the prior quarter and a non-GAAP gross loss of $8 2 million in the year ago quarter with the difference driven primarily by significant improved product direct margin and lower warranty and other indirect costs.
Speaker 5: These figures compare to a non-GAAP gross profit of $2.6 million, or 8.2% in the prior quarter, and a non-GAAP gross loss of $8.2 million in the year-ago quarter, with a difference driven primarily by significant improved product direct margin and lower warranty and other indirect costs.
Speaker 5: Our GAAP operating expenses were $19.7 million on a non-GAAP basis, excluding stop-based compensation and certain other costs. Operating expenses were $13.2 million, compared to $9.1 million in the year-ago quarter.
Our GAAP operating expenses were $19 7 million on a non-GAAP basis, excluding stock based compensation and certain other costs operating expenses were $13 2 million compared to $9 1 million in the year ago quarter.
Speaker 5: The operating expenses this quarter included an approximate $4 million credit loss relating to a specific customer account. Excluding this charge, our non-GAAP operating expenses would have been $9.2 million, which would be below or better than our guidance range and at the low end of what we've seen over the last two years, as we continue to look for efficiencies across the company while continuing to invest strategically in areas that support our growth.
The operating expenses. This quarter included an approximate $4 million credit loss related to a specific customer action.
Splitting this charge our non-GAAP operating expenses would have been $92 million.
Which would be below or better than our guidance range and at the low end of what we've seen over the last two years as we continue to look for efficiencies across the company, while continuing to invest strategically in areas that support our growth.
Speaker 5: Next, GAAP net loss of $16.9 million or $0.14 per share compared to a $10.4 million or $0.09 per share in the prior quarter and had a net loss of $25.6 million or $0.25 per share in the year ago quarter.
Next GAAP net loss of $16 9 million or <unk> 14 per share compared to $10 4 million or <unk> <unk> per share in the prior quarter and had a net loss of 25 6 million or <unk> 25 per share in the year ago quarter adjust.
Speaker 5: Adjusted EBITDA loss, which excludes approximately $7.2 million, including stock-based compensation expense and other non-cash items, was $9.7 million compared to losses of $7.2 million in the prior quarter and $17.7 million in the year-ago quarter. Excluding the $4 million charge as well as the gross margin benefit, adjusted EBITDA would have been at the high end of our guidance range.
Adjusted EBITDA loss, which excludes approximately $7 $2 million, including stock based compensation expense and other noncash items was $9 7 million.
Compared to losses of $7 2 million in the prior quarter and $17 7 million in the year ago quarter, excluding the $4 million charge as well as the gross margin benefit adjusted EBITDA would have been at the high end of our guidance range.
Speaker 5: Finally, regarding liquidity, we had an operational use of cash in the quarter offset by usage of the ATM facility for which we received 13.4 million dollars of cash in the quarter and we ended the quarter with 31.5 million dollars cash on the balance sheet.
Finally regarding liquidity, we had an operational use of cash in the quarter offset by usage of the ATM facility for which we received $13 $4 million of cash in the quarter and we ended the quarter with $31 $5 million cash on the balance sheet. We continue to hold no debt on the balance sheet have a largely available credit review.
Speaker 5: We continue to hold no debt on the balance sheet, have a largely available credit revolver, as well as sixty five million dollars remaining under the ATM program at the end of the quarter. With that, let us turn.
Silver as well as $65 million remaining under the ATM program at the end of the quarter.
With that let us turn our focus to the outlook.
Speaker 5: Based on our current view and including the project delays that Patrick mentioned, we expect fourth quarter revenue to be down sequentially with margin reflecting the lower absorption. We expect this to be followed in the first quarter by a fairly substantial revenue recovery as project ramp. As Patrick mentioned, we have a great deal of gross margin runway ahead of us, and we expect the trend, particularly as the revenue grows to largely be up.
Based on our current view and including the project delays that Patrick mentioned, we expect fourth quarter revenue to be down sequentially with margin, reflecting the lower absorption.
We expect this to be followed in the first quarter by a fairly substantial revenue recovery as projects ramp.
As Patrick mentioned, we have a great deal of gross margin runway ahead of us and we expect the trend, particularly as the revenue grows to largely be up.
Speaker 5: Specifically, our targets for the fourth quarter call for the following. Revenue between $18 million and $28 million. Non-Gab gross margins between negative $1.3 million and positive $2 million, or between negative 7% and positive 7% of revenue.
Specifically our targets for the fourth quarter call for the following revenue between 18 million and $28 million.
non-GAAP gross margins between negative $1 3 million and positive $2 million.
Between negative, 7% and positive 7% of revenue.
Speaker 5: NANDAP operating expenses between $10 million and $11 million, and finally adjusted even a loss between $13 million and $2.5 million.
non-GAAP operating expenses between $10 million and $11 million and finally, adjusted EBITDA loss between $13 million and $2 5 million.
For the first quarter of 2024, we expect to see about a 96% sequential revenue growth at the midpoint with improvements in all categories.
Speaker 5: For the first quarter of 2024, we expect to see about a 96% sequential revenue growth at the midpoint with improvements in all categories. Specifically revenue between $40 million and $50 million. Non-Gab growth margin between $3.2 million and $6.3 million or between 8% and 13% of revenue. Non-Gab operating expenses between $9 million and $10 million and finally adjusted EBITDA loss between $7.3 million and $3 million.
Physically revenue between $40 million and $50 million.
non-GAAP gross margin between $3 2 million and $6 $3 million or between 8% and 13% of revenue non-GAAP operating expenses between $9 million and $10 million and finally, adjusted EBITDA loss between $7 3 million and $3 million.
Looking forward, we continue to feel good about the opportunity for a strong revenue recovery in 2024, and achieving profitability with that we conclude our prepared remarks, and I will turn it over to the operator for any questions operator.
Speaker 5: Looking forward, we continue to feel good about the opportunity for a strong revenue recovery in 2024 and achieving profitability. With that, we conclude our prepared remarks and I will turn it over to the operator for any question. Operator?
Thank you.
Ladies and gentlemen to ask a question. Please press star one on your telephone and then wait to hear your name announce to withdraw your question. Please press star one again.
Speaker 1: Ladies and gentlemen, to ask the questions, please first start 1-1 on your telephone and then wait to hear your name announce. To withdraw your question, please first start 1-1 again. Please stand by while we compile the Q&A roster.
Please standby, while we compile the Q&A roster.
Speaker 6: Our first question comes from the line of Philip Cheen with Wop. Yaline is open. Okay. Thanks for taking my questions. First one here is...
Our first question comes from the line of Philip Shen with Roth. Your line is open.
Hey, guys. Thanks for taking my questions.
First one here is on the guidance for Q4 and Q1.
I think it came in lighter than what the street was looking for.
Wei.
You talked about in your prepared remarks that.
You will see a ramp up and that's been impacted by module delays is it fair to say that you guys have been more exposed to the long G. Attentions as opposed to Genco Genco has been flowing pretty smoothly for some time now.
And then recently only.
Laundry was able to get their OCI.
Hollywood modules released.
So as that starts to ramp would you expect much.
Much.
Better.
Expectations as a result of that attention release from launching thanks.
Hey, Phil So I'll start and then I'll let.
Speaker 2: It feels so all start and then let the Patrick continue to wait. Historically in our backlog, we did have a fair amount of modules from that.
Patrick.
Continue so historically in our backlog, we did have a fair amount of modules from that.
Speaker 2: that the player that were associated with our projects, many of those have...
From that supplier that were associated with our projects.
Many of those have during the <unk> process found.
Speaker 2: During the ADCVD process found different modules to move forward with.
<unk> modules to move forward with.
Speaker 4: So it's fair historically, but I think that's been changing. I don't know if you'd add anything there. Yeah, it's been so like to say the other thing too, when you think about kind of Q4, Q1, we've had some projects kind of move to the right in terms of the overall revenue ramp. You know, the one gigawatt project that
So it's fair historically, but I think thats been <unk> been changing and I forgot if you'd add anything until I would say the other thing too. When you think about kind of Q4 Q1, we've had some projects move to the right in terms of the overall revenue ramp.
The one gigawatt project.
No we will be delivering here and then 700 megawatt project.
We signed last quarter and are in process of delivering so you're going to see a lot of that base load revenue get shifted into 2024, which is why we're so optimistic about.
The future prospects, because we've got that one seven gigawatts plus.
Speaker 4: got that 1.7 gigawatts plus already kind of in the hopper and delivering. So we're very excited about that.
Already kind of in the Hopper and delivering so we're very excited about that.
Great.
Speaker 6: So, you know, we've been very mad recently about the challenges with some project delays as a result of, you know,
No.
A fair amount recently about the.
Challenges with some project delays as a result of.
Elevated rates for a long period of time and so forth.
Can you walk us through the rationale for each of those project push outs.
Have you touched on it earlier, sorry, if I missed it.
But just curious if you can give a little more color as to why the gigawatt and the 700 megawatt projects were pushed to the right.
So I think from a just overarching perspective, what we're seeing is rise in financing cost, obviously is creating a little bit longer duration those projects reach kind of SMTP our LNP.
Speaker 4: So, I think from just overarching perspective, what we're seeing is rise in financing costs, obviously is creating a little bit longer duration as projects reach FNTP or LNTP. And you're seeing those types of projects move. Interconnection has also been a little bit of a challenge you're seeing a little bit of grid issues.
We're seeing.
Those types of projects move interconnection has also been a little bit of a challenge you are seeing kind of a little bit of grid issues grid.
Speaker 7: congestion and that's having those projects ultimately pushed to the right, more than what we've traditionally seen in the past. Obviously, module availability is getting better, but we're seeing increased rates and financing and an interconnection is kind of the current challenges in the market.
Congestion and Thats, having those.
Thats ultimately pushed to the right.
More than what we've traditionally seen in the past, obviously module availability is getting better.
But we're seeing increased rates and financing.
And interconnection is is kind of the current challenges in the market.
Okay, great. Thanks, Patrick one last one for me and I'll pass it on as it relates to working capital.
Speaker 6: One last one for me, I'll pass it on as it relates to the working capital. You have a healthy amount of cash, 30 million, but you have a bunch of cash tied up and accounts receivables at 71.
A healthy amount of cash $38 million.
But you have a bunch of cash tied up in accounts receivables at $71 million in pretty high discounts.
Just wondering if you can talk us through balance sheet working capital how are you.
To manage through.
Yes. So this is cathy.
Speaker 6: Yeah, so this is Kathy. We feel very confident. Our catch position will be flat, who will improve by the end of Q4. We have some chunky receivables we expect to be coming in in Q4. And with the ramp that we're seeing and the move to profitability, we're confident and kind of where that stands on the balance sheet. Great, thanks Kathy. In terms of why are the receivables so chunky at this point?
We feel very confident.
Our cash position is.
We will be flat to will improve by the end of Q4.
We have some chunky receivables, we expect to be coming in in Q4.
And with the ramp that we're seeing and the profitability we are confident.
And kind of where that stands on our balance sheet.
Great. Thanks, Kathy in terms of why why are the receivables. So chunky at this point or why are they so high.
Are there just are there some yes, there is another kind of reflection of what's going on in the market, where some of your customers might be trying to preserve cash.
Yes, I think that's exactly what we've seen and some financing changes on our customer side.
Speaker 8: Yeah, I think that's exactly what we've seen. And so in financing changes on our customer side, also making the, has pushed out some of the receivables. So we have some of their, a large receivable led we're expecting to see come in in Q4. Thank you. And that was the, the receivable that we mentioned a lot, that we expected to come in last quarter. It's actually the second it's going to come in now this quarter. So that's the, that's the bigger chunk of it. Thank you. I'll give you a second to the right. Got it.
Also making the push out some of the receivables that we have some that are.
A large receivable that were.
Expecting to see come in in Q4.
And that was the receivable that we mentioned that we expected to come in last quarter. Its actually looks like it's going to come in now this quarter seven that's the that's.
That's a bigger chunk of it moves to the right.
Got it and do you have a credit facility and it can you talk about the capacity available.
Speaker 4: Yeah, yeah, we haven't we have a revolving credit facility right now. It's 100Million dollars. You know, we, we've got about.
Yes, we I mean, we have a revolving credit facility right now it's $100 million.
We've got about one $5 million to $2 million, a pretty de Minimis amount. That's ultimately utilized its traditionally used for letters of credit to support projects.
Speaker 7: one and a half to two pretty de minimis amounts that's ultimately utilized. It's traditionally used for letters of credit to support projects.
Speaker 7: As we've gotten more credibility within the market, we haven't had to tap in and ultimately utilize it. So it's remained undrawn and untapped. So we've got more than $95 million available under the line. But as it's pretty.
As we've gotten more.
Credibility within the market, we haven't had to tap in and ultimately utilize it. So it has remained.
Drawn an untapped so we've got.
More than $95 million available under the line.
But as of quarter end detail Putnam, Okay. Sorry go ahead.
Speaker 8: I didn't say so we can utilize throughout the quarter, we can use the full amount. And then at the quarter end, there's five million available left on. On the revolving.
I can say with so we can use throughout the quarter, we can realize the full amount.
And then that that but as of quarter end theres $5 million available left on the.
On the revolver.
Okay. Thanks, guys I'll pass it on.
Thanks, so much.
Thank you.
Please standby for our next question.
Our next question comes from the line of Donovan Schafer with Northland Capital markets. Your line is open.
Speaker 1: Our next question comes from Elana of Donovan Shaper with Northland Capital Market. Elana is open.
Hey, guys.
Thanks for taking the questions.
Speaker 9: So thanks for taking the questions. I first want to ask, you know, with the...
First one to ask.
<unk>.
Speaker 9: So what the transition with the CIO and the CFR.
So with the transition with the CEO and the CFO kind.
Speaker 9: Kind of wondering, you know, Shaker's still on me. We can get a response from him on this. But, you know, if the issue here is kind of the way everything, the way you guys are describing it and all these dynamics that are out of your...
Kind of wondering shakers still on maybe we can get a response from him on this but.
If the issue here is kind of the way everything the way you guys are describing in all of these dynamics that are out of your control it seems.
Speaker 9: control, it seems, or at least being framed that way, but also, you know, lined up for acceleration. I think the word acceleration was used a lot in the prepared remarks. If all that's lined up that way, and unfolding.
Being framed that way, but also wind up for acceleration.
Acceleration I think the word acceleration was used a lot in there.
The prepared remarks, if all of that lined up.
That way.
Unfolding.
Speaker 9: as best as possible within what you can control, you know, then why replace the CEO and CFO and, you know, or otherwise, you know, more candidly, you know, what is the board's use? What's going on here and tied to that, you know, why should we continue to put faith in, you know, the Q1 guidance, you know, the Q1 guidance, Q4 guidance and even the backlog at this point, you know, has all that been...
As best as possible within what you can control.
Then why then why replace the CEO and CFO.
Or otherwise.
Candidly.
What is the board's view of whats <unk>.
Going on here and tied to that.
Why should we continue to put faith in Q1 guidance Q1 guidance Q4 guidance.
And even in the backlog at this point you know how does all of that then.
<unk> reviewed and reviewed by the board.
Speaker 9: Reviewed and re reviewed by the board any clarification would be helpful.
Any clarification would be helpful.
In terms of the guidance thing and I'll, let Kathy speak to this but.
Speaker 8: So, in terms of the guidance, I'm not going to let Kathy speak to this, but the
I think the view is too.
Speaker 8: I think the view is to de-risk the guidance, that's why you saw some lower numbers.
Derisk the guidance Thats why you saw some.
Some lower numbers and I think.
The company feels comfortable with what we're putting out for Q4, and Q1 and Cathie I don't know if you want to add to that.
Speaker 2: the company feels comfortable with what we're putting out for Q4 and Q1. And Kathy, I don't know if you want to add something.
Speaker 5: Yeah, you know, yes, the answer is, yes, we've gone through it project by project and, you know, my goal is to provide guidance that I can be confident in and and that's that's what we've done and we have, you know, a very clear view into the ramp into 1. So, very confident with that.
Yes.
Yes, the enthusiasm gone thread project by project.
Michael has said.
Provide guidance that I can be confident in and that's what we've done and.
And we have a very clear view.
And so the ramp in Q1, so very confident with that.
Okay and then.
Speaker 10: OK, and then with the.
With fee.
Speaker 9: Actually, did anyone else want to comment on that question?
Actually sorry did did anyone else want to comment on that question.
Sure.
Okay, well then.
Speaker 10: Okay, well then as a follow up, talking about, you know, if module, if module imports have improved, you know, we've talked before about that really being the hang up and
As a follow up talking about module. This module imports are improved.
Before about that really being the hang up and.
Speaker 9: to the backlog being skewed to a 2P project and that those tend to be more complex sites.
The backlog being skewed sort of two key projects and those tend to be more complex sites.
Speaker 9: And so those would move to the back of the queue. Since module supplies improved so much, it feels like... the fare was left or ), this sounds....
And so those would move to the back of the queue since module suppliers improved so much it feels like.
Speaker 10: you know those waiting in the wings should have been able to kind of kick into gear and start going or otherwise you know that narrative is kind of broken down if it's just interconnect and you know finding
Those waiting in the wings should've been able to kind of kick into gear and start growing or otherwise that narrative is kind of broken down. It is it's just interconnect and.
Financing now.
Speaker 10: is there a reason on those aspects why you guys would be disproportionately impacted? I mean, I mean, some peers have, you know, it's not that peers haven't been impacted at all, but it seems like you are still being disproportionately impacted. So if it's, if it's not the modules, how is the disproportionate impact landing on you guys around financing? And
Is there a reason on those aspects why you guys would be disproportionately impacted.
Some peers have.
Peers haven't been impacted at all but it seems like you are still being disproportionately impacted.
If it's not the modules.
How is the disproportionate impact lending and you guys around financing.
Yeah.
Interconnects.
Speaker 7: So I'll talk to the module piece. We are seeing modules ultimately come in and dominant your right, two P sites are inherently ultimately more complex. If you think about the developers and how they engage with the EPCs, they're building out their kind of construction schedule.
So I'll talk to the module piece.
We are seeing modules ultimately come in and dominant you are right.
Sites are inherently ultimately more complex, but if you think about developers and how they engage with the epc's.
They are building out their kind of construction construction.
Construction schedule so.
Speaker 7: You know, a lot of the one-piece sites are still continuing to get done. And, you know, some of the two-piece sites just based on EPC availability are still, you know, kind of forefaceted to go, you know, mid to late 2024 and then to 2025. And those schedules are set in set in Q3 and Q4, ultimately of 2023, as they build some of these, you know, 150 to 200 megawatt sites.
A lot of the <unk> sites are still continuing to get done.
And some of the <unk> sites, just based on EPC availability or still kind of forecasted to go mid to late 2024 and into 2025 and those schedules are being set in Q3 and Q4 ultimately 2023 as they build some of these 150 to 200 Mega.
What sites.
Speaker 2: But to that, in general, we've seen some of the same things that industry have seen around, you know, financing panels, labor permitting, renegotiating PPAs. I mean, those types of things we have talked about last quarter, seeing a general pushout and backlog around the 2P. We have had a number of projects that.
And to add to that in general.
Seeing some of the same things that industry youre seeing around.
Financing panels labor permitting renegotiating ppas I mean, those sides of things we have.
You talked about last quarter were seeing a general pushout in backlog around the <unk>, we have had number of projects that.
Speaker 2: that if they were scheduled to move forward the project, but they didn't have modules, they may be negotiated now. So a project that would have been scheduled to go, you know, six months ago, maybe it's now gonna do go in late 24 and 25. So that's the new schedule for that particular project, but I feel like I'm listening. I'd like to. Thank you.
That if they were scheduled to ship.
To move forward with the project, but they didn't have modules.
Renegotiated now so a project that would have been scheduled to go.
Six months ago, maybe it's now going to go in late 'twenty, four and 25%. So that's the new schedule for the that particular project.
But thats the only other thing I would add there.
Yes.
Hey.
Our billing Donovan this will shrink or I'm, sorry, I'm, probably the audio and I can address the <unk>.
Speaker 6: Bill and Donovan, this is Shaker, I'm sorry, I had trouble with the audio and I can address the question with the leadership chain.
Question with the leadership change and.
Speaker 6: And and again, thank you for the question. You know, we talked in the prepared remarks about repositioning the business, you know, that we have to work that we've done in the last two years and essentially a lot of the work we've done.
And again, thank you for the question, we talked in the prepared remarks about.
Repositioning the business.
The work that we've done in the last two years and essentially in a lot of the work we've done.
Speaker 3: has improved our cost structure and the competitive position.
Has improved our cost structure and the competitive positioning.
Speaker 6: The organization is also a lot leaner and we have filled gaps in our product portfolio.
The organization is also a lot leaner.
And we had hoped.
<unk> in our product portfolio.
Speaker 6: And really, in the April May timeframe, we were very optimistic on the business outlook, but really what was happening, we were not getting the POs. So the board, really started getting into the details.
And really in the April may timeframe, we were very optimistic on the business outlook, but really what is happening to you are not getting the.
So the board.
You started getting into the details.
Speaker 6: And we found a lot of opportunity for improvement in just the basic blocking and tackling and execution issues.
And we found a lot of opportunity for improvement in just the basic blocking and tackling and execution issues.
Speaker 6: In particular, we found our opportunities to accelerate decision making and how it was coordinated across the organization.
Particular, we found other opportunities to accelerate decision, making and how it goes coordinated across the organization.
Speaker 6: closing gaps with product portfolio faster.
Closing gaps with product portfolio faster.
Speaker 6: and increasing customer interaction, you know, so it was better linkage between revenue forecast and PO attendance.
Increasing customer interaction service.
<unk>.
Linkage between revenue forecast attainment, so thats the reason for the change.
Speaker 6: So that's a reason for the change and hopefully that answers your question.
Hopefully that answers your question.
Okay that is helpful.
Speaker 10: Okay, yeah, that is helpful. Um, and then just if I can get one last question one last more in on the credit charge So with the four million dollar
And then just if I can get one last question one last more than on the credit charge.
So with the $4 million.
Speaker 9: you know, credit provision tied to one customer, can you clarify, is that a case where, you know, the, you guys and the customer, there's agreement, or they share your understanding around the idea of, you know, what is the total amount of monies owed for, you know, goods and services provided, or is there actually, and they just don't have, you know, and they're
Got it provision tied to one customer can you clarify is that a case where.
The you guys and the customer there is agreement or they share your understanding around the idea of.
What is the total amount of monies owed for goods and services provided or is actually.
Don't have.
Speaker 10: not paying it. Or is it a case where they're actually in some way disputing or they don't share your view and they don't think they owe or have reason to or withholding that that $4 million.
Not paying yet or is it a case, where they're actually in some way disputing or they don't share your view and they don't think they or how reasoning for withholding that.
$4 million.
Hi, gentlemen, thanks for the question.
Speaker 5: I don't think the question and now there's no dispute the customer understand the value of the receivable. It's it's strictly a collectibility and ability to pay issue.
No. There is no dispute the customer understands the value of the receivable.
It's strictly.
Collectability and ability to pay issue.
Okay. That's very helpful. Okay. Thank you guys I'll take the rest of my questions offline.
Speaker 9: Okay, that's very helpful. Okay, thank you guys. We'll take the rest of my questions offline.
Speaker 1: Thank you. Please stand by for our next question.
Thank you.
Please standby for our next question.
Our next question comes from the line of Amit Dayal with H C. Wainwright. Your line is open.
Speaker 1: Our next question comes from the line of Armand Dale with H.C. Wainwright. Your line is open.
Thank you and good morning, everyone.
Speaker 11: Thank you. Good morning, everyone. Most of my questions have already been addressed, but I was just wondering if you had any projects that have been canceled. I know backlog is a little bit higher, but are there any project cancellations that are impacting near-term results and outlook?
Most of my questions have already been addressed but I was just wondering if.
<unk>.
Have been canceled I know backlog is a little bit on <unk>.
Are there any project cancellations that are impacting near term results.
And outlook.
Speaker 7: No, we haven't seen, thanks for the question. We haven't seen any projects that have been canceled, just pushed to the right.
No we havent see thanks for the question, we haven't seen any projects.
That had been canceled just pushed to the right.
Speaker 11: Okay, understood. And in non-UFLPA orders, I think you guys give a number, last quarter, I don't see it this time maybe I missed it. Could you tell us what that number looks like?
Okay understood.
And in non U S Opa orders.
You guys gave a number last quarter.
See it this time, maybe I missed it could you tell us what that number looks like.
Yes, I mean in terms of the non <unk>.
Speaker 7: Yeah, I mean, in terms of the non for the, the awards that we signed up this quarter, all of those are not subject to and all the projects have have panels. Okay.
For the awards that we signed up this quarter all of those are not subject to U F LTA and all of the projects have panels.
Okay. Thank you thank you for that.
Speaker 11: So, given you have pretty positive outlook for 2024,
So.
Given you have pretty.
Pretty positive.
Outlook for 2024.
Speaker 11: Do you think you potentially could see sequential improvements through the year in 2024, you know, after the bouncebacks are relative to Q23 or
Do you think you potentially could see sequential improvements will be earned in 2024.
After the bounce back relative to Q3.
<unk> III or <unk>.
Do you not have any.
Speaker 11: Do you not have any visibility at this point to kind of give us that kind of outlook?
Any visibility at this point to kind of give us that great number outlook.
So we haven't got into 2020.
Speaker 2: So we haven't we haven't got it to 2020 beyond beyond Q1 for 2024. But, you know, we had indicated in that last call that we expect the ramp to start in Q4. And now you're seeing that ramp start now here in Q1. So as these projects, particularly the almost 700 megawatt project is one example that Patrick called out. That's one that's going to contribute here in Q4 and in ramp in the next quarter. So.
Beyond Q1 for 2024.
<unk> indicated in the last call that we expect the ramp to start in Q4, and I think youre seeing that ramp start now here in Q1, so as these projects, particularly the.
Almost 700 megawatt project is one example, Patrick called out that's one that's going to contribute here in Q4 and in.
And ramp into next quarter so.
Speaker 2: That kind of give you an indication of, you know, how the, we'd expect things to start to.
That kind of give you an indication of.
We would expect things to start to.
Speaker 7: to ramp on those projects that we talked about last quarter. And I think the one thing to kind of piggyback off that is, you know, if you look at, you know, a gigawatt cross project in a, you know, nearly 700 megawatt project.
To ramp on those projects that we've talked about last quarter and I think the one thing to kind of piggyback off of that is if you look at.
A gigawatt project in us nearly 700 megawatt project.
Speaker 7: You know, once those projects start flowing, you're getting kind of that recurring base load of revenue. So the project isn't having this like stop and start. So there's, you know, kind of a linear progression of revenue that's going to stretch over multiple quarters. So now that we've got some of these larger projects that are ultimately delivering, it gives us a further visibility on, you know, how much revenue that we're going to get in any given quarter from those projects. And then it's just adding new projects kind of along the way that are ultimately...
Once those projects start flowing youre, giving kind of that recurring base load of revenues. So the project isn't having thats like stop and start so there's kind of a linear progression of revenue that's going to stretch over multiple quarters. So now that we've got some of these larger projects that are ultimately delivering it gives us a further visibility on how much revenue that we are.
Are going to get in any given quarter from those projects and then it's just adding new projects kind of all along the way that are ultimately going to it's going to start.
Speaker 7: So, you know, converting from our current contract and award is finding new projects in Junction with, you know, these two large projects, plus several others that are, you know, ramping at the end of Q4. They're in Q4 and into 22.
Converting from our current contract and awarded finding new projects in conjunction with these two large projects plus several others that are ramping at the end of Q4 or in Q4 and into 2024.
Speaker 11: Right. So we have good potentially beyond situation where we see your real improvements.
Alright.
Could potentially be in a situation, where we see year over year improvements.
Through all four quarters next year.
Speaker 2: We definitely feel good about the growth process in 2024 and definitely revenue growth and margin improvement.
So we definitely feel good about the growth prospects in 2024 and definitely <unk>.
Growth and margin improvement for sure.
Okay. Thank you.
Speaker 11: Thank you. Just one last one on the one P offering, how much of the backlog or how much backlog for that product in the overall backlog number?
Just one last one number <unk> offering how much of the backlog or how much.
Backlog for that product in the overall backlog number.
Speaker 7: The majority of, if you look at the kind of contracting award, the majority of the backlog is our two important.
The majority of it.
You look at the kind of contracted and awarded the majority of the backlog is our two in portrait trucker.
Speaker 7: That really ties to the fact that the two important trackers have been around since...
Really ties to the fact that the two and part two and portrait tracker has been around since.
Speaker 7: 2017 and we brought it to market in 2019 and we didn't bring the one P pioneer until late Q3 and so we haven't had the time to build that one P backlog that we had with 2P. Now we are seeing a lot of being offered to bid on projects a lot of
2017 and product to market in 2019, and we didn't bring the one P pioneer Intel.
Late Q3, and so we haven't had the time to build that.
<unk>.
Backlog that we had with that we have with <unk> now we are seeing a lot of it.
A lot of being offered to bid on projects a lot of.
Speaker 11: activity around pioneer and the constructability benefits of it. And we expect to start building out our backlog of our 1P is kind of get through Q4 into the coming quarters. Thank you guys. That's what I appreciate it.
Activity around pioneer and the construct ability benefits of it.
We expect to start building out our backlog of our <unk>.
Get through Q4 and into the coming quarters.
Okay quite a bit I understood. Thank you guys Thats all I have I appreciate it.
Thank you.
Please standby for our next question.
Speaker 1: Our next question comes from a line of PVA or more can of with Raymond James in the social.
Our next question comes from the line of Paypal mechanics, with Raymond James and Associates. Your line is open.
Speaker 12: Yes, thanks for taking the question. Can we get an update on your manufacturing joint venture, which I think is now maybe a quarter or two since it started operating?
Yeah. Thanks for taking the question can we get an update on your <unk>.
Manufacturing joint venture, which.
It is now.
A quarter or two since it started operating.
Speaker 8: Yeah, I'll start on that one. So all the equipment's installed and we've been doing qualification runs. We've got some revenue facility in the in the current quarter here at Q4 and get larger in 2020.
Yeah I'll start on that one so all the equipment's installed and we've been doing qualification runs got some revenue facility in the in the current quarter here in Q4 and get larger in 2024.
And Patrick I don't know.
Speaker 13: that found something and have to go on dehydrate. Qu? and have to go on their thing.
Debbie.
Sorry, Bob.
No. Please go ahead.
Speaker 7: No, I just say, you know, Bill's right. I mean, you know, that's a facility is up and running. We've got projects going through it currently. And if you look at the, you know, some of the projects that are, you know, in delivery or in shipment in Q4 in 2024, the anticipation is that we'll be utilizing that facility. And when we're going to market with new bits or new quotations, you know, use and production of that facility is kind of at the forefront right now.
Right.
Our facility is up and running we've got projects going through are currently and if you look at the some of the.
Facts that are in delivery or in shipment in Q4 and 2024, the anticipation is that we'll be utilizing that facility.
And when we're going to market with new new bids or new quotations.
Use and production of that facility is kind of about it.
The forefront right now.
Is there.
Speaker 12: They're uplift and gross marches!
Uplift in gross margin.
Speaker 12: that you are anticipating. Once that is that's facility, it's fully wrapped up.
That you are anticipating one stat is that facility is fully ramped up.
So at this point, we're not making any benefit from fortify backs into the <unk>.
Speaker 8: So at this point, we're not baking any benefit from 45x into the in our
Our.
Speaker 8: In our current guidance, I picked Kathy once. There's learning else you wouldn't wanna have.
And our current guidance.
Cathy went there isn't anything else you'd want to add too.
Speaker 5: No, we do expect to see, you know, continue to improve in our margin, and that facility will be in support of that as well.
No.
We do expect to see continued improvement in our margin.
That facility will support that as well.
Okay, I know youre, not giving formal guidance yet.
Speaker 12: I know you're not giving formal guidance yet beyond Q1, but as you sort of zoom out on 2024 as a whole, do you anticipate being a cash user or a cash generator?
Q1, but as you sort of zoom out on 2024 as a whole do you anticipate being a cash user or a cash generator.
Well, we're moving we see crossover into profitability in 2024, so we expect to be generating cash in 2021.
Speaker 5: Well, we're moving, we see a crossover into profitability in 2024. So we expect to be generating cash in 2024.
Alright, thanks very much.
Thanks, Bob.
Thank you as a reminder, ladies and gentlemen that star one to ask a question. Please.
Speaker 1: Thank you. As a reminder, ladies and gentlemen, that star 11 to ask the question, please stand by.
Please standby for our next question.
Our next question comes from the line of John Wenham with UBS. Your line is open.
Speaker 1: Our next question comes from a line of John with UBS. Yalana's open.
Speaker 14: Great, thanks for taking the questions. I guess the first one just quickly, in the commentary from the board on the status of a CO and CFO permanent replacements and the parameters of which it internal, there's external candidates and what's of a time frame investors should expect on permanent replacements. Thanks.
Okay, great. Thanks for taking the questions.
I guess my first one just quickly any commentary from the board on the status of a CEO and CFO permanent replacements and the parameters of which is internal versus external candidates and what sort of timeframe investors should expect.
And permanent replacements. Thanks.
Alright, John Shaker. Thank you for the question. So the board like I said we.
Speaker 6: All right, John , this is Shaker. Thank you for the question.
Speaker 3: So the board, like I said, we have been involved with the details of the company in the last three months and trying to understand what's going on. And for now, we feel that the best team to take us forward is Patrick Sassan and Kathy with oversight from the board. And we do not want to rush into a CEO succession.
I have been involved with details of the company over the last three months and trying to understand what's going on.
And for now we feel that the best team to take us forward.
Patrick's Hassan and Kathy.
Oversight from the board and we do not want to rush into a CEO succession.
Primarily because there's urgency with which we need to get things done and we need to take our time in finding a good CEO and.
Speaker 3: primarily because there's urgency with which we need to get things done and we need to take our time and finding a good CEO .
Speaker 6: So for both those reasons, we'll be very deliberate to make sure we have positioned the company well. We have the team that we have now is a tremendous amount of operational depth.
And so for both those reasons will be very deliberate.
To make sure we have.
Positioned the company well.
We have the team that we have now is that a tremendous amount of operational depth.
Speaker 3: And they're also going to be guided by a board with a lot of operational depth. And Ahmad is going to act as a facilitator and he played a similar role at end phase, between 2017 and 2020.
And they're also going to be guided by a board with a lot of patients that nobody is going to act as a facilitator and you play a similar role at Enphase.
Between 2017 and 2020, so I think we feel good about the team that we have and we want to take our time and getting the.
Speaker 6: So I think we feel good about the team that we have and we want to take our time in getting the CEO in place. In terms of CFO , you know, Kathy is a very accomplished person to take that role. And we will decide on, you know, a replacement if it in turn, an external art to have Kathy going forward in the subsequent months. Hopefully that answers you.
CEO in place in terms of CFO Kathy.
Kathy is a very accomplished.
Person too.
Take that role and we will decide on Saturday.
R&D placement, either internal external or to have Kathy going forward.
In the subsequent months I hopefully that answers your question.
Speaker 15: Yeah, it did appreciate it. And then on the complete separate topic.
Yes, Tim I appreciate it and then on a completely separate topic.
Obviously there is.
Speaker 14: Obviously, there's, I think a healthy amount of skepticism around the $1.6 billion backlog. It's essentially the same size as a competitor that has 13 times the annual revenue.
Thank a healthy amount of skepticism around the $1 6 billion dollar backlog, it's essentially the same size as our competitors that has 13 times.
Annual revenue.
Yeah.
Is there any thought about taking an opportunity to provide more transparency on specifically what's in the backlog like specific projects is there anything to stop the company from disclosing specific projects again, I think just a little bit of comparability with just a portion of the backlog.
Speaker 14: Is there any thought about taking an opportunity to provide more transparency on specifically what's in the backlog? Like specific projects, is there anything to stop the company from disclosing specific projects? Again, I think just a little bit of comfortability with just a portion of the backlog would provide a lot of peace of mind for investors. Just your thoughts on that and I really appreciate you taking the questions.
Provide a lot of peace of mind for investors just your thoughts on that and I really appreciate you taking the questions. Thanks.
We've actually got that question.
Speaker 13: We've actually gotten that question recently and we actually did some work on that to put us doing that. We didn't present at this quarter it's given the changes that we announced, but that's something that over the next few months or something we do to put out or mention or the next call, but we definitely something that we're looking to do in some form.
Recently, and we actually did some work on that.
We're just doing that.
We didnt presented this quarter, given the changes that we announced but.
That's something that over.
The next few months or something we can either put out or mentioned on our next call but.
It's definitely something that we're looking to do some permanent.
Great.
Thank you.
Thank you.
Please standby for our next question.
Our next question comes from the line of Julien Dumoulin Smith with Bank of America. Your line is open.
Speaker 1: Our next question comes from the line of Julian Dumoulin Smith with Bunk of Merckert, Yalana Sop.
Speaker 16: Hey guys, it's Alex Raybewant for Julian. Maybe just actually if follow on to that question on sort of the makeup.
Hey, guys its Alex variable on for Julian.
Just actually a follow on to that question on sort of the makeup.
Speaker 16: of the backlog and the opportunity I'll frame it as I guess to provide a little bit more transparency. I know you guys obviously talked about UFLPA or I guess you just non-UFLPA orders, but also international as sort of being a shorter cycle.
The backlog in the the opportunity I'll frame it as I guess to provide a little bit more transparency I know you guys, obviously talked about <unk>.
Rguest yourself non <unk> orders, but also international as sort of being a shorter cycle faster ramp than some of the stuff. We're seeing in the U S. Just curious whats the status of that piece of it being as clearly things still look a little bit challenged and just curious I mean as far as the slippage is.
Speaker 16: faster ramp than some of the stuff you're seeing in the U.S.
Speaker 16: Just curious, what's the status of that piece of being clearly? Things still look a little bit challenged. And just curious, I mean, as far as these slippages, are you seeing the same thing internationally versus the US where obviously the rates environment is still high, but a little bit more muted depending on that. That's kind of where you're exposed. Thanks.
Are you seeing the same thing internationally.
Versus the U S, where obviously the rates environment is still high but but.
Little bit more muted, depending on kind of where youre access thanks, yes.
Yes, I mean, I think if you look at thank you for the question I mean, I think if you look at the regions in which we operate.
Speaker 7: Yeah, I mean, I think if you look at, thank you for the question. I mean, I think if you look in the regions in which we operate, you know, obviously the US is the largest portion. That's where we've had the longest kind of sustained presence.
Obviously the U S is the largest portion that's where we've had the longest kind of sustained presence.
Speaker 7: And some of the new geographies that we're seeing, certainly there's interconnection and financing challenges. We haven't seen it to the extent that we've seen it ultimately in the US, but that's a function of our early entrance into those markets. So we haven't been in them for four or five years where you're working on large 5, six, 700 megawatt project.
Some of the new geographies that we're seeing.
Certainly there is there is interconnection and financing challenges.
We haven't seen it to the extent that we've seen it ultimately in the U S. But that's a function of.
Kind of our early entrance into those into those markets. So we haven't been in them for four or five years, where you are working on large 567 hundred megawatt projects.
Speaker 7: traditionally in places like Spain and Italy, where there's not a lot of pre-use land. Most of the projects are, you know, sub-100 and megawatts. So those move forward and take the P.O. A little bit faster, but if you look at places like Australia, they have interconnection issues, ultimately as well, but it's more exacerbated here in the US.
Traditionally in places like Spain, and Italy, where there's not a lot of free use land. Most of the projects are sub 100 megawatts of those move forward and take the PEO a.
A little bit a little bit faster, but if you look at places like Australia.
They have interconnection issues.
Ultimately as well, but it's more exacerbated here in the U S that we've seen.
Speaker 16: Got it. Makes sense. What do you guys think, I guess, moving forward? I mean, clearly some, you know, recovery contemplated for Q1 at least.
Got it makes sense.
When you guys think I guess moving forward I mean clearly some.
Covered contemplated for Q1 at least.
Speaker 16: I think what's interesting is you guys obviously to your point, Patrick started as a 2P company sort of shifted to doing both at this point and also sort of brought in the commercial base outside of the US.
I think what's interesting is you guys obviously to your point Patrick started the company.
Sort of shifted to doing both at this point it also sort of brought in the commercial base.
Outside of the U S.
Speaker 16: It seems to us that there's a little bit of a, you know, I don't know what you'd call it, a flight to quality or to certain EPCs or players in the space. There's a little bit of a habit of not. I'm curious.
It seems to us that there's a little bit of a I don't want you to call it a flight to quality.
Certain EPC or players in this space there is a little bit of a hasnt have not I'm curious I mean.
Speaker 16: As you guys look to sort of reposition the business for growth up of a higher margin base.
As you guys look to sort of reposition the business for growth off of a higher margin base. How do you think about sort of targeting that more directly as it we just need to win more when P. Again is it hey international looks more attractive than than the U S. I mean, how would you sort of frame the strategy from here.
Speaker 16: How do you think about sort of targeting that more directly? Is it, we just need to win more 1P? Again, is it, hey, international looks more attractive than the US? And how would you sort of frame the strategy from here? I guess the other converting the existing backlog.
Beyond the converting the existing backlog.
Speaker 7: Yeah, no, that's a great question. I mean, I think, you know, obviously we're very excited about the US market. We're excited about the one P pioneer that we have to offer. And you know, certainly, you know, the copy PCs are the ones that are getting, you know, a majority of the business and we're, you know, we're penetrated with those accounts. And the one nice part is we're able to sit down with.
Yes, no. It's a great question I mean, I think obviously, we're very excited about the U S market. We're excited about the one the pioneer that we have to offer.
The top <unk> of the ones that are getting a majority of the business and where we're penetrated with <unk>.
Those accounts and the one nice part as we're able to sit down with.
Speaker 7: You know those top tier EPCs and ultimately developers and really design a project that's agnostic between one P and DUP and really maximize The the site based on you know the goals of that EPC or developer and I think that's been a differentiator for us
Those top tier EPC, and ultimately developers and really design a project, that's agnostic between <unk> and <unk> and really maximize.
The site based on the <unk>.
Golar that EPC or a developer and I think thats been a differentiator for us.
Speaker 7: Continuing to expand, I mean, double down in the US, continue to win projects. That's what we're, you know, that's a big focus for us. But you continue to grow our footprint internationally as well. So if you think about...
Continuing to expand I mean double down in the U S continue to win projects that cohort.
Big focus for us, but it is continuing to grow our footprint internationally as well. So if you think about.
Speaker 7: you know how we are boots on the ground strategy for the US. You win several projects and then they grow and get bigger and you've developed kind of a base load revenue and you've got kind of a fact pattern out there. We did the same thing in Australia where we've done over two dozen projects. From there and we're relatively well penetrated.
Our boots on the ground strategy for the U S. You win several projects and then they grow and get bigger and you've developed kind of a base load.
Revenue and you've got.
Kind of a fact pattern out there we did the same thing in Australia, where we've done over two dozen projects, there and where we are.
Relatively well penetrated we've recently won awards and.
Speaker 7: We've recently won awards in Spain and Italy, and we plan on delivering those in early 2024. So that gives us a stronger foot hold in Europe and a proof point for us to build a base around.
In Spain, and Italy, and we plan on delivering those in early 2024, so that gives us a stronger foothold in Europe, and a proof point for us to build a base around.
Speaker 7: And then also, you know, as Bill mentioned, continuing to expand in markets like South Africa, where, you know, we've delivered several large projects and expect to continue to grow that market.
And then also.
As Bill mentioned continuing to expand in markets like South Africa, where we have delivered several large projects and expect to continue to grow that market.
Speaker 7: ultimately as well and you know the commonality amongst those are
Ultimately as well in the <unk>.
Commonality amongst those are markets in which our value proposition of construct ability and quality hold true and that allows for the margin expansion, we're not looking to participate markets where.
Speaker 7: It's markets in which our value proposition of constructability and quality hold true. And that allows for the margin expansion. We're not looking to participate in markets where we aren't able to achieve profitable growth. And that's echoed by the comments that Shaker made in his opening remarks. That has mixed heads.
We arent able to achieve profitable.
Both MF.
Echoed by the comments that shaken made in his opening remarks.
Got it makes sense guys I appreciate the color.
Thank you.
I am showing no further questions in the queue.
Speaker 1: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
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