Q1 2024 Shoals Technologies Group Inc Earnings Call

Operator: Good afternoon, and welcome to the Shoals Technologies Group first quarter 2024 earnings conference call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Mehgan Peetz, Chief Legal Officer for Shoals Technology Group. Thank you. You may begin. Thank you, operator, and thank you everyone.

Good afternoon, and welcome to the shelf Technologies Group first quarter 2024 earnings Conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A.

At this time I would like to turn the conference over to Megan.

Megan: Chief legal officer for Shoals technology thing.

Megan: Thank you you may begin thank you operator, and thank you everyone for joining us today hosting the call with me are CEO Brandon.

Mehgan Peetz: You may begin. Thank you, Operator, and thank you, everyone, for joining us today on the call with me, our CEO, Brandon Moss, CFO, Dominic Bardos, and our new Vice President of Finance and Investor Relations, Matt Trachtenberg. On this call, management will be making projections or other forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. As you listen and consider these comments, you should understand that these statements, including guidance for the second quarter and full year 2024, are not guarantees of performance or results.

Megan: The F O Dominic BARDA, and our new Vice President of Finance and Investor Relations not tracking Berg.

Mehgan Peetz: Actual results could differ materially from our forward-looking statements if any of our assumptions are incorrect or because of other factors. These factors include, among other things, the risk factors described in our filings with the Securities and Exchange Commission, including economic, market, and industry conditions, defects, or performance problems in our products or their parts, including those related to the wire insulation shrinkback matter, failure to accurately estimate the potential losses related to such matter, and failure to recover those losses from the manufacturer, decreased demand for our product, policy and regulatory changes, supply chain disruptions, and availability and price of our components and [inaudible] Although we may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate, who are incorrect, and therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.

Megan: On this call management will be making projections or other forward looking statements.

Megan: Based on current expectations and assumptions, which are subject to risks and uncertainties.

Megan: You listened and consider these comments you should understand that these statements including guidance for the second quarter and full year 2024 are not guarantees of performance. Our results actual results could differ materially from our forward looking statements. If any of our assumptions are incorrect or because of other factors. These factors include among other things the risk factors.

Megan: As described in our filings with the Securities and Exchange Commission, including economic market and industry conditions defect performance.

Megan: Performance problems and our products for their part, including those related to the wire insulation shrink back later failure to accurately estimate the potential losses related to such matter and failure to recover those losses from the manufacturer.

Megan: Demand for our product policy, and regulatory changes supply chain disruptions and availability and price of our components and materials.

Megan: Although we may indicate and believe that the assumptions underlying the forward looking statements are reasonable any of these assumptions could prove inaccurate.

Megan: Or incorrect and therefore, there can be no assurance that the results contemplated in the forward looking statements will be realized.

Mehgan Peetz: We caution that any forward-looking statements included in this discussion are made as of the date of this discussion, and we do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's first quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures. With that, I will turn the call over to Shoals CEO, Brandon Moss.

Megan: Cautioned that any forward looking statements included in this discussion is made as of the date of this discussion we do not undertake any duty to update any forward looking statements.

Megan: Today's presentation also includes references to non-GAAP financial measures.

Megan: You should refer to the information contained in the company's first quarter press release for definitional information and reconciliations of historical non-GAAP measures to comparable GAAP financial measures.

Megan: With that let me turn the call over to shoulder CEO Brendan Mark.

Brandon Moss: Thank you, Meghan. Good afternoon, everyone.

Brandon Moss: Thank you Meghan and good afternoon, everyone I want to start by welcoming Marc Trachtenberg, our new Vice President of Finance and Investor Relations that will be leading our IR efforts and is looking forward to meeting all of you.

Brandon Moss: I want to start by welcoming Matt Trachtenberg, our new Vice President of Finance and Investor Relations. Matt will be leading our IR efforts and is looking forward to meeting all of you. Turning to our agenda, I'll begin with a discussion of some key macro trends regarding energy demand and solar power markets, both domestically and internationally. I'll then shift focus to discuss some specific Shoals business updates, including backlog and awarded orders, shrink back warranty remediation, and our ongoing ITC intellectual property litigation.

Brandon Moss: Turning to our agenda I'll begin with a discussion of some key macro trends regarding energy demand in solar power markets, both domestically and internationally.

Marc Trachtenberg: I will then shift focus to discuss some specific shows business updates, including backlog and awarded orders shrank back warranty remediation and our ongoing ITC intellectual property litigation.

Brandon Moss: Also provide additional insight as to where <unk> fits into the timeline of a solar plant construction project, particularly our revenue recognition as it related to our solar plants commercial operation date.

Brandon Moss: Finally, I'll discuss revenue contributions from our adjacent product areas of battery energy storage systems and E mobility before handing the call over to Dominic <unk>, who will review our financial results for the quarter and our outlook for the remainder of 2024.

Brandon Moss: I'll also provide additional insight as to where Shoals fits into the timeline of a solar plant construction project, particularly our revenue recognition as related to a solar plant's commercial operation date. Finally, I'll discuss revenue contributions from our adjacent product areas of battery energy storage systems and e-mobility before handing the call over to Dominic, who will review our financial results for the quarter and our outlook for the remainder of 2024. Before I talk about what we see going forward in the solar industry, I'd like to take a moment to reflect on what our industry has achieved and Shoals' role in it.

Dominic Bardos: Before I talk about what we see going forward in the solar industry I'd like to take a moment to reflect on what our industry has achieved and shows Roland.

Brandon Moss: According to the Energy Information Administration, or EIA, solar power represented the single greatest source of new generation capacity in 2023. Solar energy accounted for 4% of power production in the United States last year and is expected to account for 6% and 7% in 2024 and 2025, respectively. That is extraordinary when you consider the size and the power market in the U.S.

Dominic Bardos: According to the energy information administration or EIA solar power represented the single greatest source of new generation capacity in 2023.

Dominic Bardos: Solar energy accounted for 4% of power production in the United States last year and is expected to account for 6% and 7% in 2024 and 2025, respectively.

Dominic Bardos: That is extraordinary when you consider the size of the power market in the U S.

Brandon Moss: Solar power generation is also leading all forms of renewable energy in terms of new capacity being added to power grids globally. In the U.S., solar power will represent more than 50 percent of all utility scale renewable generation capacity added to the grid from 2020 through 2023. We are very proud of the role Shoals has played in enabling the industry's growth.

Dominic Bardos: Solar power generation is also leading all forms of renewable energy in terms of new capacity will be added to power grids globally.

Dominic Bardos: In the U S.

Dominic Bardos: <unk> is represented more than 50% of all utility scale renewable generation capacity added to the grid from 2020 through 2023.

Speaker Change: We are very proud of the role Shoals has played in enabling the industry's growth.

Brandon Moss: Our products make it possible to build faster with less labor at lower cost and higher reliability than competing solutions. As significant as growth has been in solar over the past five years, we see the potential for continued attractive growth in the future. Our optimism is underpinned by two tailwinds the industry did not have in recent years: Accelerating Load Growth and Rising Power Prices. Over the past five years, total electricity demand in the U.S. grew by only 0.1 percent.

Dominic Bardos: Our products make it possible to build faster with less labor.

Dominic Bardos: Sure cost and higher reliability and competing solutions.

Dominic Bardos: As significant as growth has been in solar over the past five years, we see the potential for continued attractive growth in the future. Our optimism is underpinned by two tailwind the industry did not have in past years.

Dominic Bardos: Accelerating load growth and rising power prices.

Dominic Bardos: Over the past five years total electricity demand in the U S grew by only 0.1%.

Brandon Moss: Over the next five years, utility filings with the Federal Energy Regulatory Commission show load growing at 4.7 percent. That significant growth is driven by a combination of data centers, reshoring of manufacturing, electric vehicles, and increased weather volatility, requiring more heating and cooling. Meeting all the new demand will require more generation capacity, and we expect solar to get more than its fair share of that. At the same time, as demand is increasing, so are power prices. The average price paid by commercial and industrial customers for electricity increased by 20 percent from 2020 to 2023 and has continued to increase despite very low gas prices.

Dominic Bardos: Over the next five years utility filings with FERC show low growing at four 7%.

Dominic Bardos: That's significant growth is driven by a combination of data centers re shoring of manufacturing electric vehicles and increased weather volatility requiring more heating and cooling.

Dominic Bardos: Meeting all the new demand will require more generation capacity and we expect solar to get more than its fair share of that.

Dominic Bardos: At the same time as demand is increasing solar power prices. The average price paid by commercial and industrial customers for electricity increased by 20% from 2020 to 2023.

Dominic Bardos: Continued and increased despite very low gas prices.

Dominic Bardos: Primary driver is higher transmission and distribution charges, which is why we don't think power prices are likely to come down in the future.

Brandon Moss: The primary driver is higher transmission and distribution charges, which is why we don't think power prices are likely to come down in the future. Higher power prices benefit solar because solar can not only reduce costs but also give commercial and industrial users more certainty they need to accurately forecast their costs. We believe that the long-term fundamentals underpinning solar growth remain in place and are arguably better today than they have been historically.

Dominic Bardos: Higher power prices benefits solar because solar can not only reduce cost, but also give commercial and industrial users more certainty they need to accurately forecast their cost.

Dominic Bardos: We believe that the long term fundamentals underpinning solar growth to remain in place and are arguably better today than they have been historically however.

Brandon Moss: However, our industry is currently impacted by two key issues in the near term. These are the speed at which utilities and regulators connect new projects to the grid and the availability of key equipment. Over one half of all solar projects in development have been delayed six months or more, according to the EIA. Within our business, we are experiencing reduced revenue in the near to midterm due to solar project delays that have pushed projects out from the first half of 2024. Permitting issues, higher financing costs, extended equipment lead times, particularly for transformers and switchgear, and long interconnection queues continue to stifle industry growth.

Dominic Bardos: However, our industry is currently impacted by two key issues in the near term.

Dominic Bardos: The speed at which utilities and regulators connect new projects to the grid and the availability of key equipment.

Dominic Bardos: Over one half of all solar projects in development have been delayed six months or more according to the EIA.

Dominic Bardos: Within our business, we are experiencing reduced revenue in the near to mid term due to solar project delays that have pushed projects out from the first half of 2024.

Dominic Bardos: Permitting issues higher financing cost extended equipment lead times, particularly for Transformers, and switch gears and long interconnection queues continue to stifle industry growth.

Brandon Moss: These construction delays will impact our results in the near term, but we expect this trend to reverse over time. Our experience mirrors the projections of major industry analysts and consultants. They see installations of new solar capacity in 2025 as flat when compared to 2024, with potentially approximately 28 gigawatts of new solar generation added to the grid in the base case. The capacity expected to come online in 2025 will drive our 2024 revenue, given we typically produce and begin recognizing revenue approximately 13 months before a solar project achieves its commercial operation date and is counted in the installed capacity figures tracked by regulators and industry analysts. I'll share more information about this relationship later.

Dominic Bardos: These construction delays will impact our results in the near term, but we expect this trend to reverse over time.

Dominic Bardos: Our experienced mirrors, the projections of the major industry analysts and consultants.

Dominic Bardos: <unk> installations of new solar capacity in 2025 is flat when compared to 2024 with potentially approximately 28 gigawatts of new solar generation added to the grid in the base case.

Dominic Bardos: The capacity expected to come online in 2025, we will drive our 2024 revenue given we typically produce and begin recognizing revenue approximately 13 months before a solar project achieved commercial operation date and is counted in the installed capacity figures.

Dominic Bardos: By regulators and industry analysts.

Speaker Change: I'll share more information about this relationship later.

Brandon Moss: One area we do not see major project delays is the community, commercial, and industrial market. The CC&I market is roughly 10% of the size of the utility-scale market but is expected to grow at a faster rate than utility-scale solar, in part because these projects get interconnected faster and use more widely available equipment. We are increasing our focus on the CCNI market, and we believe the addressable market for all products is one and a half to two gigawatts of community solar projects and approximately two gigawatts of commercial and industrial projects.

Speaker Change: One area, we do not see major project delays as the community commercial and industrial market.

Speaker Change: C&I market is roughly 10% of the size of the utility scale market, but is it expected to grow at a faster rate than utility scale solar in part because of these projects get interconnected faster.

Dominic Bardos: Used more widely available equipment, we are increasing our focus on the C&I market and we believe the addressable market for our products is one five to two gigawatts of community solar projects and approximately two gigawatts for commercial and industrial projects.

Brandon Moss: The CC&I market represents another growth opportunity for Shoals. We will move quickly to bring the best products to market for our customers. With that said, initial customer response has been very positive, and we expect to show progress in these areas in late 2024, with potentially more significant revenue coming in 2025. Turning to the international market, $77.9 million of our backlog and awarded orders at the end of the quarter were for projects outside of the U.S., with the most significant portion coming from projects in Africa.

Dominic Bardos: The C&I market represents another growth opportunity for Shoals, we will move quickly to bring our best product set the market for our customers.

Dominic Bardos: With that said initial customer response has been very positive and we expect to show progress in these areas in late 2024 with potentially more significant revenue coming in 2025.

Brandon Moss: Our project wins in Africa represent the largest order book that we have ever had outside of the U.S. We will continue to focus on select international markets for growth. Latin America, Australia, certain southern European countries, Africa, and the Middle East are all desirable for a number of reasons.

Dominic Bardos: Turning to the international market.

Dominic Bardos: $77 $9 million of our backlog and awarded orders at the end of the quarter is for projects outside of the U S. With the most significant portion coming from projects in Africa.

Dominic Bardos: Our project wins in Africa represent the largest order book that we have ever had outside of the U S. We will continue to focus on select international markets for growth Latin.

Dominic Bardos: Latin America, Australia, certain southern European countries Africa, and the Middle East are all desirable for a number of reasons.

Brandon Moss: Collectively, these regions have an estimated addressable market of 63 gigawatts in 2025. To summarize our perspectives on the market, first, we believe the fundamentals underlying continued long-term growth in solar remain in place, driven by accelerating load growth and persistently higher power prices. Second, we believe the near-term headwinds creating project delays will give way to longer-term sustainable growth as utilities, regulators, and equipment suppliers adjust to greater demand for generation capacity. Third, we believe that because our products make it possible to build faster with less labor at lower cost and higher reliability than competing solutions, they are extraordinarily valuable to our customers, particularly in the current environment.

Dominic Bardos: Collectively these regions have an estimated addressable market of 63 Gigawatts in 2025.

Dominic Bardos: To summarize our perspectives on the market first we believe the fundamentals underlying continued long term growth in solar remain in place driven by accelerating low growth and persistently higher power prices.

Dominic Bardos: Second we believe the near term headwinds, creating project delays will give way to longer term sustainable growth as utilities regulators and equipment suppliers adjust to greater demand for generation capacity.

Dominic Bardos: Third we believe that because our products make it possible to build faster with less labor at lower cost and higher reliability than competing solutions.

Dominic Bardos: Extraordinarily valuable to our customers, particularly in the current environment.

Brandon Moss: Fourth, we see the CC&I market is less exposed to the issues that have delayed many utility-scale projects, and it will be a key focus area for us going forward. We also see strong growth outside of the U.S., particularly in the MENA region, and are positioning ourselves to take advantage of that growth. Turning now to Shoals Specific Business Updates, I would like to start by reminding everyone where Shoals products fit into the construction timeline of a new utility-scale solar plant.

Dominic Bardos: Fourth we see the C&I market is less exposed to the issues that have delayed many utility scale projects and it will be a key focus area for us going forward.

Brandon Moss: Yes, we see strong growth outside of the U S, particularly in the Mena region and are positioning ourselves to take advantage of that growth.

Dominic Bardos: Turning now to show specific business updates.

Brandon Moss: To provide more color, we've included additional charts in our quarterly slide presentation, available on our website. One important point I want to expand on is the timing of the sale of our products as it relates to a project being completed and energized. Because Shoals manufactures the eBoss solution that installs after the structural balance of systems is in place, we typically deliver our products in the middle of a solar field construction timeline.

Dominic Bardos: I'd like to start by reminding everyone of our shoulder products into the construction timeline of the newly <unk> scale solar plant.

Dominic Bardos: Provide more color. We've included additional charts, our quarterly slide presentation available on our website.

Dominic Bardos: One important point I want to expand on is the timing of the sale of our products as it relates to a project being completed and energized.

Dominic Bardos: Because shows manufacturers the EBA solution that installed after the structural balance of system is in place, we typically deliver our products in the middle of a solar field construction timeline.

Brandon Moss: As a result, we are recognizing revenue for projects well in advance of them being connected to the grid, energized, and counted towards market size calculations. EPCs, on the other hand, are recognizing revenue throughout the build cycle. To further illustrate that timing, we have included a chart in our quarterly materials that shows the revenue recognition of our top 20 projects in 2023, only one of which went live that year. The remainder are scheduled to go live in 2024 or 2025.

Brandon Moss: As a result, we are recognizing revenue for projects well in advance of it being connected to the grid energized and counted towards market SaaS calculations CPC is on the other hand, our recognizing revenue throughout the build cycle.

Dominic Bardos: To further illustrate that timing we have included a chart in our quarterly materials that shows the revenue recognition of our top 20 projects in 2023, only one which went live that year.

Brandon Moss: Therefore, our 2023 revenue was predominantly tied to the 2024 market figures, and revenue this year will be driven by projects that are expected to be energized in 2025. This information is provided to assist you in modeling for growth against future market expectations. At the end of the first quarter, backlog and awarded orders were $615.2 million, driven by the addition of $75 million of awarded orders.

Brandon Moss: The remainder are scheduled to go live in 2024 or 2025, and therefore, our 2023 revenue was predominantly tied to the 2024 market figures revenue. This year will be driven by projects that are expected to be energized in 2025.

Brandon Moss: This information is provided to assist you in modeling our growth against future market expectations.

Brandon Moss: At the end of the first quarter backlog and awarded orders were $615 $2 million driven by the addition of $75 million of awarded orders.

Brandon Moss: This may be further broken down to backlog, where purchase orders have been received for $196.2 million and awarded orders for $419 million. Of the total $615.2 million of BLAO, $484.2 million have projected shipment dates in the next four quarters. It is important to note that we achieved record quote volumes during the quarter. Furthermore, our pipeline is at record levels and continues to grow. While the near-term landscape is challenging, we remain optimistic about the opportunities ahead.

Dominic Bardos: This may be further broken down to backlog.

Dominic Bardos: Purchase orders have been received a $196 $2 million in awarded orders of $419 million.

Brandon Moss: Of the total $615 $2 million of BL Ao.

Dominic Bardos: $484 2 million have projected shipment dates in the next four quarters.

Brandon Moss: It is important to note that we achieved record quote volumes during the quarter further our pipeline is at record levels and continues to grow while the near term landscape is challenging we remain optimistic about the opportunity ahead.

Brandon Moss: Shifting our attention to our remediation efforts related to shrinkback on wire purchased from Prismium, a former vendor, our potential range of exposure has not changed this quarter. Since our last update, we have become aware of only one additional site displaying shrinkback.

Brandon Moss: Shifting our attention to our remediation efforts related to shrink back on wire purchase from premium a former vendor or potential range of exposure, which has not changed this quarter. Since our last update we have become aware of volume one additional site displaying shrink back we continue to work with our customers to remediate known issues.

Brandon Moss: And further address challenges and opportunities.

Brandon Moss: We continue to work with our customers to remediate known issues and further address challenges and opportunities. In terms of the legal proceedings against Prismian, we are working through the process and expect written discovery and depositions to be completed by early next year. We're pursuing legal action against Prismian as we seek compensatory and punitive damages, recovery of all costs and expenses incurred by us in connection with the identification, repair, and replacement of the defective wire, and other legal and equitable relief.

Brandon Moss: In terms of the legal proceedings against Brisbane, We're working the process and expect written discovery and depositions and be completed by early next year.

Brandon Moss: We are pursuing legal action against <unk>, because we see compensatory and punitive damages recovery of all costs and expenses incurred by us in connection with the identification repair and replacement of the effect of wire and other legal and equitable relief.

Brandon Moss: With regard to our ITC intellectual property litigation, we completed the ITC trial in Washington, D.C., in March. We expect to hear the court's initial ruling in July, the full ITC commission review in November, and final resolution following a potential presidential review in January of 2025. We feel strongly about accomplishing our goal of preventing the importation of products that infringe on our BLA solution and look forward to the initial ruling in July. Additionally, we intend to pursue remedies for damages in district court following the final resolution.

Brandon Moss: With regards to our ITC intellectual property and litigation, we completed the ITC trial in Washington, DC in March we expect to hear the courts initial ruling in July for ITC Commission review in November and final resolution following a potential presidential review in January of 2025.

Brandon Moss: Yes.

Brandon Moss: We feel strongly about accomplishing our goal of preventing the importation of products that infringe on our BLA solution and look forward to the initial ruling in July.

Dominic Bardos: Additionally, we intend to pursue remedies for damages in district Court following the final resolution.

Brandon Moss: Now that I have completed three quarters in my role with Shoals, I want to provide you with an update on the priorities I laid out for my first year. As Shoals continued its evolution from a small founder-led company to a rapidly growing public company last year, I needed to assess the talent, organizational structure, and operating cable. Positive changes have been made. Over the last nine months, we have refined and refocused our corporate strategy. We hired and onboarded key talent and critical functions. In addition, we implemented an enhanced operating model with a regular cadence and more robust analytics as Shoals continues to build a more data-driven culture.

Brandon Moss: Now what I have completed three quarters in my role with Shoals I want to provide you with an update on priorities I laid out my first year.

Brandon Moss: It shows continued its evolution from a small founder led company to a rapidly growing public company last year I needed to assess the talent organizational structure and operating cadence.

Brandon Moss: Changes have been made.

Brandon Moss: Over the last nine months, we have refined and redeployed our corporate strategy.

Brandon Moss: We hired and on boarded key talent in critical functions. In addition, we implemented an enhanced operating model with a regular cadence and more robust analytics as shoals continues to build a more data driven culture.

Brandon Moss: While it's hard to immediately see the impact of those changes from the outside, they have made our organization significantly stronger in ways that I am confident will drive better results for our shareholders. Additionally, I've assessed the status of Shoals' product portfolio, go-to-market strategy, business development capabilities, and sales team in conjunction with our strategic growth plans. I will now provide some of my initial takeaways.

Brandon Moss: While it's hard to immediately see the impact of those changes from the outside they have made our organization significantly stronger in ways that I'm confident will drive better results for our shareholders.

Brandon Moss: Additionally, I have assessed the status of shoulder product portfolio go to market strategy business development capabilities and sales team in conjunction with our strategic growth plans I will now provide some of my initial takeaways.

Brandon Moss: Consistent with our comments over the last several quarters, the predominance of our growth has been driven by the domestic utility scale solar industry. This quarter is no different, as less than 1% of our revenue was derived from international solar, domestic e-mobility, and energy storage solutions. International solar is beginning to show signs of more consistent growth. I fully intend to maintain a strong focus on capturing market share in our targeted region.

Brandon Moss: Consistent with our comments over the last several quarters. The predominance of our growth has been driven by the domestic utility scale solar industry.

Brandon Moss: This quarter is no different is less than 1% of our revenue was derived from the international solar.

Brandon Moss: <unk> E mobility and energy storage solutions.

Brandon Moss: International Solar is beginning to show signs of more consistent growth fully intend to maintain a strong focus on capturing market share in our targeted regions.

Brandon Moss: I described the target regions earlier, and we will continue to implement our international strategy. Our e-mobility product offering, which utilizes our big lead assembly trunk bus system, provides value to fleet operators that need multiple charging stations in close proximity to each other. Some of our initial customers were impacted by higher interest rates, reduced consumer spending, and availability of battery energy delivery vehicles last year. As a result, revenues in 2023 declined significantly from our launch in 2022, and they remain at a low level. We will continue to review the entire platform and prioritize investment in businesses that we believe will create value for our shareholders. Our battery energy storage system revenue was also de minimis this quarter.

Brandon Moss: Scribe the target regions earlier, and we will continue to implement our international strategy.

Brandon Moss: Our E mobility product offering which utilizes our big lead Assembly trunk bus system provides value to fleet operators that need multiple charging stations in close proximity to each other.

Brandon Moss: Some of our initial customers were impacted by higher interest rates reduced consumer spending and availability of battery energy delivery vehicles last year.

Brandon Moss: As a result revenues in 2023 declined significantly from our launch in 2022 and they remain at low levels.

Brandon Moss: We will continue to review the entire platform.

Brandon Moss: Prioritize investment in businesses that we believe will create value for our shareholders.

Brandon Moss: Our battery energy storage system revenue was also de Minimis this quarter, while the solar industry is experiencing higher attach rates of storage solutions. We do not currently have a complete plug and play product offering that is desired by most customers. We remain very interested in this market, but will likely have to <unk>.

Brandon Moss: While the solar industry is experiencing higher catch rates for storage solutions, we do not currently have a complete plug-and-play product offering that is desired by most customers. We remain very interested in this market, but we will likely have to modify our product offering and go-to-market strategy to maximize our growth potential in this area. So for now, we continue to expect the majority of our revenue to be directly linked to Solar eBoss solutions.

Brandon Moss: Modify our product offering and go to market strategy to maximize our growth potential in this area.

Brandon Moss: So for now we continue to expect the majority of our revenue to be directly linked to solar Ebor solutions.

Brandon Moss: Our core offering is for the domestic utility-scale solar market, but we are the market leader and will provide the vast majority of our revenue this year. Importantly, we believe that there are still significant opportunities to grow with the market as well as benefit from further increases in our market share. As part of my broader business review, we have realigned our sales force to go after what we would describe as low-hanging fruit that we expect to benefit the company in the coming quarters.

Brandon Moss: Our core offering is for the domestic utility scale solar market, but we are the market leader and we will provide the vast majority of our revenue this year.

Brandon Moss: Importantly, we believe that there are still significant opportunities to grow with the market as well as benefit from further increases to our market share.

Brandon Moss: As part of my broader business review, we have realigned our sales force to go after what we would describe as low hanging fruit that we expect to benefit the company in coming quarters.

Brandon Moss: In addition to domestic utility-scale solar, we are seeing tangible opportunity in the international and CC&I markets in the near to medium term. And over the longer term, we do expect to leverage BLA into other applications, as we've previously discussed. With that, I'll now turn it over to Dominic, who will discuss our first quarter financial results and outlook for the year.

Brandon Moss: In addition to domestic utility scale solar we are seeing tangible opportunity and then international and <unk> markets near to medium term and over the longer term, we do expect to leverage BLA into other applications as we have previously discussed.

Brandon Moss: With that I'll now turn it over to Dominic who will discuss our first quarter financial results and outlook for the year Dominic.

Dominic Bardos: Thanks, Brandon, and good afternoon to everyone on the call. Turning to our results. First quarter net revenue declined 14% to $90.8 million versus the same period in 2023. The decline in sales was driven by project pushouts, which resulted in lower demand for our products in domestic utility scale solar projects and by fewer days of production, resulting in lower sales volume. Gross profit decreased to $36.5 million compared to $48.3 million in the prior year period.

Dominic: Thanks, Brandon and good afternoon to everyone on the call.

Dominic Bardos: Rose profit as a percentage of net revenue was 40.2% compared to 45.9% in the prior year period, primarily due to higher labor costs and lower fixed cost absorption. During the quarter, similar to the fourth quarter of 2023, we did not incur wire installation shrink pack warranty liability expenses or our cost of goods sold. Therefore, there was no adjustment to gap gross profit necessary during the period.

Dominic Bardos: Turning to our results.

Dominic Bardos: First quarter net revenue declined 14%.

Dominic Bardos: $8 8 million versus the same period in 2023 the.

Dominic Bardos: A decline in sales was driven by project push outs, which resulted in lower demand for our products and domestic utility scale solar projects and by fewer days of production, resulting in lower sales volumes.

Dominic Bardos: Gross profit decreased to $36 5 million compared to $48 3 million in the prior year period.

Dominic Bardos: Gross profit as a percentage of net revenue was 42% compared to 45, 9% in the prior year period, primarily due to higher labor costs and lower fixed cost absorption.

Dominic Bardos: During the quarter similar to the fourth quarter of 2023, we did not incur wire installation street back warranty liability expenses and our cost of goods sold. So there was no adjustment to GAAP gross profit necessary during the period.

Dominic Bardos: Further, as Brandon mentioned, based on our current knowledge and assumptions, the remediation range remains at $59.7 million at the low end and $184.9 million at the high end. During the quarter, we spent $3.7 million in cash as we ramped up remediation efforts, and we had a remaining warranty liability on our balance sheet of $51.2 million related to the shrink back matter as of March 31st. The current portion of the remaining liability is now $31.1 million.

Dominic Bardos: Further as Brandon mentioned based on our current knowledge and assumptions the remediation range remains at $59 $7 million at the low end and $184 $9 million at the high end.

Dominic Bardos: During the quarter, we spent $3 7 million in cash as we ramped up remediation efforts.

Dominic Bardos: Remaining warranty liability on our balance sheet of $51 $2 million related to the shrink back matter as of March 31.

Dominic Bardos: The current portion of the remaining liability is now $31 1 million.

Dominic Bardos: As a reminder, this represents the amount of cash we estimate we will consume during the next four quarters as we continue remediation efforts and does not reflect any potential recovery from Prismian. Shifting to general and administrative expenses, for the first quarter, we incurred $22.8 million of G&A expense compared to $20 million during the same period in the prior year. The year-over-year increase in general and administrative expenses was primarily related to legal fees for the patent infringement and wire insulation shrink-back matters, and planned increases in payroll expenses due to higher headcounts supporting growth, all of which was partially offset by lower stock-based compensation. Approximately $850,000 of G&A expenses were specifically related to the wire insulation shrink-back litigation.

Dominic Bardos: As a reminder, this represents the amount of cash we estimate we will consume during the next four quarters as we continue remediation efforts and does not reflect any potential recovery from Brisbane.

Dominic Bardos: Shifting to general and administrative expenses for the first quarter, we incurred $22 8 million of G&A expense compared to $20 million during the same period in the prior year.

Dominic Bardos: The year over year increase in general and administrative expenses was primarily related to legal fees for the patent infringement and wire insulation shrink back matters and planned increases in payroll expenses due to higher head count supporting growth all of which was partially offset by lower stock based compensation.

Dominic Bardos: Approximately $850000 of G&A expense was specifically related to the wire insulation shrink back litigation.

Dominic Bardos: Net income was $4.8 million in the first quarter, compared to $17.0 million during the same period in the prior year; adjusted EBITDA in the first quarter was $20.5 million compared to $38.1 million in the prior year. Adjusted EBITDA margin was 22.5% compared to 36.3% a year ago, largely a result of lower gross margin. Adjusted net income was $12.6 million in the first quarter compared to $25.3 million in the prior year period.

Dominic Bardos: Net income was $4 8 million in the first quarter compared to 17.0 million during the same period in the prior year.

Dominic Bardos: Adjusted EBITDA in the first quarter was $25 million.

Dominic Bardos: Compared to $38 1 million in the prior year period.

Dominic Bardos: Adjusted EBITDA margin was 22, 5% compared to 36, 3% a year ago, largely a result of lower gross margin.

Dominic Bardos: Adjusted net income was $12 6 million in the first quarter compared to $25 3 million in the prior year period.

Dominic Bardos: Cash flow from operations was $12.9 million, while capital expenditures were $2.5 million. Our balance sheet remains very strong, and we ended the quarter with net debt to adjusted EBITDA of one time, which is down from two times a year ago and a significant improvement from 4.4 times as of Q1 2022. During the quarter, we amended and extended our revolving credit facility for five years and retired our term loan. The new revolving credit facility has been upsized from $150 million to $200 million and carries a lower interest rate compared to the old term loan.

Dominic Bardos: Cash flow from operations was $12 9 million.

Dominic Bardos: While capital expenditures were $2 5 million.

Dominic Bardos: Our balance sheet remains very strong and we ended the quarter with net debt to adjusted EBITDA of one times, which is down from two times a year ago and a significant improvement from the four four times as of Q1 2022.

Dominic Bardos: During the quarter, we amended and extended our revolving credit facility for five years and retired our term loan.

Dominic Bardos: The new revolving credit facility has been upsized from $150 million to $200 million.

Dominic Bardos: And carries a lower interest rate compared to the old term loan.

Dominic Bardos: We appreciate the support of our new and existing bank partners. However, equally important to our strong cash flow generation is how that capital is allocated. As I've shared with you on past calls, our focus will remain on driving sustainable, long-term organic growth. However, other opportunities that create shareholder value may present themselves, and we are in regular discussion with our board. Those may include inorganic opportunities that expand our presence in underrepresented markets or broaden our offering to existing customers.

Dominic Bardos: We appreciate the support of our new and existing Bank partners.

Dominic Bardos: Equally important to our strong cash flow generation is how that capital is allocated.

Dominic Bardos: As I've shared with you on past calls our focus will remain on driving sustainable long term organic growth.

Dominic Bardos: However, other opportunities that create shareholder value may present themselves and we are in regular discussions with our board.

Dominic Bardos: Those may include inorganic opportunities that expand our presence in underrepresented markets or broaden our offering to existing customers.

Dominic Bardos: Another might be repurchasing our own shares, given what we believe may be a disconnect between our current valuation and the long-term value we are creating. Our commitment is that we will deploy our capital to the activities that generate the highest return for shareholders. Turning to backlog, as of March 31, 2024, we had $615.2 million in backlog and awarded orders, an increase of 17% year over year, as the company added $75 million in orders during the period.

Dominic Bardos: Another might be repurchasing our own shares given what we believe may be a disconnect between our current valuation and the long term value we are creating.

Dominic Bardos: Our commitment is that we will deploy our capital to the activities that generate the highest returns for shareholders.

Dominic Bardos: Turning to backlog as of March 31, 2024, we had $615 2 million in backlog and awarded orders an increase of 17% year over year as the company added $75 million in orders during the period.

Dominic Bardos: As we discussed last quarter, some of our international orders have longer lead times than domestic orders, and we are also winning domestic jobs that extend beyond our historical revenue cycle of 9 to 13 months to realize revenue from those awarded orders. As of March 31st, approximately $204.4 million of our backlog and awarded orders had delivery dates beyond 2024. Turning now to The Outlook. Given the current headwinds in the utility-scale solar market, some of our customers have experienced project delays.

Dominic Bardos: As we discussed last quarter some of our international orders have longer lead times than domestic orders and we're also winning domestic jobs that extend beyond our historical revenue cycle of nine to 13 months to realize revenues from those awarded orders.

Dominic Bardos: As of March 31, approximately $204 4 million of our backlog and awarded orders had delivery dates beyond 2024.

Dominic Bardos: As a result of the current macro uncertainty, we will continue to provide quarterly guidance for the remainder of the year. Based on current business conditions, business trends, and other factors, for the quarter ending June 30, 2024, the company expects revenue to be in the range of $85 million to $95 million, and adjusted EBITDA to be in the range of $20 million to $25 million. Based on current business conditions, business trends, and other factors for the full year 2024, the company now expects revenue to be in the range of $440 million to $490 million.

Dominic Bardos: Turning now to the outlook.

Dominic Bardos: Given the current headwinds in the utility scale solar market some of our customers have experienced project delays.

Dominic Bardos: As a result of the current macro uncertainty we will continue to provide quarterly guidance for the remainder of the year.

Dominic Bardos: Based on current business conditions business trends and other factors for the quarter ending June 32024, the company expects revenue to be in the range of $85 million to $95 million and adjusted EBITDA to be in the range of 20 million to $25 million.

Dominic Bardos: Based on current business conditions business trends and other factors for the full year 2024. The company now expects revenue to be in the range of $440 million to $490 million.

Dominic Bardos: This change is reflective of the industry delays we are experiencing and sharing with you today. Our goal is to provide you with a reasonable and achievable range given the uncertainty we believe exists. I want to stress that we believe these changes reflect the timing of our revenues, not losses. We expect most projects that have been delayed from 2024 to be completed in 2025.

Dominic Bardos: This change is reflective of the industry delays, we're experiencing and sharing with you today.

Dominic Bardos: Our goal is to provide you with a reasonable and achievable range given the uncertainty we believe exists.

Dominic Bardos: I want to stress that we believe these changes reflect the timing of our revenues not lost projects.

Dominic Bardos: We expect most projects that had been delayed from 2024 to be completed in 2025.

Dominic Bardos: Adjusted EBITDA is now expected to be in the range of $130 million to $150 million, adjusted net income to be in the range of $85 million to $100 million, and cash flow from operations to be in the range of $100 million to $115 million. Capital expenditures to be in the range of $15 million to $20 million, and interest expense to be in the range of $15 million to $20 million. And with that, I'll turn it back over to Brandon for his closing remarks.

Dominic Bardos: Adjusted EBITDA is now expected to be in the range of $130 million to $150 million adjusted.

Brandon Moss: Net income to be in the range of $85 million to $100 million.

Dominic Bardos: Cash flow from operations to be in the range of $100 million to $115 million.

Brandon Moss: Capital expenditures to be in the range of 15 million to $20 million.

Dominic Bardos: Interest expense to be in the range of 15 million to $20 million.

Dominic Bardos: With that I'll turn it back over to Brandon for closing remarks.

Brandon Moss: Thanks, Dominic. I would like to close by thanking all of our customers for their confidence in Shoals, our employees for enabling us to effectively serve our customers, and our shareholders for their continuous support. I'm excited about the long-term macro trends that will drive the solar market for years to come, and I am even more excited about Shoals' competitive position in the marketplace. We are an innovation leader with strong product development capability and an outstanding customer list.

Brandon Moss: Thanks, Dominic I would like to close by thanking all of our customers for their confidence and shows our employees for enabling us to effectively serve our customers and our shareholders for their continuous support.

Brandon Moss: Im excited about the long term macro trends that will drive the solar market for years to come and I'm, even more excited about <unk> competitive positioning in the marketplace. We are an innovation leader with strong product development capability and an outstanding customer list.

Brandon Moss: As we move past this period of volatility, we expect to continue our industry-leading growth, driven by further market share gains in the domestic utility-scale market, expand our presence in the CC&I market, and extend our leading position in key international markets. Over the last nine months, I've heard a consistent message from our customers that they want to expand their relationship with Shoals. They've provided candid feedback on how we can be more flexible and responsive, and that's extremely encouraging because it's entirely within our control and influence.

Brandon Moss: As we move past this period of volatility we expect to continue our industry, leading growth driven by further market share gains in the domestic utility scale market expand our presence in the <unk> market and extend our leading position and to key international markets.

Brandon Moss: Over the last nine months Ive heard a consistent message from our customers that they want to expand our relationship with shoals.

Brandon Moss: Provided candid feedback on how we can be more flexible and responsive and that's extremely encouraging because it's entirely within our control and influence.

Brandon Moss: As a result, we've made meaningful changes to our sales structure and operations, which we believe will improve our flexibility and increase touch points with each customer. Ensuring that doing business with Shoals is as simple and efficient as possible is top of mind for all of us, and we believe you'll begin to see the benefits over time. And finally, as conditions improve, we expect Shoals to be well positioned to produce strong profitability and cash flow driven by our capital light model.

Brandon Moss: As a result, we've made meaningful changes to our sales structure and operations, which we believe will improve our flexibility and increased touch points with each customer.

Brandon Moss: Ensuring that doing business with Shoals is a simple and efficient as possible is top of mind for all of us and we believe youll begin to see the benefits over time.

Brandon Moss: And finally as conditions improve we expect shoals will be well positioned to produce strong profitability and cash flow driven by our capital light model.

Brandon Moss: To that end, we will continue to make investments in talent and our operational footprint that will position us for many years to come. Thoughtful and disciplined capital allocation is a key strategic imperative going forward, and as Dominic mentioned, may include types of activities you haven't seen from us before. Remaining flexible yet opportunistic while operating within a framework that prioritizes shareholder returns will allow us to create value and reward investors. And with that, we thank you for your time today. Operator, we can now open the line for questions.

Brandon Moss: To that end, we will continue to make investments in talent and our operational footprint that will position us for many years to come.

Brandon Moss: Thoughtful and disciplined capital allocation is a key strategic imperative going forward and as Dominic mentioned may include types of activities you havent seen from us before remaining flexible debt opportunistic while operating within a framework that prioritizes shareholder returns will allow us to create value.

Brandon Moss: And reward investors.

Brandon Moss: And with that we thank you for your time today, operator, we can now open the line for questions.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. We ask that you limit your questions to one and a follow-up so that others may have an opportunity to ask questions.

Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from Nokia.

Operator: So you limit your questions to one and a follow up to that others may have an opportunity to ask questions.

Operator: You may re-enter the queue by pressing star 1. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we poll for questions. Our first question comes from Mark Strouse, Chief Executive Officer of JPMorgan Chase. Please proceed with your question.

Operator: May reenter the queue by pressing star one.

Mark Wesley Strouse: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Mark Wesley Strouse: One moment, please while we poll for questions.

Operator: Our first question comes from Mark Strouse with Jpmorgan. Please proceed with your question.

Mark Wesley Strouse: Yes, good afternoon. Thank you very much for taking our questions. I wanted to start with just a general question on the visibility that you have into the second half ramp and, more specifically, if you've sensitized that guidance at all for a potential ADCBD case, I mean, are there projects that you're baking into the second half of this year's guidance that are using panels that may be subject to tariffs if Commerce determines to take that case up? And I have a quick follow-up. Thank you.

Mark Wesley Strouse: Yes, good afternoon, and thank you very much for taking my questions.

Mark Wesley Strouse: Wanted to start with.

Mark Wesley Strouse: Just a general question on the visibility that you have into the second half ramp.

Mark Wesley Strouse: And then more specifically.

Mark Wesley Strouse: If you sensitize that guidance at all for a potential ADC with U K.

Mark Wesley Strouse: Are there are there projects that you are baking into the second half of this year guidance.

Mark Wesley Strouse: That are using panels that may be subject to.

Mark Wesley Strouse: Tariffs commerce determined to take that that.

Mark Wesley Strouse: That case up and I have a quick follow up thank you.

Brandon Moss: Mark, hope you're well. Um, good, good, good question. I think, look, on the second half guidance, absolutely, we've got visibility into every project. And we've taken into account, you know, the potential delays. So with the information that we've got now, I think we feel good about our guidance and the areas where we can control and really influence. I think we're executing quite well. Our goal is really to put something out there that's reasonable and achievable, and I think we've achieved that with this guide.

Speaker Change: Mark Hope you're well.

Speaker Change: Good good good question I think look on the on the second half guidance.

Brandon Moss: Absolutely we've got visibility to every project and we've taken them into.

Brandon Moss: Into account.

Brandon Moss: The potential delays so the information that we've got now.

Brandon Moss: I think we feel good about about our guidance.

Brandon Moss: And the areas, where we can control and really influence I think we're executing quite well our goal is really to put something out there thats reasonable and achievable.

Brandon Moss: As it relates specifically to panels, look, we hear the same information that you hear, I'm sure. There is maybe upwards of 12 to 18 months' worth of panel inventory on the ground in the U.S. I do realize that some of those may be subject to tariffs, but we are not anticipating a significant amount of disruption from the ruling at this point on the back end.

Brandon Moss: And.

Brandon Moss: I think I think we've done that with this guide as it relates specifically.

Brandon Moss: So panels look.

Brandon Moss: We hear the same information that you hear I'm sure.

Brandon Moss: There is maybe upwards of 12 months to 18 months worth of panel inventory on the ground in the U S.

Brandon Moss: Do realize that some of those may be subject to tariffs.

Brandon Moss: But we are not anticipating a significant amount of disruption.

Brandon Moss: From the ruling at this point in the back half.

Mark Wesley Strouse: Okay. Okay. Thanks, Brandon. And then, quick follow-up. I fully understand projects are getting delayed, generally. But when you look at the orders that are occurring within the industry, you know, over the last quarter, over the last two quarters, can you just kind of talk about what you're seeing with your market share of those orders?

Speaker Change: Okay. Okay. Thanks Brandon.

Mark Wesley Strouse: And then quick follow up.

Mark Wesley Strouse: I fully appreciate projects are getting delayed.

Mark Wesley Strouse: Generally, but when you look at the orders that are occurring within the industry.

Mark Wesley Strouse: Over the last quarter over the last two quarters can you just kind of talk about what youre seeing with your your market share of those orders.

Brandon Moss: Yeah, maybe to touch on, you know, lots unpacked there. I'll touch on market share first. Look, from NYU and everybody really.

Speaker Change: Yes, maybe to touch.

Brandon Moss: Lots of unpack there.

Brandon Moss: I'll touch on market share first look.

Brandon Moss: We grew 50% last year. The 2023 numbers relate to 2024 COD. So we're doing a 50% growth rate on a year that is expected to grow at 26% if that happens. Since IPO, look, we've outpaced the market by 2x, and our goal is to always outpace the market. I think we'll continue to do that.

Brandon Moss: Just to remind you and everybody really we grew 50% last year.

Brandon Moss: R R.

Brandon Moss: 123 numbers relate to 2024 cities.

Brandon Moss: So we're doing a 50% growth rate on a year that is expected to grow 26%.

Brandon Moss: If that happens.

Brandon Moss: Since IPO look we've outpaced the market by <unk> and our goal is to always outpaced the market I think.

Brandon Moss: I think we will continue to do that.

Brandon Moss: We've got an opportunity, as I've noted in the past, to grow WalletShare. So, where I feel very strong about growing MarketShare, there are opportunities to continue to grow WalletShare with existing large EPC customers. And I mentioned in the prepared remarks that, hey, we've reorganized the sales team to go after what we believe is some low-hanging fruit, and we'll do just that.

Brandon Moss: We've got opportunity as I've noted in the past.

Brandon Moss: To grow wallet share. So we're I feel very strong about growing market share there is opportunities to continue to grow wallet share with existing large EPC customers.

Brandon Moss: I mentioned in the prepared remarks that hey, we reorganized the sales team to go after what we believe some low hanging fruit and we will do just that so I feel very strongly about our market share and I feel very strongly about our ability to continue to grow and take wallet share with larger increases.

Brandon Moss: So, I feel very strongly about our MarketShare, and I feel very strongly about our ability to continue to grow and take WalletShare with larger EPCs. As it relates to the delays, I think, most importantly, to remind everybody, these projects are delayed. They're not lost.

Brandon Moss: As it relates to the delays.

Brandon Moss: I think most importantly to remind everybody as projects are delayed not lost.

Brandon Moss: We follow the form 860 data from the EIA very very closely both for new projects and the historic projects.

Brandon Moss: We follow the Form 860 data from the EIA very closely, both for new projects and for historic projects, and about half of the projects in that data set are delayed by six months or more. If you look specifically at Shoals projects, 37% of our projects have been pushed out by at least one month. And maybe the most important number is that 20% of the projects that were in our awarded order bucket at the end of the year last year have been pushed out of 2024 into 2025.

Brandon Moss: And about half of the projects in that data set are delayed six months or more.

Brandon Moss: You look specifically.

Brandon Moss: At Shoals projects, 37% of our projects have been pushed out by at least one months and maybe the most important number is that 20% of the projects that were in are awarded order bucket at the end of the year last year had been pushed out of 2000.

Brandon Moss: 24 in the 2025.

Brandon Moss: And that number equates to about $50 million worth of projects that have been pushed to the right. So a significant number, obviously. But again, we track these projects, we're tight with our customers, the EPCs. And again, we feel like these projects are not lost, they're just delayed and pushed into 2025.

Brandon Moss: And that number equates to about $50 million worth of projects that were pushed to the right. So significant number obviously, but again.

Brandon Moss: We track these projects were tight with our customers that you can see and again, we feel like these projects are not lost they are just delayed and pushed into 2020.

Operator: Our next question comes from Philip Shen with Roth. Please proceed with your question.

Brandon Moss: Our next question comes from Philip Shen with Roth. Please proceed with your question.

Philip Shen: Hey guys, thanks for taking my questions. Brandon, you just talked about how the 80 CVD case could impact your 24 guide and how conservative it is and how you have a good line of sight there. I was wondering if you could talk about how that case could impact bookings in Q2 and 3. So while the 24 is conservative, to what degree do you think this could slow down bookings? What do you think the trend of bookings could be in Q2 and 3 overall as well?

Philip Shen: Hey, guys. Thanks for taking my questions.

Philip Shen: Brandon you just talked about how the ADC vk's could impact.

Philip Shen: You're at 24 guide and how conservative it is.

Philip Shen: You have good line of sight. There I was wondering if you could talk about how that case could impact bookings in.

Philip Shen: In Q2 and three.

Philip Shen: No.

Philip Shen: While the 24 is conservative to what degree do you think this could slow down bookings what do you think the trend of bookings could be in Q2 and three overall as well.

Philip Shen: Phil, just to clarify, you're talking about Q2 bookings 2024 related to the module inventory? Yeah, and I know you talked about the quoting activity being high, but are you seeing, you know, we saw for the module... The Buyers and Sellers.

Philip Shen: Phil just to clarify you're talking Q2 bookings 2024 related to the.

Philip Shen: The module inventory and yes, and I know you talked about the quoting activity is high.

Philip Shen: Right.

Philip Shen: Are you seeing we saw for the modules.

Philip Shen: And sellers basically come to a pause because of this case and so are you seeing that pause maybe impact.

Brandon Moss: So, are you seeing that pause maybe impacting your... We're not, module pricing, module availability is not something that is bubbling up from our customers at this point. Um, so, not, you know, not a significant concern at this point. It's possible, Phil, that folks have procured modules for these these projects already for projects that we have not received yet in a backlog or awarded order. So look, of all the things that we hear in terms of delays via interconnections, site permitting, equipment availability, modules have not bubbled up to a concern.

Brandon Moss: In your conversations with customers as well.

Brandon Moss: We're not a module.

Brandon Moss: Module pricing module availability.

Brandon Moss: It's not something that is bubbling up from our customers at this point.

Brandon Moss: So.

Brandon Moss: Not a not a significant concern at this point that's possible fill that folks.

Brandon Moss: Procured modules for.

Brandon Moss: For these these projects already.

Brandon Moss: For projects that we have not.

Brandon Moss: Received yet.

Brandon Moss: Backlog or awarded orders so look of all the things that we hear in terms of delays via interconnections site permitting.

Brandon Moss: Equipment availability.

Brandon Moss: Modules is not bubbled up to a concern at this point.

Philip Shen: Great, thanks for the caller. Shifting to a few housekeeping questions here, I was wondering if you might be able to give us a little bit of the cadence of Q3 versus Q4 revenue after you factor in Q1 and Q2. You know, it's roughly $ 140 million per quarter, or do you think it kind of ramps up from Q2 to Q3 and then we have a larger Q4? And then finally, Brandon, you talked about the progress you're making in the C&I segment, and you could see some developments and impact by year-end this year. Is there any way you can quantify that? Thanks.

Speaker Change: Great. Thanks for the color shifting to a few housekeeping questions. Here was wondering if you might be able to give us a little bit of the cadence of Q3 versus Q4 revenue.

Philip Shen: After you factor in Q1 and two.

Philip Shen: It's roughly a 140 ish million per quarter or do you think.

Philip Shen: It kind of ramps up from Q2 Q2 to Q3 and then.

Philip Shen: We have a larger Q4 and then finally, Brandon you talked about the progress you're making in the C&I segment.

Philip Shen: And you could see we could see some developments and impacted by year end of this year.

Philip Shen: Are there any way you can quantify that.

Dominic Bardos: So, Phil, this is Dominic. Let me take the pacing first. Yeah, we've adjusted the annual, and we're going to provide quarterly guidance. We have not given specifics yet for three and four. At this point in time, I think the expectation would be that it's relatively even, but we have not given anything very specific yet. So, appreciate your patience on that one. I'll let Brandon answer questions about the CC&I space

Philip Shen: Fulfill this is Dominic let me take the the pacing first yes.

Dominic Bardos: Adjusted the annual and we are going to provide quarterly guidance, we have not given specifics yet to three and four.

Dominic Bardos: At this point in time, I think the expectation would be that it's relatively even but we have not given anything very specific yet so.

Dominic Bardos: I appreciate your patience on that one and I'll, let Brandon answered things about the CNI space.

Brandon Moss: So great question about CC&I. We're excited about this space. I think it is fantastic timing for us to not only have the ability to capture more share, but the changes that are happening via load growth, particularly in the U.S., and the substantial growth that's going on with data center builds, primarily due to AI. I think that's going to drive a lot of distributed generation in the future, which fits well with this CCNI product portfolio. Look, I would think for 2024, we are moving very fast.

Brandon Moss: So great question about C&I, we're excited about this this space.

Brandon Moss: I think it is fantastic timing for us to not only have the ability to capture more share, but the changes that are being that are happening really via load growth, particularly in the U S with substantial growth thats going on with data center builds primarily due to AI.

Brandon Moss: That's going to drive a lot of.

Brandon Moss: Distributed generation in the future, which fits well with this <unk> product portfolio.

Brandon Moss: Look I would think for 2024.

Brandon Moss: We are moving very fast were very excited about the opportunity in front of us to get the product set right.

Brandon Moss: We're very excited about the opportunity in front of us to get the product set right. We have developed a specific team to begin cultivating the market in the CCNI space, and the team is out in the market again, working on the right product set and creating relationships with potential new EPCs that Shoals has not done business with in the past. I've been engaged in some of those conversations personally.

Brandon Moss: We have developed a specific team to began cultivating the market in the <unk> space.

Brandon Moss: And the team is.

Brandon Moss: Is out in the market again, working on the right product set and creating relationships with potential.

Brandon Moss: New EPC that Charles has not been business with in the past and I have been engaged in some of those conversations personally I think youre going to see some traction in the back of <unk> back end of 2024.

Brandon Moss: I think they're going to see some traction in the back end of 2024, but meaningful progress will be made in the 2025 timeline because, again, we've got to put together a new product set and have a new team focused on it. The product set specifically, just to be clear, is not a huge departure from what we do today. It's the same basic core products, just working for our optimal product set to bring to market. We are, again, very excited about it. Thanks, Phil.

Brandon Moss: But the meaningful.

Brandon Moss: Meaningful progress will be made in the 2025 timeline because again, we've got to put together a new product set and have a new team focused on it.

Brandon Moss: Product set specifically just to be clear not a huge departure from what we do today, we're just.

Brandon Moss: It's the same same basic core products, just working for our optimal product set the burden the market. So we again are very excited about it. Thanks Bill.

Operator: Our next question comes from Andrew Percoco with Morgan Stanley. Please proceed with your question.

Brandon Moss: Our next question comes from Andrew <unk> with Morgan Stanley. Please proceed with your question.

Andrew Salvatore Percoco: Great, thanks so much for taking the question. I do have another follow-up question here on the booking number and backlog. I mean, you know, totally understand that there's a lot of strong tailwinds here related to renewable energy demand, whether it be data centers or the surrounding manufacturing, but if I just look at the first quarter bookings number, it looked relatively light compared to kind of the first quarter of last year or even the fourth quarter of last year.

Andrew Salvatore Percoco: Great. Thanks, so much for taking the question.

Andrew Salvatore Percoco: I do have another follow up question here on on the bookings number and backlog I mean.

Andrew Salvatore Percoco: Totally understand that Theres, a lot of strong tailwind here related to renewable energy demand, whether it be data centers or.

Andrew Salvatore Percoco: The onshoring of manufacturing, but if I just look at the first quarter bookings number it looked relatively light compared to kind of the first quarter of last year or even the fourth quarter of last year can you just discuss what's what's driving that is it mostly customers just hitting pause while they.

Andrew Salvatore Percoco: Can you just discuss what's driving that? Is it mostly customers just hitting pause while they wait to get most of the projects that they're currently in their pipeline online, or is there anything else underlying that softness this quarter? Thank you.

Andrew Salvatore Percoco: We're going to get most of the projects that they're currently in their pipeline online or is it is there anything else underlying that that softness this quarter and I have one follow up thank you.

Brandon Moss: Yeah, thanks. Great, great question. Um, yeah, I'd love to love to talk through this a bit.

Speaker Change: Yes, Thanks, Greg Great question.

Brandon Moss: Yes.

Speaker Change: Love to talk through this a bit so.

Brandon Moss: Total backlog and awarded orders as mentioned $615 million, which is a nice increase over the first quarter of last year.

Brandon Moss: So total backlog and awarded orders are mentioned $615 million, which is a nice increase over the first quarter of last year. What I do want to point out is that our project awards were consistent with past quarters. What was unusual for us was that we had some projects that, in at least one case, were canceled, and a handful of projects that we pushed back into ourselves. So, you know, you can think of that number being around $60 million.

Speaker Change: What I do want to point out.

Brandon Moss: Is that our project awards.

Brandon Moss: We're consistent.

Brandon Moss: Sure.

Brandon Moss: Last quarters.

Brandon Moss: What was unusual for us as we have had some projects that.

Brandon Moss: And at least one case were canceled.

Brandon Moss: And a handful of projects that pushed back into our sales funnel.

Brandon Moss: So.

Brandon Moss: You can think of that number being around $60 million.

Brandon Moss: So I think if you take that $60 million and you add it to our net new bookings, which we're at $75 million, you'd see that we've got kind of a normalized quarter of project inflow into our BLAO pipeline. So, not abnormal.

Brandon Moss: So I think if you take that $60 million and you add it to our our net new bookings.

Brandon Moss: We're at $75 million you'd see that we've got.

Brandon Moss: A normalized quarter.

Brandon Moss: Project inflow.

Brandon Moss: And two our BLA our pipeline.

Brandon Moss: So not abnormal.

Brandon Moss: What was abnormal was having some things shift back up in the funnel and then, in at least one instance, projects canceled. The good news is that the things that the projects that moved back up into the funnel, we feel very good about our opportunity to go after that business again, whether it's with the same EPC or a different EPC. Also, I would love to point out that from a quote standpoint, again, we are seeing record quote volume.

Brandon Moss: Abnormal as having some things.

Brandon Moss: Shift back up in the funnel and then and one at least one instance project cancelled.

Brandon Moss: The good news is the things that projects that move back up into the funnel.

Brandon Moss: We feel very good about our opportunity to go after that business again, whether it's with the same APC or a different piece of it.

Brandon Moss: Also would love to point out.

Brandon Moss: From a quote standpoint.

Brandon Moss: Again, we are seeing a record quote volume.

Brandon Moss: And that is both on the number of quotes and the total dollars of quotes so.

Brandon Moss: And that is both on the number of quotes and the total dollars of quotes. So the inbound demand is certainly very strong. And I think, again, we're in a volatile time. I look at this as being a transitory period of volatility and am excited about the growth ahead.

Brandon Moss: Inbound demand.

Brandon Moss: Is certainly very strong and I think again, we're in a volatile time I look at this as being a transitory period of volatility.

Brandon Moss: And excited about the growth ahead.

Andrew Salvatore Percoco: understood that that's really helpful. And I want to follow up, you know, really helpful disclosures in the deck as it relates to kind of shipments and REVREC versus COD.

Speaker Change: Understood. That's really helpful and then one follow up.

Andrew Salvatore Percoco: Really helpful disclosures in the deck as it relates to kind of shipments and Rev Rec versus cfd.

Speaker Change: I know youre, not providing 2025 guidance, what I'm just going to take a crack at a question here anyway.

Brandon Moss: I know you're not providing 2025 guidance, but I'm just going to take a crack at a question here anyway. You know, if you look at this Wood Mackenzie SCIA forecast for 2026 growth, it's implying relatively soft growth. Is that a proper way to think about your 2025 top line growth? I know there's potentially some market share opportunities at play as well, but if there's any additional context you can provide in terms of how we should be thinking about a normalized growth rate beyond 2024, that'd be super helpful.

Brandon Moss: Look it is wood Mackenzie CIA forecast for 2026th growth, it's implying relatively soft growth.

Brandon Moss: Is that.

Brandon Moss: <unk> way to think about your 2025 top line growth I know there is potentially some market share opportunities at play as well, but if theres any additional context, you can provide in terms of how we should be thinking about a normalized growth rate beyond 2024, that'd be super helpful. Thank you.

Brandon Moss: Thank you.

Speaker Change: Sure Andrew Yes, Youre right you said at the beginning we haven't discussed 25 or 26 guidance yet we're very excited to be sharing more information at our analyst day in early September.

Brandon Moss: Sure, Andrew. Yeah, you're right. As you said at the beginning, we haven't discussed 25 or 26 guidance yet. We're very excited to be sharing more information at our Analyst Day in early September. But there are a couple things I want to point out.

Brandon Moss: Some of the projects that we've talked about in 24 are pushing into 25. Assuming that those projects are still going forward, that would be natural growth year over year that you'd expect to see on top of something that we're going to get organically. And the other thing is that the growth that we see in the CC&I space and international is not reflected in the domestic utility scale solar pieces. So, we have other growth pillars to go on. We look forward to sharing more with you in our September Analyst

Speaker Change: But theres a couple of things I want to point out some of the projects that we've talked about in 'twenty four are pushing into 'twenty fives, assuming those projects are still going forward that would be.

Brandon Moss: Natural growth over year over year that you would expect to see on top of something that we can get organically and the other thing is the growth that we see in the C&I space in international is not reflected in the domestic utility scale solar pieces. So we have other growth pillars to go on we look forward to sharing more with you in our September analyst day.

Operator: Our next question comes from Brian Lee with Goldman Sachs. Please proceed with your question.

Brandon Moss: Our next question comes from Brian Lee with Goldman Sachs. Please proceed with your question.

Brian K. Lee: Hey guys, good afternoon. Thanks for taking the questions. Real quickly, just on Andrew's question, Brandon, I wasn't following totally. The $60 million that you referenced, which was inflow, it sounded like. That was an order you had, but then it went back into the sales funnel, and then it was an order you had, but then the project got canceled. All that happened within the quarter, so you would have had $135 million in net orders. I just wanted to understand what that $60 million is referencing.

Brian K. Lee: Hey, guys. Good afternoon, thanks for taking the questions.

Brian K. Lee: Real quickly just on Andrew's question Brandon.

Brian K. Lee: Brandon.

Brian K. Lee: I wasn't following totaling $60 million.

Brian K. Lee: That you referenced which was in flow it sounded like.

Brian K. Lee: That was an order, which you had but then went back into the sales funnel and then the order you had but then the project got cancelled all of that happened within the quarter. So you would have had $135 million of net orders I just wanted to understand what that $60 million is referencing.

Brandon Moss: Yeah, Brian, happy to clarify. Yeah, we're talking about a handful of projects here, not just one project. So yes, I mean, in the quarter we had a project cancellation, and we had a handful of projects that would have been included in our backlog and awarded orders numbers that we moved back into the sales funnel, which is very unusual for us because of questions about the projects. So, um...

Brandon Moss: Yes, Brian.

Brandon Moss: Happy to clarify, yes, so we're talking about a handful of projects here not just one project.

Brandon Moss: So, yes, I mean.

Brandon Moss: In the quarter, we had a project cancelled and we had a handful of projects.

Brandon Moss: That would've been included in our backlog and awarded orders number that we move back into the sales funnel, which is very unusual for us.

Brandon Moss: <unk>.

Brandon Moss: Because of <unk>.

Brandon Moss: Questions about the project so.

Brandon Moss: So that equated to about $60 million. If you think of our net new backlog and awarded orders that we talked about, it was $75 million. So yes, you're right with the math there. 60 plus percent.

Brandon Moss: So that equated to about $60 million.

Brian K. Lee: Okay, that's helpful. I just wanted to clarify that. And then, maybe, just one more math question, and I'll pass it on.

Brandon Moss: Do you think of R. R.

Brian K. Lee: Our net new backlog and awarded orders that we would.

Brian K. Lee: We talked about was $75 million so yes. So.

Brian K. Lee: Right with the math that 60 plus percent.

Dominic Bardos: I think you said $204 million of your backlog in awarded orders is for beyond 2024 delivery. So if my math is right, that means there's about $400 million plus, which presumably is for 2024 delivery. And you just did $90 million of revenue in Q1, and the midpoint of guidance is 465. So are you assuming that more of that $410 million or so that's remaining for 24 deliveries doesn't actually play out in 24? And I guess the secondary question to that would also be, are you not assuming any... GoGetRevenue.com So, Brian, this is Dominic. Let me end on that one.

Speaker Change: Okay. That's helpful. I just wanted to clarify that and then maybe just one more last question and I'll pass it on.

Dominic Bardos: I think you said $204 million of.

Dominic Bardos: Your backlog and awarded orders.

Dominic Bardos: Is for beyond 2024 deliveries. So my math is right that means there's about $400 million plus which presumably is for 2024 delivery and you just did $90 million of revenue in Q1.

Dominic Bardos: And the midpoint of guidance is $4 65, so are you assuming.

Dominic Bardos: More of that $410 million or so thats remaining for 24 deliveries doesn't actually play out in 'twenty four and I guess the secondary question to that would also be are not assuming any.

Dominic Bardos: Go get revenue, which I know you get pretty much some tens of millions of dollars. We'll go get revenue every year, but.

Dominic Bardos: Curious if you could reconcile that a little bit thank you.

Dominic Bardos: So, Brian, this is Dominic. Let me handle that one. You're absolutely right about the math. And at the end of the quarter, that was the math that would indicate that, hey, you should have about $500 million in revenue this year. In April, there were additional project pushes. So, we referenced $50 million worth of projects that were pushed from the year. It didn't all happen in Q1. Some of that happened through April as well. So, the number's a little bit south of that 410 that's left in the awarded orders and backlog status.

Dominic Bardos: So Brian this is Dominic let me handle that one you're absolutely right about the math and at the end of the quarter that was the math that would indicate that hey, you should have about $500 million right.

Dominic Bardos: Revenue in the year in April there was additional project pushes so we referenced $50 million worth of projects that pushed from the year did not happen in Q1. Some of that has happened through April as well so the numbers a little bit south of that for 10 minutes left in the awarded orders and backlog status.

Dominic Bardos: And as we go through the year, the amount of time to book and bill for these projects starts to decrease. And so, we are now looking at things that we can really add towards the tail end of Q3 and into Q4. But we believe that there are, you know, some projects will still likely move. We'll continue to backfill and replace those projects as we did. We added $135 million worth of new projects because 60 million of them actually pushed out. It makes the numbers look lower in Q1. So, we're just trying to give you a very realistic guidance range that we believe is comfortable and achievable. And we intend to deliver on that.

Dominic Bardos: And as we go through the year the amount of time to book and Bill.

Dominic Bardos: These projects.

Dominic Bardos: Starts to decrease and so we now are looking at things that we could really add towards the tail end of Q3 and into Q4.

Dominic Bardos: But we believe that there is some.

Dominic Bardos: Some projects will still likely move will continue to backfill and replace those projects because we did we added $135 million worth of new projects, because $60 million of them actually pushed out. It makes the numbers look lower in Q1. So we're just trying to give you a very realistic guidance range that we believe is comfortable and achievable.

Dominic Bardos: And we intend to deliver on those numbers.

Operator: Our next question comes from Maheep Mandloi. Please proceed with your question.

Dominic Bardos: Our next question comes from Mohit <unk>. Please proceed with your question.

Maheep Mandloi: Hey, Kareem, and thanks for taking the questions. Just a question on the pushouts. Could you talk about the nature of them? Are they looking for months or quarters of pushouts into the next year? And as you kind of think about 25 to 26 growth versus some of the forecasts out there, could you talk about any other levels, which you have either international sales or increasing the wallet or water per project or any other levels for you guys?

Maheep Mandloi: Hey, good evening, Thanks for taking my questions here.

Maheep Mandloi: Question on the push outs can you talk about the nature of them are these have been looking for months or quarters or push outs into the next year and.

Maheep Mandloi: As we kind of like think about ratified to undertake its growth versus some of the forecasts out there.

Maheep Mandloi: Could you talk about any other levers.

Speaker Change: You have internationally.

Maheep Mandloi: Excuse me the wallet.

Maheep Mandloi: Our waterflood projects.

Maheep Mandloi: Level three phases.

Brandon Moss: Maheep, thanks. Yeah, as mentioned, look, 37% of our projects have shifted at least by a month. And, as mentioned, we pushed $50 million worth of projects out of the year into 2025. So, you know, some substantial project pushes, and that is obviously impacting our number more than anything this year. As it relates to 25 and 26, again, we're not going to comment or guide on that.

Speaker Change: Hey, Thanks, Yes, as mentioned look 37% of our projects and shifted at least by a month and as mentioned, we pushed $50 million worth of projects out of the year into 2025. So.

Brandon Moss: Some some substantial projects.

Brandon Moss: Bush is and that is obviously impacting our number more than anything this year.

Brandon Moss: As it relates to 25% and 26 again, we're not going to comment our guide on that but.

Brandon Moss: But certainly, we're driving an international strategy. As we mentioned, there's 63 gigawatts of available market opportunity out in 2025 for us. We're really pleased with our approach and progress in the international space. As we've mentioned in prior calls, we've got about $78 million of orders on the books to ship internationally.

Brandon Moss: Certainly we're driving an international strategy as we mentioned there are 63 gigawatts of available market opportunity out in the 2025 for US we're really pleased with.

Brandon Moss: Our approach and.

Brandon Moss: Progress really in the international space as we've mentioned.

Brandon Moss: In prior calls we've got about $78 million of orders on the books to ship internationally. So we're excited about that opportunity and.

Brandon Moss: So we're excited about that opportunity and, obviously, excited about the CCI opportunity that we talked about before. Having said that, as we move out into 25 and 26, you know, I understand the wood map data, that base case is probably not as exciting as we've seen in prior years as it relates to the solar market. But what we are very excited about is the load growth in the United States. We've had a period of about five years of no load growth in the US, and we're entering a period where we've got a projected 4.7% load growth.

Brandon Moss: Obviously excited about the CCI opportunity that we've talked about before.

Brandon Moss: Having said that.

Brandon Moss: As we move out into 'twenty, five and 'twenty six.

Brandon Moss: I understand the woodmac data.

Brandon Moss: Base case is.

Brandon Moss: Probably not as exciting as we've seen in prior years as it relates to the solar market.

Brandon Moss: But what we are very excited about is the load growth in the United States We've had.

Brandon Moss: In a period of about five years of no load growth.

Brandon Moss: In the U S and we're entering a period, where we've got a projected four 7%.

Brandon Moss: Load growth, we have seen some exciting things in the news recently.

Brandon Moss: We've seen some exciting things in the news recently. You guys have probably all seen the Brookfield Microsoft deal that was announced at 10.5 gigawatts. If you've listened to the Quanta Earnings Call, they mentioned the boom in data centers and customers coming at them with 100 gigawatt opportunities. The data center space alone, we look at, over the next four years, that load growth potentially doubling from 70 to close to 140 gigawatts

Brandon Moss: You guys have probably all seen the Brookfield, Microsoft deal that was announced $10 five gigs.

Brandon Moss: If you've listened to the quanta earnings call. They mentioned in the boom in data centers.

Brandon Moss: Customers coming out with 100 gigawatt opportunities.

Brandon Moss: The data center space alone, we look at over the next four years that low growth potentially doubling from 70 to close to 140 Gigawatts. So.

Brandon Moss: We are excited about the future in the US, that that load growth is going to break the solar generation space. The limiting factor on all this growth is labor, and Shoals is uniquely well positioned to solve that problem for folks. So, you know, I know the forecasts are tough, and the WMAC information and others, but we really are excited about what we're seeing in the broader macro area around politics.

Brandon Moss: We are excited about the future.

Brandon Moss: In the U S, but that load growth is going to break the solar generation space.

Brandon Moss: The limiting factor on all of this growth is labor and Shoals is uniquely well positioned.

Brandon Moss: To solve that problem for folks so.

Brandon Moss: I know the forecast were tough in the wood Mac.

Brandon Moss: Information and others, but we really are excited about what we're seeing in the broader macro area around around power demand.

Maheep Mandloi: Thanks for letting us know today. And maybe just one small one on just new backlog or new bookings, given you talked about your backlog is mostly for COD next year, or REVREC is for COD next year. Are bookings mostly for late 2025-2026 now, or other things about that?

Speaker Change: Thanks for that and then maybe sneak one small one on just on new backlog of new bookings.

Maheep Mandloi: Kevin.

Maheep Mandloi: The boat.

Maheep Mandloi: Yes.

Maheep Mandloi: Backlog is mostly for COPD next year or does that reflect associated next year bookings, mostly for late 'twenty five 'twenty six now or.

Maheep Mandloi: How to think about that.

Brandon Moss: As Dominic was mentioning, we've got, you know, some opportunity here still for book and bill that will impact 2024, or could impact 2024. But yeah, you're right. I mean, the vast majority of our project, and I think we put some materials, or I know we put some materials out on the deck that show the difference between project COD and our REVREC. So, you know, on average, it's about 13 months, but we've got some outliers there that stretch out as far as two years. Our next question comes from Jordan Levy with True Securities. Please proceed with your question.

Maheep Mandloi: It's Dominic was mentioning we've got some opportunity here still for book and Bill that will that will impact 2024 or could impact 2024, but yes, youre right I mean, the vast majority of our projects and I think we put some materials or I know, we put some materials out in the deck that shows.

Jordan Alexander Levy: The difference between projects and.

Jordan Alexander Levy: And our Rev Rec so on.

Jordan Alexander Levy: On average, it's about 13 months, but you've got some outliers there.

Jordan Alexander Levy: Stretch out as far as two years.

Jordan Alexander Levy: Our next question comes from Jordan <unk>.

Jordan Alexander Levy: Sure Securities. Please proceed with your question.

Operator: Afternoon all, I appreciate all the details maybe and you might have hit on this missed it, but maybe can you just talk about any changes, a competitive environment in the ebus?

Jordan Alexander Levy: Afternoon, all I appreciate all the details maybe and you might have hit on this one I may have missed it but maybe can you just talk about any change in the.

Jordan Alexander Levy: <unk> environment on the EBIT side, if theres been any and how you see that evolving.

Jordan Alexander Levy: Jordan, thanks for the question. Look, no, no dynamic changes in the competitive market. We still believe that our best opportunity for growth is to really replace the traditional installation methods of, you know, home runs, combiner boxes, and doing field installs. We still are huge advocates, obviously, that we've got the best solution in the marketplace, we've got the best technology, we have the best IP, which we are obviously in the process of protecting.

Jordan Alexander Levy: Jordan. Thanks for the question look no no dynamic changes in the competitive market, we still believe that our best opportunity for growth is too.

Jordan Alexander Levy: Really replace the traditional install methods of homeruns can monitor boxes and doing field installs.

Jordan Alexander Levy: We still are.

Jordan Alexander Levy: Huge advocates obviously that we've got the best solution in the marketplace. We've got the best Tech.

Jordan Alexander Levy: Technology, we have the best IP, which were obviously.

Jordan Alexander Levy: In the process of protecting so.

Jordan Alexander Levy: So, still all good news on the competitive landscape as far as things go here. I appreciate that, and maybe just as a follow-up as it relates to kind of the sales side of things as you kind of look at it for the International Market. I know that's been an initiative for a while now, and also with the CCNI side of things.

Speaker Change: So all good news on the competitive landscape as far as things go ahead Charles.

Jordan Alexander Levy: I appreciate that and maybe just as a follow up as it relates to kind of the <unk>.

Jordan Alexander Levy: Sales side of things as you kind of look to go more into the international market I know that's been an initiative for a while now and and also with the C&I side of things just curious if.

Brandon Moss: Just curious, do you think the sales organization is the right size right now, or does that kind of need to scale up? Um, yeah. I think look, we've changed a lot of things around here related to our commercial organization in the last six months, not just the sales organization specifically. We're making investments. We're making investments in our product line management function. But as it relates specifically to the commercial organization and sales, yeah, we've made some investments.

Jordan Alexander Levy: Do you think the sales organization is right size right now where does that kind of need to scale up as well.

Brandon Moss: Yes, I think look we've changed a lot of things around here.

Brandon Moss: Related to our commercial organization.

Brandon Moss: And call it the last six months.

Brandon Moss: Not just the sales organization, specifically, we're making investments.

Brandon Moss: And our marketing function.

Brandon Moss: We're making investments in our product line management function.

Brandon Moss: But as it relates to <unk>.

Brandon Moss: Specifically to the commercial organization and sales, yes, we've made some investments we've hired a GM of our international business.

Brandon Moss: We've hired a GM for our international business who is now leading that effort for us cross-functionally from a manufacturing operation standpoint and even, you know, from a product standpoint as well. We have put in place a dedicated CCI team, again, a little different sales cycle there and, potentially, could be even a different go-to-market structure than we have historically participated in the utility scale space. So we're excited about those investments. Even on our core utility scale side, again, we're market leaders.

Brandon Moss: Who is now leading that effort for us cross functionally.

Brandon Moss: From a manufacturing standpoint and uneven.

Brandon Moss: From a product standpoint as well.

Brandon Moss: <unk> put in place a dedicated CCI team.

Brandon Moss: Again, a little little different sales cycle, there potentially could be even.

Brandon Moss: Different go to market structure than we have historically participated in the utility scale space. So.

Brandon Moss: We're excited about those investments even on our core utility scale side.

Brandon Moss: We're again, we're market leaders, we have changed our sales organization to a pod structure.

Brandon Moss: We have changed our sales organization to a pod structure, and our goal is to increase touch points with our customers and not just the touch points of our salespeople. But the different functions that interact and engage with these large EPCs could be something as simple as legal. When we sign up for a deal with an EPC, there's a contract. And so we're trying to give our customers great touch points with our entire organization and then also see familiar faces each and every time they transact business with us.

Brandon Moss: And our goal is to increase touch points with with our customers and not just the touch points of our salespeople, but the different functions that interact and engage with these large upcs.

Brandon Moss: It could be something as simple as this.

Brandon Moss: His legal when we sign up a deal with an EPC, there's a contract.

Brandon Moss: So we're trying to give our customers.

Brandon Moss: Great touch points with with our entire organization and then also see familiar faces each and every time they transact business.

Operator: Our next question comes from Christine Cho with Barclays. Please proceed with your question.

Brandon Moss: Our next question comes from Christine Cho with Barclays. Please proceed with your question.

Christine Cho: Good evening. Thank you for all the color today.

Christine Cho: Good evening.

Christine Cho: Thank you for all the color today I just wanted to touch on slide 15 here.

Dominic Bardos: I just wanted to touch on slide 15 here, you know, the slide where it delineates the projects that are on schedule, delayed six months or delayed less than six months. And in 2023, we see that these projects increasingly become more delayed more than six months. So just trying to clarify what that meant exactly for you. Did that mean that, you know, in 2023, customers took delivery of your product and are delayed getting the project to the finish line?

Christine Cho: By the way.

Christine Cho: Lenny for projects that are on schedule delay it six months or.

Speaker Change: So great question.

Dominic Bardos: And then 2023, we see these projects increasingly become.

Dominic Bardos: More than six months, so just trying to clarify what that meant exactly for you does that mean that.

Dominic Bardos: In 2023 customers took delivery of our product and our delayed getting the projects to the finish line or was it the other way around in that because projects are delayed they werent, taking delivery of air products until they have better line of sight and ultimately I'm just trying to I guess on the slide prior to that.

Dominic Bardos: Or was it the other way around, in that because projects were delayed, they weren't taking delivery of your product until they had a better line of sight? And ultimately, I'm just trying to, I guess, on the slide prior to that, you know, the 50% revenue growth in 23, but only having 26% year over year growth in utility scale installations in 24. You know, I guess, that could be market share gains, but I'm also, I guess, trying to figure out how much of that was, you know, your customers taking delivery of the product maybe a little earlier than they normally would have.

Dominic Bardos: At the 50% revenue growth in 'twenty, three but only having 26% year over year growth in utility scale Inflations in 'twenty four.

Dominic Bardos: I guess the.

Dominic Bardos: That can be market share gains, but im also I guess trying to figure out.

Dominic Bardos: How much of that was your customers taking delivery of the product may be a little earlier than they normally would have.

Dominic Bardos: So, Christine, this is Dominic. I'll answer a couple of those. On the slide deck, when we look at the project delays, and we took all the EIA data from Form 860, you're right that there has been a trend that has been growing with projects being delayed. What we also see, by the way, is all new projects that are being added into the funnel at EIA on Form 860s, on their initial reports, they may have a COD target date of 2026 or 2027.

Dominic Bardos: Christine This is Dominic let me answer a couple of those on the slide deck. When we look at the project delays. So we took all the EIA data from 460.

Dominic Bardos: Youre right that it has been a trend that has been growing with projects being delayed what we see also by the way is all new projects that are being added into the funnel at EIA on form eight <unk> on their initial reports they may have.

Dominic Bardos: Target date to 2026 or 'twenty 'twenty seven they're naturally going to be on time. So what we have seen is an increase in projects that are being delayed and we've seen the push outs really started manifesting itself for us largely in Q4, because there was a lot of growth coming in and that was just kind of masking some of the delays that we're seeing.

Dominic Bardos: They're naturally going to be on time. So, what we have seen is an increase in projects that are being delayed, and we've seen the pushouts. It really started manifesting itself for us, largely in Q4, because there was a lot of growth coming in that was just kind of masking some of the delays that we were seeing. In no case are we aware of any customers agreeing to take product early.

Dominic Bardos: Our products are shipped over a period of weeks to the sites where they're installed directly on the sites under construction. So, if a project is being delayed and construction is being halted, or they have a permitting issue and we're being told to delay for 30, 60, or 90 days, that length of time is going to increase, and we're just going to have to wait for our revenue recognition until they're ready to receive product.

Dominic Bardos: Okay. So we are aware of any customers agreeing to take product early our products are shipped over a period of weeks to the sites, where they're installed directly on site and construction. So if a project is being delayed in construction as being halted or they have a permitting issue. We are being told to delay for 30 60 or 90 days that length of time is going to increase.

Dominic Bardos: And we're just going to have to wait for our revenue recognition until they're ready to receive product.

Dominic Bardos: We have seen the length of time from the time we initially quoted something to the time a purchase order comes in and revenue is recognized increase over the past six months. We have probably added a full quarter of visibility now, and it's lengthening as these projects are sitting out there longer. So, the project delays, we believe, are very real. We're experiencing them here, and we just tried to show the color of how that is manifesting itself with some public data.

Dominic Bardos: We have seen the length of time from the time, we've initially quoted something to the time of purchase order comes in in revenues recognized increase over the past six months, we have probably added a full quarter of visibility now and its lengthening as these projects are sitting out there longer. So the project delays. We believe are very real were.

Dominic Bardos: <unk> here and we just tried to show the color of how that is manifesting itself with some public data.

Christine Cho: Okay, thank you for that. And then, just wanted to go back to your earlier comments about, you know, some of your bookings and projects getting canceled and pushed back into the funnel. Can you just talk exactly about what drove that? I understood that, like, if they got to awarded orders and things like that, that so much time and, you know, energy had been spent getting to that point that it was very rare to have something canceled. So just more color on that would be helpful. Yeah, you're exactly right, Christine.

Dominic Bardos: Okay.

Christine Cho: Thank you for that and then just wanted to go back to your earlier comments about some of your bookings from projects getting cancelled then pushed back into the final.

Christine Cho: Can you just talk exactly about what drove that I understood that like I say gatza awarded orders and things like that that so much time and.

Christine Cho: No.

Christine Cho: Energy had been spent getting to that point that it was very rare to have something canceled.

Speaker Change: Just more color on that would be helpful. Yes, Youre exactly right Kristine it has been very rare that something like this has happened.

Brandon Moss: Yeah, you're exactly right, Christine. It has been very rare that something like this has happened, unprecedented, really, for what we've seen historically at Shoals. We had one order cancel, as I mentioned, and that was with a fantastic customer, quite honestly. So something that we haven't seen in the past.

Brandon Moss: Unprecedented really for what we've seen historically at Shoals, we had one order cancel as I mentioned in.

Brandon Moss: And that was worth.

Brandon Moss: Fantastic.

Brandon Moss: Again, as a reminder, when we talk about an awarded order, we're in a position where we've got a verbal agreement and we're 70% through the design process with a customer. And so if the customer is moving forward with the project, we've got that order with the customer. So in these very few cases that we've seen, the site, the project, either was pushed back or canceled, or we have had a situation where the EPC did not move forward with the project for a variety of reasons.

Brandon Moss: Quite honestly, so it's something that we've not seen in the past again as a reminder, when we talk about an awarded order we are in a position where we've got a verbal agreement and we're 70% through the design process with a customer.

Brandon Moss: And so if a customer is moving forward with the project, we've got that order with the customer so.

Brandon Moss: A few cases that we've seen.

Brandon Moss: The site the project.

Brandon Moss: Either was pushed back or canceled or we have.

Brandon Moss: Had a situation where the EPC did not move forward with the project for a variety of reasons. So again unprecedented for us not something we've experienced in the past, but I do want to make sure that everybody understands that our inbound order flow again was normal and consistent with what we've seen in the past.

Brandon Moss: So again, unprecedented for us, not something we've experienced in the past, but I do want to make sure that everybody understands that our inbound order flow, again, was normal and consistent with what we've seen in the past.

Operator: Our next question comes from Donovan Schafer with Nordland Capital Markets. Please proceed with your question.

Brandon Moss: Our next question comes from Donovan cheaper with Northland Capital markets. Please proceed with your question.

Donovan Due Schafer: Hey guys, thanks for taking questions. So first, I want to ask about just having the slowdown that you're seeing right now, and you know that results in lower fixed cost absorption and some maybe lower utilization of your facilities and whatnot. My question is, are you... Is there a material portion of your resources that you are able to redirect in some way on the other initiatives? You know, like, if you have sales folks that are well-versed and have contacts in the US, you know, maybe you're not able to kind of pivot them temporarily to focusing on international, maybe you are.

Donovan Due Schafer: Hey, guys. Thanks for taking the questions. So first I wanted to ask.

Donovan Due Schafer: Just having the slowdown.

Donovan Due Schafer: Youre seeing right now.

Donovan Due Schafer: That resulting in lower fixed cost absorption and some maybe lower.

Donovan Due Schafer: <unk> facilities and whatnot.

Donovan Due Schafer: My question is are you.

Donovan Due Schafer: Is there a material.

Donovan Due Schafer: A portion of your resources.

Donovan Due Schafer: Is that you are able to redirect in some way on the other initiatives.

Donovan Due Schafer: If you are a sales folks that are.

Donovan Due Schafer: Well versed and have contacts on the U S.

Donovan Due Schafer: Maybe youre not able to kind of pivot then temporarily to focusing on international maybe you or I'm just kind of curious if sometimes they'll give you a silver lining sometimes right.

Donovan Due Schafer: I'm just kind of curious if, you know, sometimes there's going to be a silver lining, sometimes, right? If something like this gives you an opportunity to throw more at other things or people you already have under your roof, is there something you're able to do, or is the skill set quite specialized and geographically?

Donovan Due Schafer: If something like this gives you an opportunity to throw more.

Donovan Due Schafer: Other things or people you already have under your roof now.

Donovan Due Schafer: Anything you're able to do or the skill set is quite specialized and geographically focused.

Dominic Bardos: Sure, there's a couple things, Donovan. I think that this is Dominic, by the way.

Donovan Due Schafer: Sure. There's a couple of things Jonathan I think that this is dominic by the way. Thanks for that question from a cost of goods sales standpoint, we had ramped up and we're ramping up significantly in Q4 to be prepared for the business and so some of our gross margin we had some labor ready on the Florida, We don't want a whipsaw for a short term scenario and similarly with our salary.

Dominic Bardos: <unk> sales force and our salaried team members, we don't want to be that abrupt and swing quarter to quarter based on short term results Brandon would you like to add a little bit more to that.

Dominic Bardos: Yeah, thanks for that question. From a cost of good sales standpoint, we've ramped up, and we're ramping up significantly in Q4 to be prepared for the business. And so, some of our gross margin, we had some labor ready on the floor that we don't want to whip soft for a short-term scenario. And similarly, with our salaried sales force and our salaried team members, we don't want to be that abrupt and swing from quarter to quarter based on short-term results.

Dominic Bardos: Yes, Jonathan.

Dominic Bardos: Most importantly look.

Dominic Bardos: We're looking at these project delays and the turbulence that we have in the market as a short term.

Brandon Moss: Brandon, would you

Dominic Bardos: In no way shape or form are we are cutting back resources.

Brandon Moss: To serve our utility scale, our core of core customers here domestically in fact, we're doing the opposite.

Brandon Moss: Yeah, Donovan, you know, most importantly, look, we're looking at these project delays, and the turbulence that we have in the market is short term. In no way, shape, or form are we cutting back resources to serve our utility scale, our core of core customers here domestically. In fact, we're doing the opposite. You know, we're increasing touch points. We're increasing visibility with our customers. So, you know, again, as Dominic alluded to, I think in the plant, you know, you're always looking for ways where you can shift labor and, you know, spread your absorption a little bit. But with our salaried staff, again, we're peddled down and focused on growth mode and focused on this low growth that is coming.

Brandon Moss: We're increasing touch points more increasing visibility with our with our customers. So.

Brandon Moss: Again, as Don alluded to I think in the plant Youre always looking for ways, where you can shift labor.

Brandon Moss: Spread your absorption a little bit, but with our salaried staff.

Brandon Moss: Again, we're pedal down and focused on growth mode and focused on this with low growth that is coming.

Donovan Due Schafer: Okay, and then as a follow up, the last questioner, you know, pointed out the things around timing, the 50% growth in 2023, you know, compared to the installed installed capacity growth 24, and things like that. And there's kind of a lot of moving parts, but what I'd like to get is, is kind of stripped as much as possible, and and kind of directly directly as possible to kind of ask the question around market share where where if if we took to make it apples to apples and took like the core offering like let's let's call it you know VLA or combiner boxes you know like the things that people use out in a field to connect the whole you know, like a million panels into some bank of inverters to collect all of that.

Speaker Change: Okay, and then as a follow up.

Donovan Due Schafer: And the last questioner.

Donovan Due Schafer: You pointed out the things.

Donovan Due Schafer: The 50% growth in terms of your three.

Donovan Due Schafer: Compared to the installed capacity.

Donovan Due Schafer: Passenger growth 24, and things like that and that's kind of a lot of moving parts, but what I'd like to get is is.

Donovan Due Schafer: As kind of strip as much as possible.

Donovan Due Schafer: And kind of directly.

Donovan Due Schafer: Directly as possible to kind of ask the question.

Donovan Due Schafer: And market share, where we're if if we took to make it apples to apples and took like the core offering like let's let's call. It.

Donovan Due Schafer: Our combined their boxes.

Donovan Due Schafer: Things that people yeah.

Donovan Due Schafer: Use out in the field to connect the whole.

Donovan Due Schafer: That set of apparatus, stripped down to kind of its core, is your position still that, you know, your market share from the time of the IPO has, you know, increased, held the same, or decreased, and specifically just the US, if we just talk about that? trying to get the S on there. I think you're

Donovan Due Schafer: Like a million panels into some bank of.

Donovan Due Schafer: Inverters to collect all of that.

Donovan Due Schafer: That set of apparatus.

Donovan Due Schafer: Stripped down to kind of its core.

Donovan Due Schafer: Is your position still that.

Donovan Due Schafer: Your market share from the time of the IPO has has increased.

Donovan Due Schafer: The same or decrease and specifically just the U S. If we just talk about that.

Speaker Change: Just trying to get the other.

Brandon Moss: I think you said it very well; you know we made some comments in our prepared remarks of what sales outside of our core domestic utility scale solar were in 23 and what they represented in the first quarter of 2024, so I think you could classify virtually all of these sales as being related to domestic utility scale solar. There have been some instances where we've written some large projects internationally over the course of the period that is outlined. Page 14, but on the aggregate, the vast majority of the sales have come from U.S. domestic solar energy. So I think the comp of 40% growth over a period of 20% growth is correlated.

Speaker Change: I think you said it very well.

Brandon Moss: We made some comments in our prepared remarks.

Brandon Moss: What sales outside of our core domestic utility scale solar.

Brandon Moss: It was in 'twenty three and what is represented in the first quarter of 2024, So I think you could classify.

Brandon Moss: Virtually all of these sales to related to domestic utility scale solar.

Brandon Moss: There has been some instances, where we've written some large projects internationally.

Brandon Moss: Over the course of the period that is outlined on.

Brandon Moss: Page 14, but on the aggregate the vast majority of the sales has come from U S. Domestic solar so I think the the.

Brandon Moss: The comp of a 40% growth over a period of 20% growth is.

Brandon Moss: This is correlated.

Brandon Moss: Yes.

Operator: We have reached the end of our question and answer session. I would now like to turn the floor back over to Brandon Moss for closing comments.

Brandon Moss: We have reached the end of our question and answer session I would now like to turn the floor back over to Brendan Marsh for concluding comments.

Brandon Moss: Yeah, I'd just like to thank all of you for joining us today and for the thoughtful questions. Dominic, Matt, and I look forward to seeing all of you in person at upcoming conferences. So thanks for the time today. I appreciate all the questions.

Brandon Moss: Yes, I'd just like to thank all of you for joining us today and for the thoughtful questions and Dominic and I look forward to seeing all of you.

Brandon Moss: In person at upcoming conferences. So thanks for the time today.

Brandon Moss: All the questions.

Operator: This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.

Speaker Change: This concludes today's conference. Thank you for your participation you may disconnect your lines at this time.

Operator:

Operator: Okay.

Operator: Okay.

Operator: Hum.

Operator: [music].

Operator: Yes.

Operator: [music].

Operator: Okay.