Q2 2024 Tigo Energy Inc Earnings Call - Q&A
[music].
Okay.
Good afternoon.
Operator: Welcome to Tigo's Energy Financial Second Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode.
Speaker Change: Welcome to Chico's energy financial second quarter 2024 earnings Conference call.
Speaker Change: At this time, all participants are in listen only mode.
Operator: After the speaker's presentation, there will be a question and answer session. Join us today from Tigo R and Bill Roeschlein, CFO. As a reminder, this call is being recorded. I would now like to turn the call over to Bill Roeschlein, Chief Financial Officer. Thank you, operators.
Speaker Change: The speaker's presentation, there will be a question and answer.
Speaker Change: Or session.
Speaker Change: Joining us today from Tiger.
Speaker Change: Sure.
C U V L. L C O M.
Speaker Change: And Bill Rush lie CFO.
Speaker Change: As a reminder, this call is being recorded.
Bill Roeschlein: We'd like to remind everyone that some of the matters we'll discuss on this call, including our expected business outlook, our ability to increase our revenues, reach cash flow breakeven, adjusted EBITDA breakeven, become profitable, and our overall long-term growth prospects, expectations regarding recovery in our industry, statements about demand for our products, our competitive position, our current and future inventory levels and their impact on future financial results, inventory supply and its impact on our customer shipments and our revenue, and adjusted EBITDA for the third fiscal quarter 2024, our ability to penetrate new markets and expand our market share, including expansion in international markets and investments in our product portfolio, are forward-looking and as such are subject to known and unknown risks and uncertainties, including but not limited to those factors described in today's Paris release and discussed in the risk factors section of our annual report on Form 10-K for the fiscal year ended December 31st, 2023. Our quarterly report on Form 10-Q for the fiscal quarter ended June 30th, 2024, and other reports we may file with the SEC from time to time.
Speaker Change: I'd now like to turn the call over to Bill Rushmore Chief Financial Officer.
Bill Roeschlein: These risks and uncertainties could cause actual results to differ materially from those expressed on this call. These forward-looking statements are made only as of the date when they are made. During our call today, we will reference certain non-GAAP financial measures. We include non-GAAP and GAAP reconciliations in our press release, attached as an exhibit to our Form 8K. The non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.
Speaker Change: Thank you operator.
Speaker Change: We'd like to remind everyone that some of the matters, we'll discuss on this call, including our expected business outlook, our ability to increase their revenues to reach cash flow breakeven adjusted EBITDA breakeven, but unprofitable.
Speaker Change: And our overall long term growth prospects expectations regarding a recovery in our industry statements about demand for our products, our competitive position, our current and future inventory levels and their impact on future financial results inventory supply and its impact on our shipments and our revenue and adjusted EBITDA for the third fiscal quarter of 2024, our ability to penetrate new markets.
Speaker Change: Expand your market share, including expansion in international markets and investments in our product portfolio are forward looking.
Speaker Change: And as such are subject to known and unknown risks and uncertainties, including but not limited to those factors described in today's press release and discussed in the risk factors section of our annual report on Form 10-K for the fiscal year ended December 31, 2023, a quarterly report on Form 10-Q for the fiscal quarter ended June 32024 and other.
Speaker Change: Reports, we may file from.
Speaker Change: From time to time.
Speaker Change: These risks and uncertainties could cause actual results to differ materially from those expressed on this call.
Speaker Change: Forward looking statements are made only as of the date when made.
Speaker Change: Our call today, we will reference certain non-GAAP financial measures are.
Speaker Change: We include non-GAAP and GAAP reconciliations in our press release furnished as an exhibit to our form 8-K, the non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.
Speaker Change: Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay at <unk> Investor Relations website at investors <unk> Hydro energy Dot com.
Bill Roeschlein: I would now like to turn the call over to Tigo CEO Zvi Alon. Zvi?
Speaker Change: I'd now like to turn the call over to Tiger <unk> Li.
Tiger Li: Thank you Bill.
Tiger Li: To begin today's discussion.
Tiger Li: I'll give some background on our company.
Speaker Change: <unk> recent performance and market trends before turning the call over to our CFO Bill Losch line.
Speaker Change: He will discuss our financial results for the quarter in more depth as well as provide financial outlook for the third quarter of 2024.
Tiger Li: After that I will discuss the demand outlook and share some closing remarks before opening the call for questions.
Tiger Li: All right, let's begin.
Tiger Li: For those of you who may be new to our journey Hydro energy is recognized as a global leader in intelligent solar and energy storage solutions.
Tiger Li: Stablish since 2007, our mission is to provide smart hardware and software solutions.
Tiger Li: Improved safety enhanced NRG yield and reduce operating cost of residential commercial and utility scale systems.
Tiger Li: It's Tycho, we also three primarily product lines.
Tycho: The T S full MLP module level power electronics, our flagship product, which offers a range of flexibly designed MLP solutions to meet the diverse needs of installers worldwide.
Tycho: Second goal, we assess energy and storage solutions.
Tiger Li: Your line of energy storage solutions built on modular components designed to be intuitive and flexible during the installation.
Speaker Change: Ill go we assess the range includes the go virtual go battery go Ats and go EV charging.
Speaker Change: And the third one energy intelligence.
Speaker Change: Self serve platform, which includes monitoring fleet management, and our flagship predict plus AI based reductions tool for energy production and consumption.
Zvi Alon: Now, let's discuss our recent operational results and demand outlook. In addition to the TS4X,
Speaker Change: Now, let's discuss our recent operational results and demand outlook.
Speaker Change: As mentioned in our last quarterly call.
Speaker Change: Revenue stabilized during the first quarter of the year and we're pleased to report the significant sequential revenue growth of up to 30%. This quarter. So passing many of our peers. During this period of extended market recovery.
Speaker Change: We conclude Q2 was $12 $7 million in revenue within the previously stated guidance and shipped 378, thousands MLP devices, which translates to approximately 161 megawatts DC.
Speaker Change: Assuming a panel size of about 400 watts.
Speaker Change: I will see a nice increase business still an interest activity highlighted by type of selection is the rapid shutdown technology provider for 142 megawatts power solar installation for a large EPC in Spain.
Speaker Change: Marking the largest order in history.
Speaker Change: Once installed we believe that this will represent the largest utility projects globally to deploy MLP.
Speaker Change: We are proud to deliver the best in class with our newly introduced <unk> four X product.
Speaker Change: At large scale.
Speaker Change: We also will come with midnight solo is our latest Olympic shutdown licensee.
Speaker Change: This agreement empowers them to deploy innovative products containing Tigers Olympic shutdown intellectual property for compliance with safety regulations.
Speaker Change: Geographically the EMEA region grew 29% sequentially and now represents 55% of our total revenue in the quarter.
Speaker Change: During the quarter, we saw solid sales growth in Germany, Italy, and the United Kingdom.
Speaker Change: The Americas grew three 6% sequentially and represents 22% of total revenue during the quarter.
Speaker Change: During the quarter, we saw solid sales growth in Brazil, driven by increasing regulatory requirements, so epic shutdown capabilities in that country.
Speaker Change: The Asia Pacific region grew more than 124% sequentially and represents 23% of our revenue during the quarter.
Speaker Change: During the quarter, we saw solid sales growth in Singapore, Australia and in the Philippines.
Speaker Change: Turning to an update to our newest line of MLP.
Speaker Change: The tearful X as a reminder, it is still externally represents a culmination of multiyear effort to provide the CNI and utility marketplace with leading edge MLP that are designed to satisfy the several key industrial needs.
Speaker Change: The <unk> X MLP products of the highest power.
Speaker Change: The current solution and Nexium design flexibility.
Speaker Change: All while enabling lower overall system cost and dental markets.
Speaker Change: We are pleased to report that we have received a great reception since last quarter's rollout.
Speaker Change: We believe the <unk> X family will continue to grow.
Speaker Change: It's safer.
Speaker Change: Most reliable most cost effective and most flexible and highest power MLP solution in the market.
Speaker Change: In addition to the <unk> X.
Speaker Change: We would also like to highlight some other recent announcements we have made including the unveiling of the new Tiger install installer loyalty program for residential PV installers in EMEA.
Speaker Change: It into solo your 2024.
Speaker Change: This program will recognize the dedication of professionalism of installers, who choose tiger solution.
Speaker Change: The supporting of our continued success and emphasizing the vitality of all members of the <unk> value chain.
Speaker Change: Okay.
Speaker Change: Within our <unk> software product line.
Speaker Change: Since we introduced a new sleek yield paid service offering.
Speaker Change: As the flagship solution <unk> professional.
Speaker Change: Also having a centralized view of critical health and performance data all systems under management.
Speaker Change: Beyond scalable monitoring experience and simple flat price model.
Speaker Change: Ultimate.
Speaker Change: C E O professional package includes.
Speaker Change: One click enrollment of companywide unlimited seats subscription access covering all systems under management.
Speaker Change: Our portfolio wide dashboard, which it does view into critical data such as health status production performance equipment status local data location data and commissioning time to action and.
Speaker Change: Time, saving features including advanced tagging grouping and sites filtering for improved management and maintenance optimization and trend analysis.
Speaker Change: The standard system by system monitoring view now named EIA basic remains free of charge and includes module level resolution and insight into third party hardware.
Speaker Change: More advanced monitoring analytics tools.
Speaker Change: Total data and minute level monitoring resolution among others.
Speaker Change: Salable via a simple in platform upgrades to EI premium.
Speaker Change: Finally.
Speaker Change: We are pleased to announce that more than 520 solar installations have been enrolled in our Thai go Green glove all grow.
Speaker Change: Which provide premium customer experience for every phase of system installation for C&I in stores.
Bill: And with that I would like to turn over to Bill Bill. Thank you Duane turning now to our financial results for the second quarter ended June 32020 for.
Bill: Revenue for the second quarter of 2024 decreased 81, 5% $12 7 million from $68 8 million in the prior year period by geography, EMEA revenue was $7 million or 55% of total revenues America's revenue was $2 8 million or 22% of total revenues in APAC with $2 nine.
Speaker Change: Our 23% of total revenues for the quarter.
Speaker Change: On a sequential basis revenues improved 29, 6% compared to Q1 with improved results coming from Germany, Italy, and the U K and EMEA region, and Singapore, Australia, and the Philippines in the APAC region.
Zvi Alon: Growth profit in the second quarter of 2024 was $3.9 million or 30.4% of revenue compared to $25.9 million or 37.6% of revenue in a comparable year-ago period. Now turning to the balance sheet.
Speaker Change: Gross profit in the second quarter of 2024 was $3 9 million or 34% of revenue.
Speaker Change: Third to $25 9 million or 37, 6% of revenue in the comparable year ago period.
Bill: Year over year decline was primarily due to lower revenue and lower gross margins on our <unk> product line amid competitive pricing conditions in that market.
Bill: On a sequential quarter basis gross margins increased by 220 basis points due primarily to product mix.
Speaker Change: Total operating expenses for the second quarter were $12 3 million down from $17 2 million in the prior year period. The year over year decrease was driven primarily by M&A expenses recognized in the prior year period as a result of our dispatch.
Speaker Change: During the quarter, we initiated additional cost cutting efforts and expect that on a normalized basis, our GAAP operating expenses to be approximately $12 5 million per quarter, and our non-GAAP operating expenses to be approximately $11 million per quarter.
Speaker Change: Operating loss for the second quarter totaled $8 4 million compared to an operating profit of $8 7 million in the prior year comparable period, while GAAP net loss for the second quarter totaled $11 3 million compared to a net loss of $22 2 million for the prior year period.
Speaker Change: Adjusted EBITDA loss in the second quarter totaled $6 4 million compared to adjusted EBITDA of $13 6 million in the prior year period. As a reminder, adjusted EBITDA represents operating profit adjusted for depreciation amortization stock based compensation and M&A transaction expenses.
Speaker Change: Primary shares outstanding were $60 4 million for the second quarter of 2024.
Speaker Change: Now turning to the balance sheet accounts receivable net increased $6 million two in the second quarter to $6 9 million compared to $6 3 million last quarter and $45 8 million in the year ago comparable period.
Speaker Change: Inventories net decreased by $4 4 million or 8% to $51 3 million compared to $55 8 million last quarter and $50 6 million in the year ago comparison period in.
Speaker Change: In the second quarter, the vast majority of our cost of goods sold with comprised of inventory, which we expect to continue to decline and generate cash for us in future quarters.
Speaker Change: We expect revenues in the third quarter ended September 32024 to range between $13 million and $16 million.
Speaker Change: We expect adjusted EBITDA loss to range between $6 5 million and eight.
Speaker Change: $8 5 million and reflects the potential variability in product mix and noncash inventory reserve expenses for the third quarter.
Speaker Change: That completes my summary, I'd like to now turn the call back over to Zee for final remarks.
Zee: Thanks Bill.
Zee: As we have discussed in prior quarters, we are still navigating them certain fee of the prolonged solo market industry recovery.
Speaker Change: So now <unk> products to fulfill demand and the evidence of market recovery recover the east Plaza.
Speaker Change: Although at slower pace than what was being predicted earlier in the year.
Zee: Even within the current environment. However, we believe we can continue to outpace the market.
Zee: And return to profitability goals.
Zee: For the second half of 2024, we expect our revenue and profitability to more slowly continue their upward trajectory.
Speaker Change: The sluggish macroeconomic environment may delay EBITDA profitability into early 2025.
Speaker Change: Longer term, we believe firmly in the long term growth prospects for our business and look forward, providing additional updates in the coming quarters.
Speaker Change: With that.
Operator: To withdraw your question, please press star 11 again.
Speaker Change: In a moment.
Speaker Change: Okay got it so early is not middle.
Speaker Change: And so that would suggest Q1 25, I mean is that a realistic option or do you think it might have risk for Q2.
Speaker Change: We defined early as first half that's how I think of it.
Speaker Change: Got it okay.
Speaker Change: As you think about the channel inventory you know this is a little bit slower than expected and you know I met with you guys.
Speaker Change: At the end of June in Munich, as well as our London at London event, and so was wondering if the channel inventory is taking a little bit longer to clear. So is it like the slower than expected kind of view is it a function of.
Speaker Change: Channel inventory, taking along longer to clear or is it perhaps the demand outlook is a little bit weaker than expected or a combination of both.
Speaker Change: Or something else altogether.
Speaker Change: First we thoroughly enjoyed our time with you in an interim solar and and in London at Roth Conference and I.
Speaker Change: I think you and I both.
Speaker Change: It could sort of see what the general.
Speaker Change: <unk>.
Speaker Change: The general view.
Speaker Change: You are the market was while we were all there.
Speaker Change: And it can compare it to.
Speaker Change: Analyst reports and.
Speaker Change: Industry reports that came out earlier in the year.
Zvi Alon: No, it's fine. I mean, as Bill said, the major places where we had inventory are pretty much down.
Speaker Change: Places, where we had inventory it's pretty much down to.
Speaker Change: Quote unquote normal as you say depleted as in effect, you've seen an increase in number of repeat orders from them and in the market.
Speaker Change: Highlighted like Germany, and Italy.
Speaker Change: The U K we've.
Speaker Change: <unk> seen a growing number of repeat orders and SMO effect, specifically in Germany. We added that use two of them, who stated that the volume for the two X three X months over months.
Speaker Change: Just recently.
Speaker Change: We have we are beyond that stage as the market is slow in general.
Speaker Change: Okay. Thanks, one last question and I'll pass it on.
Speaker Change: As it relates to the slowness of the market can you talk about the.
Speaker Change: General trajectory of that outlook.
Speaker Change: You think.
Speaker Change: Like what kind of we had a webinar with woodmac recently.
Speaker Change: European rugby team and they see the overall European.
Speaker Change: Our market.
Speaker Change: Basically being flat for the next five ish years and.
Speaker Change: So do you see that as.
Speaker Change: As well or do you think you have exposure to specific countries that while the whole continent might be flat for a number of years you could still grow because the countries that you have exposure to.
Zvi Alon: But we are going.
Unidentified Analyst: Hi, Hey, maybe just so it sounds like a little more sluggish here on the recovery, but I would assume, though, it is a decent assumption that in Q4, you would expect if you're going to have further improvement, even if it's modest, that that cash flow break even goal would be in reach in Q4. As we think about the remainder of the year.
Speaker Change: It takes on that so of course, we can do stuff on the discretionary and as it relates to Q.
Speaker Change: Been outsourced vendors and.
Speaker Change: Our professional services fees et cetera et cetera.
Speaker Change: And we will and are doing that.
Speaker Change: But as it relates to the more difficult decisions of head count.
Speaker Change: You have to balance the risks.
Speaker Change: Rewards of.
Speaker Change: When you do something like that you do lose momentum and you lose.
Speaker Change: Right.
Speaker Change: Institutional knowledge I mean, there is a real cost of making is taking actions like that so.
Speaker Change: You can see.
Speaker Change: The current recovery coming and you can.
Speaker Change: EBIT, a clear path to EBITDA breakeven then.
Speaker Change: Your nose.
Speaker Change: Despite your face kind of thing so.
Speaker Change: We're very flexible and we've been proactive about making cuts and changes in restructuring, where we have to and will continue to be.
Speaker Change: Barry.
Speaker Change: Mindful.
Barry: Bring that as an asset.
Speaker Change: Okay.
Barry: Understood and then last one for me, obviously theres been a lot of well known.
Speaker Change: Used for companies out there and headlines just curious any.
Speaker Change: Any exposure to any of these companies that we should think about or.
Zvi Alon: In fact, we are using a couple of those changes as potential markets.
Zvi Alon: They were, and we are very happy, took off faster than we expected.
Unidentified Analyst: Okay. And in relation to sort of, you know, the launch of this product into the market versus, you know, what you have been previously selling and what may be in inventory, is there any cannibalization or does that impact, you know?
Zvi Alon: They have been facing some challenges, the battery, and the storage itself.
Unidentified Analyst: Okay, understood. Um, just at the macro level, right? You know, going into 2024, we were anticipating
Speaker Change: There is a big impact both in the U S and in Europe, and the rest of the market.
Zvi Alon: On the other hand, the product and project we just talked about in Spain is a very large utility scale project, and it's one of many we're working on. It helps us from an inventory perspective and to go through the market, which has a little bit of variation between the different segments.
Speaker Change: On the other hand.
Speaker Change: Utility scale and C&I.
Speaker Change: Having a slower pace, but there are fairly steady.
Speaker Change: And we have seen a major increase in that space as a matter of fact.
Speaker Change: Product and project a project, we just talked about in Spain is a very large utility scale project in each one of many we are working on.
Speaker Change: And it ended up being I think the largest although we have received for single project.
Speaker Change: The largest installation who will be in the world.
Speaker Change: With MLP.
Speaker Change: So.
Speaker Change: The fact that our MLP product is sort of agnostic to the market is helping us.
Speaker Change: It helps us from an inventory perspective and to go through the market depends a little bit.
Speaker Change: Variations between the different segments.
Unidentified Analyst: And this, the order from Spain, what's the delivery timeline on that, is it over the next year or even faster than that?
Speaker Change: Understood.
Speaker Change: And this the order.
Speaker Change: Also from Spain, whats the delivery time and that is that over the next year or even faster than that.
Speaker Change: It's all going to be delivered this year all of it 100%.
Speaker Change: Before the end of 'twenty going forward.
Speaker Change: 100%, yes.
Zvi Alon: Thanks again everyone for joining us today. I especially want to thank the dedicated employees for their ongoing contribution as well as our customers and partners for their continued hard work.
Operator: Thank you for joining us today for Tigo's second quarter 2024 earnings conference call. You may now disconnect.