Q2 2024 FTC Solar Inc Earnings Call
Jet Propulsion Laboratory, California Institute of Technology California Institute of Technology
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Operator: Please wait; the conference will begin shortly.
unknown: [inaudible] David Please wait, the conference will begin shortly.
Operator: Thank you for standing by. At this time, I would like to welcome everyone to FTC Solar's second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
unknown: Thank you for standing by. At this time, I would like to welcome everyone to FTC Solar's second quarter, 2020 earnings conference call. All lines have been placed on mute to prevent any background noise.
Speaker Change: Thank you for standing by. At this time, I would like to welcome everyone to FTC Solar's second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. Thank you. I would now like to turn the conference over to Bill Michalek, Vice President of Investor Relations. Please go ahead.
Speaker Change: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad.
Bill Mhelle: if you would like to rejoy your question again press the star one thank you i would now like to turn the conference over to bill mhelle vice president of investor relations please go ahead
Bill Michalek: Thank you and welcome everyone to FTP Solar's second quarter 2024 earnings conference call. Before today's call, you may have reviewed our earnings release and supplemental financial information, which were posted earlier today. If you have not reviewed these documents, they are available on the investor relations section of our website at ftcsolar.com. I'm joined today by Ahmad Chatila, a member of our board of directors and a company founder. In addition, we'll discuss our backlog, and our definition of this metric is also included in our press release. With that, I'll turn the call over to Mahbub.
Bill Michalek: Thank you and welcome everyone to FTP Solar's second quarter 2024 earnings conference call. Before today's call, you may have reviewed our earnings release and supplemental financial information, which were posted earlier today. If you've not reviewed these documents available on the Investor Relations section of our website at ftctholar.com, I'm joined today by Ahmad Chatila, a member of our board of directors and a company founder; Yann Brandt, the company's incoming CEO, Cathy Behnen, the company's Chief Financial Officer, and Patrick Cook, the company's Head of Capital Markets and Business Development.
Bill Mhelle: Thank you and welcome everyone to FTC Solar's second quarter 2024 earnings conference call. Before today's call, you may have reviewed our earnings release and supplemental financial information which were posted earlier today.
Bill Mhelle: If you've not reviewed these documents, they're available on the investor relations section of our website at ftcsolar.com.
Speaker Change: I'm joined today by Ahmad Chatila, a member of our board of directors and a company founder.
Speaker Change: Jan Brandt, the company's incoming CEO , Cathy Behnen, the company's Chief Financial Officer, and Patrick Cook, the company's Head of Capital Markets and Business Development.
Bill Michalek: Before we begin, I remind everyone that today's discussion includes forward-looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current date. As such, these forward-looking statements include risks and uncertainties, and actual results and events could differ materially from our current expectations. Please refer to our press release and other SEC filings for more information on the specific risk factors. We assume no obligation to update such information, except as required by law.
Speaker Change: Before we begin, I remind everyone that today's discussion includes forward-looking statements based on our assumptions and beliefs in the current environment, and speaks only as of the current date. As such, the forward-looking statements include risks and uncertainties, and actual results and events could differ materially from our current expectations.
Speaker Change: Please refer to our press release and other SEC filings for more information on the specific risk factors. We assume no obligation to update such information except as required by law.
Bill Michalek: As you would expect, we'll discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes a full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure. In addition, we'll discuss our backlog, and our definition of this metric is also included in our press release. With that, I'll turn the call over to Omar.
Bill Mhelle: As you'd expect, we'll discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes a full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure.
Bill Mhelle: in addition well discus our backlog and our definition of this metric is also included in our pressrelease
Omar: Thanks, Bill, and good morning, everyone. As you likely have seen, we recently announced that Yann Brandt has been named the new CEO of Ftc Solar and will start on August 19th. Yann is an exceptional leader with great depth of experience in the solar industry, from running all operations for a downstream solar company, Racky, a board member of CEA, to being CFO and CTO in a leading-edge storage company that he helped grow very significantly to profitability.
Bill Mhelle: With that, I'll turn the call over to Omar.
Mahbub: As you've likely seen, we recently announced that Jan Brand has been named the new CEO of Ftc Solar and will start on August 19th. Jan is an exceptional leader with great depth of experience in the solar industry. He has been a board member of CIO, to being CFO and CTO in a leading-edge storage company that he helped grow very significantly to profitability.
Omar: thank bill and the morning everyone
Speaker Change: As you likely have seen, we recently announced that Jan Brand has been named the new CEO of Ftc Solar and will start on August 19th. Jan is an exceptional leader with great depth of experience in the solar industry.
Speaker Change: From running all operations for a downstream solar company to CEO of a solar racking company.
Omar: A board member of CEA, to being CFO and CTO in a leading edge storage company.
Omar: Just to name a few, he has excellent hands-on experience and a wealth of relationships throughout the industry. We're looking forward to having him on board and know he'll make an immediate impact. While he hasn't officially started yet, and I believe he's traveling overseas, we're fortunate that he was able to dial into this call to say a few words to this group.
Speaker Change: that he helped grow very significantly to profitability, just to name a few. He has excellent hands-on experience and a wealth of relationships throughout the industry. We're looking forward to having him on board and know he'll make an immediate impact.
Speaker Change: While he hasn't officially started yet, and I believe he's traveling overseas, we're fortunate that he was able to dive into this call to say a few words to this group. So let me turn it over to Jan. Jan? Jan? Jan? Jan?
Yann Brandt: So, let me turn it over to Yann. Yann? Yann? Yann?
Yann Brandt: I appreciate the generous introduction and the opportunity to drop in and say hello to everyone. So, first, good morning to all of you. I'm excited to be speaking with you even before I start in my new capacity. I think you'll find that I like to move quickly, and I'm not always big on formalities.
Jan: Thanks, Ahmad.
Jan: iappreciate the genendous introduction and the opportunity to drop in and say hello everyone
Jan: So first, good morning to all of you. I'm excited to be speaking with you even before I start in my new capacity.
Speaker Change: i think you'll find that i like to move quickly and i'm not always big on formalities
Yann Brandt: As Ahmad mentioned, I've been in the solar industry for nearly twenty years now. I've been in different roles and had varying mandates, whether as a developer, supplier, or industry advocate, but always while maintaining a consistency and perspective for building relationships and helping to foster the long-term growth of the solar industry. I've been familiar with FTC Solar since its founding, and I've tracked its progress. At the outset, I knew the company and the strong team behind it had developed great technology that would make you take notice when they came to market with their 2P offer. When you break into a new market with long-term intent and serious players, you need to have something unique and value-added to get noticed.
Omar: As Ahmad mentioned, I've been in the solar industry for nearly two decades now. I've been in different roles and had varying mandates, whether as a developer, supplier, or industry advocate, but always while maintaining a consistency and perspective for building relationships and helping to foster the long-term growth of the solar industry.
Yann Brandt: FTC quickly secured a spot as a leading provider in that market. Even from my perch, I would hear anecdotes about the technology, the constructability, and the relationship the company has with its customers. Now leveraging its technology strength into the 1P segment, I hear similar feedback from the market about the opportunity ahead for FTC. I know many professionals across the industry, whether from my various operating roles, my position on the board of directors of CO, or through the newsletter that I've run with thousands of readers. Based on my conversations, the company has developed a strong brand in the industry that far exceeds its current financial footprint. Yes, the company at one point found itself as a 2P leader in an increasingly 1P market.
Speaker Change: i've been familiar with fttc solar since it' founding and have attracted its progress as the outset i knew the company in the strong team behind it had developed great technology that would make you take notice when they came to market with their two p offering
Speaker Change: when you break into a new market with long-term intentse and trench players you need to have something unique and value added to get noticed fc quickly secureda spot as a leading provider in that marketing
Jan Brand: Even from my perch, I would hear anecdotes about the technology, the constructability, and the relationship the company has with its customers. Based on my conversations, the company has developed a strong brand in the industry that far exceeds its current financial footprint. Yes, the company at one point found itself as the 2P leader in an increasingly 1P market. I installed a Chief of Staff here nearly three weeks ago, who has been doing some legwork to help ensure the smoothest possible transition and help me be as impactful as possible on day one at FTC.
Speaker Change: even from my purch i would hear anecdotes about the technology the constructibility in the relationship the company has with its customers now leveraging the technology strength into the one pie segment i 're similar feedback from the market about the opportunity ahead for fc
Speaker Change: I know many professionals across the industry, whether from my various operating roles, my position on the board of CEO , or through the newsletter that I've run with thousands of readers.
Speaker Change: based on my conversation the company has developed a strong brand in the industry that far seeds its current financial footprint
Speaker Change: Yes, the company at one point found itself as a 2P leader in an increasingly 1P market.
Yann Brandt: But the company has nicely filled product gaps and has the broadest and most comprehensive offering to date. As a result, I see a company with excellent technology, a top-tier brand, relationships with top developers and EPCs in the industry, and a clear path to continue improvements in product and overall cost efficiency. I installed a Chief of Staff here nearly three weeks ago, who has been doing some legwork to help ensure the smoothest possible transition and help me be as impactful as possible on day one in FTC.
Speaker Change: But the company has nicely filled product gaps and has the broadest and most comprehensive offering to date. So I see a company with excellent technology, a top-tier brand, relationships with top developers and EPCs in the industry, and a clear path to continue improvements in product and overall cost efficiency.
Speaker Change: I installed a chief of staff here nearly three weeks ago who has been doing some legwork to help ensure the smoothest possible transition and help me be as impactful as possible on day one at FTC.
Yann Brandt: I'm looking forward to getting started. I believe the company has the opportunity to be a leader in the market and can enable success for EPPs and asset owners. I'm genuinely excited about the team, the technology, and the position of the company in this great industry, and I couldn't be more pleased to take on the CEO role. I'm very much looking forward to working closely with all of you in a very transparent way, and we will look to demonstrate this company's capabilities. Thanks again. Ahmad, I'll turn it back to you.
Speaker Change: and i'm looking forward to getting started i believe the company has the opportunity to be a leader in the market and can enable success for ecs and asset owners
Speaker Change: I'm genuinely excited about the team, the technology, and the position of the company in this great industry, and I couldn't be more pleased to take on the CEO role. I'm very much looking forward to working closely with all of you in a very transparent way, and we'll look to demonstrate this company's capabilities.
Ahmad Chatila: Thanks, Jan. I appreciate you joining us early and from the road. We're very much looking forward to having you. Turning to the results. I'll make a few overarching comments and then turn it over to Cathy to review the financials. At a high level, there are three main takeaways for me this quarter. One, our second quarter financial results were in line with the targets we provided. We continue to remain well positioned for growth and profitability and continue to make further enhancements across the business that will pay dividends in the future.
Speaker Change: Thanks again. Ahmad, I'll turn it back to you.
Ahmad Chatila: Thanks, Jan. I appreciate you joining us early and from the road.
Ahmad Chatila: we're very much looking forward to having your onput
Speaker Change: turning to the resu i'll make a view over arching comments and then turn it over to kathy to review the financial
Speaker Change: At a high level, there are three main takeaways for me this quarter.
Mahbub: One, our second quarter financial results were in line with the targets we provided. And three, our business, as well-positioned as it is, is still currently subscale in revenue and, therefore, impacted to a greater degree by customer project delay. Project delays in the construction business are common, and we have seen these types of issues throughout the industry in recent quarters. When you're at scale, you have layers of overlapping projects and more opportunities for compensating adjustments. Unfortunately, we're just not there yet, and the delays have more of an impact.
Speaker Change: one our second quarter financial results were in line with the targets we provided
Speaker Change: to we continue to remain well positioned for growth and profitability and continue to make further enhancement across the business that would beay dividends in the future
Speaker Change: And three, our business, as well positioned as it is, is still currently subscale in revenue and therefore impacted to a greater degree by customer project delays.
Ahmad Chatila: While we still expect a better second half relative to the first half, our second half results will unfortunately be lower than our prior expectations.
Ahmad Chatila: And three, our business, as well positioned as it is, is still currently subscale in revenue and therefore impacted to a greater degree by customer project delay. While we still expect a better second half relative to the first half, our second half results will unfortunately be lower than our prior expectations. So, let me start with that last point.
Ahmad Chatila: We have seen project delays from customers relating primarily to interconnection and finance. Specifically, three large projects that we are expecting to start construction have now moved to Q4. Project delays in the construction business are common, and we have seen these types of issues throughout the industry in recent quarters. When you're at scale, you have layers of overlapping projects and more opportunities for compensating adjustments. Unfortunately, we're just not there yet, and the delays have more of an impact.
Speaker Change: so let me start with at that point
Ahmad Chatila: We have seen project delays from customers relating primarily to interconnection and financing.
Ahmad Chatila: Specifically, three large projects that we are expecting to start construction have now moved to Q4 start dates.
Ahmad Chatila: Project delays in the construction business are common, and we have seen these types of issues throughout the industry in recent quarters.
Ahmad Chatila: When you're at scale, you have layers of overlapping projects and more opportunities for compensating adjustments.
Ahmad Chatila: Unfortunately, we're just not there yet, and the delays have more of an impact. In our case, it looks like a delay of more than a quarter, which will cause our third quarter to be relatively flat again, sequentially.
Mahbub: In our case, it looks like a delay of more than a quarter, which will cause one, our third quarter to be relatively flat against sequential, and push the start of the revenue recovery to the fourth quarter and our goal of achieving breakeven into 2025. For the past two quarters, I've told you about the progress we've made with our key initiatives to set the business up for growth and profitability. This included accelerating our booking rates, improving our product cost roadmap, and improving business processes.
Ahmad Chatila: In our case, it looks like a delay of more than a quarter, which will cause our third quarter to be relatively flat again sequentially, and push the start of the revenue recovery to the fourth quarter and our goal of achieving break-even into 2025. While the delays are certainly disappointing, I do believe we are positioned quite well for a strong recovery, including particularly strong margin growth as Raviyaram. For the past two quarters, I've told you about the progress we've made with our key initiatives to set the business up for growth and profitability.
Ahmad Chatila: Push the start of the revenue recovery to the 4th quarter and our goal of achieving breakeven into 2025.
Ahmad Chatila: While the delays are certainly disappointing, I do believe we are positioned quite well for a strong recovery, including particularly strong margin growth as revenue ramps. For the past two quarters, I've told you about the progress we've made with our key initiatives to set the business up for growth and profitability.
Ahmad Chatila: This included accelerating our booking rates, improving our product cost roadmap, improving business processes, and Lowering Our Great Eastman Revenue Level. I won't rehash those points, but we will just add a few brief comments on sales and products. As of 10 today, we have more than $500 million in signed purchase orders, which lays the groundwork for a revenue recovery that we continue to expect to begin in the second half of the year.
Speaker Change: this included accelerating our bookings rate improving our product contstroad map improving business properties and loading our breaking a revenue levels i want reehash those points but we will just add a few comments
Speaker Change: On sales and products, as of today, we have more than $500 million in signed purchase orders.
Ahmad Chatila: which lays the groundwork for a revenue recovery that we continue to expect to begin in the second half of the year.
Ahmad Chatila: Specifically, as I mentioned, the fourth quarter, while new additions to purchase orders were not as robust since our last call, we continue to add projects and have new projects in our pipeline. Our customer engagement remains high, and we are strategically adding sales resources to capture more opportunities, particularly internationally, to capture the market growth there, as well as in the U.S. Since our last call, we have announced that we hired Tractor Industry veteran and former CEO of SDI Norland, Alberto Schwerer, to lead our international field.
Mahbub: While new additions to purchase orders were not as robust since our last call, we continue to add projects and have new projects in our pipeline. Chandra is a great panelist, and we're very pleased to have her take on the new role. And finally, our breakeven cost has been greatly improved, driven by higher direct margins as well as a reduction and key focus on offset and overhead costs, while continuing to invest strategically in areas like this. We brought our break-even revenue level down from what has historically been over $100 million per quarter down to $50 to $60 million, or potentially less, depending on regional mix and whether we pay a bonus.
Ahmad Chatila: Specifically, as I mentioned, the fourth quarter. While new additions to purchase orders were not as robust since our last call, we continue to add projects and have new projects in our pipeline.
Ahmad Chatila: our customer engagement remains high and we are strategically adding sales resources to capture morede opportunity particularly internationally to capture the market growth there as well as in the u s
Speaker Change: Since our last call, we have announced that we hired Tractor Industry veteran and former CEO of SDI Norland, Alberto Echeverria, to lead our international sales efforts.
Ahmad Chatila: Alberto is an exceptional leader who has been focused on enhancing our international presence and growing our pipeline. We're very excited that he's working on it. We also announce that Ftc Solar board member Tamra Mullen has stepped down from the board to lead our North American sales effort.
Speaker Change: Alberto is an exceptional leader who has been focused on enhancing our international presence and growing our pipeline. We're very excited that he's working on.
Speaker Change: we' also announced that fc polar boordinler c amoings sat down from the board to lead our north america sale effor
Ahmad Chatila: Chandra is a great panelist, and we're very pleased to have her take on the new role. You both talked about Giron and his great customer relationship, which will be another incredible addition to our capability. Our product portfolio is as broad as it has ever been across 1P and 2P configurations with thin-film and high-wind solutions and software, with additional products on the way. We can now be truly technology agnostic and optimize each individual project by its core customer.
Ahmad Chatila: Tamara is a great panelist and we're very pleased to have her take on the new role.
Ahmad Chatila: I've already talked about Jon and his great customer relationship, which will be another incredible addition to our capabilities.
Mahbub: Our product portfolio is as broad as it has ever been across 1P and 2P configurations, with thin-film and high-wind solutions and software, with additional products on the way. We can now be truly technology agnostic and optimize each individual project size for our customers.
Mahbub: Regarding costs, we believe our product costs are in line with leading competitors, and we continue to execute on opportunities to drive further reductions.
Speaker Change: within a good place from that perspective our black march today can enable much higher long-term growth margin
Ahmad Chatila: Even at 30 million quarterly run rates, we were entering the double digit mark and range. And finally, our break-even conference has been breaking proof driven by the higher direct margins as well as a reduction in two focus on op-ed and op-ed talk while continuing to invest strategically in air like this. We brought our rate even revenue level down from what has historically been over $100 million per quarter down to $50 to $60 million, or potentially less, depending on regional mix and whether we pay a bonus.
Speaker Change: Last year, this started to show through, even at 30 million quarterly run rates, we were entering the double digits mark and range.
Speaker Change: And finally, our breakeven cost has been greatly improved, driven by the higher direct margins as well as deductions and key focus on op-ex and overhead costs, while continuing to invest strategically in areas like this.
Mahbub: we brought our rate e revenue level down from whattest historically then over one hundred million per quarter down to fifty to sixteen million range or potentially less depending our regional mix and whether we pay about us
Ahmad Chatila: John Thummary, While we are disappointed to see project delays, we remain well positioned for a healthy recovery. We have a strong product portfolio that is well regarded in the industry and can optimize our customers' projects and portfolios. Customer engagement is a top priority, and we're strategically investing in our sales capabilities to drive additional focus, with a number of great talent positions in the U.S. and internationally, not the least of which is an exceptional new CEO starting in just over a year.
Speaker Change: Fund Summary
Speaker Change: while we are appointed to p project delays we remain well positioned for a health recovery we have a strong product portfolio that as well regarded industry and can optimize our customers produject portfolio
Speaker Change: goverment engagement of the top priority and we're to ateleggically investing in our sal capility to try additional bookings with a number of raace and ions in the u s international not the need of which is an exceptional new ceo starting just over a week
Ahmad Chatila: Our product cost structure is in good place and can enable 20% long-term gross margin. And we have a company cost structure that has been reduced to enable quarterly profitability in the $50 million range. As the revenue level improves, the profitability and cash flow potential of the business can show through.
Mahbub: Our product cost structure is in good place and can enable 20% long-term gross margins. And we have a company cost structure that has been reduced to enable quarterly profitability in the $50 million range.
Mahbub: As the revenue level improves, the profitability and cash flow potential of the business can show through.
Cathy Behnen: With that, I'll turn it over to Cathy. Cathy? Thanks, Ahmad, and good morning, everyone.
Mahbub: With that, I'll turn it over to Cathy. Cathy?
Cathy Behnen: On a non-GAF basis, gross loss was $1.9 million, or 16.8% of revenue, better than the midpoint of our guidance range. This compares to a gross loss of $1.7 million, or 13.7% in the prior quarter. While our project margins remain healthy, and our costs are much improved, the revenue level in the second quarter was not high enough to absorb the indirect costs. We continue to believe that we have significant margin upside when our revenue levels recover.
Cathy Behnen: Thanks, Ahmad, and good morning, everyone. I'll provide some additional color on our second quarter performance and our outlook. Beginning with a discussion of the second quarter, revenue came in at $11.4 million, which was within our target range, although below the midpoint. This revenue level represents a decrease of 9.2% compared to the prior quarter and a decrease of 64.7% compared to the earlier quarter on both lower product and logistics volumes. Gap's gross loss was $2.3 million, or 20.5% of revenue compared to a gross loss of $2.1 million, or 16.7% of revenue, in the prior quarter.
Speaker Change: thanks s mon and good morning everyone i'll provide some additional color on our second quarter performance and our outlook
Mahbub: Beginning with the discussion of the second quarter, revenue came in at $11.4 million, which was within our target range, although below the midpoint. Gap's gross loss was $2.3 million or 20.5% of revenue compared to a gross loss of $2.1 million or 16.7% of revenue in the prior quarter. This compares to a gross loss of $1.7 million, or 13.7%, in the prior quarter. This represents the lowest level in more than three years as we have found efficiencies across the company while continuing to invest to support growth.
Mahbub: beginning of the discussion of the second quarter revenue came in at eleven point four million dollars which was within our target range although below the midpoint
Mahbub: this revenue level represpresentents a decrease of nine point two percent compared to the prior quarter and a decrease of sixty-four point seven percent compared to the year earlier quarter on both lower product and logistics volumes
Mahbub: Gap gross loss was $2.3 million or 20.5% of revenue compared to gross loss of $2.1 million or 16.7% of revenue in the prior quarter.
Mahbub: On a non-GAF basis, gross loss was $1.9 million, or 16.8% of revenue, better than the midpoint of our guidance range.
Mahbub: this compareds to a gross laws of one point seven million dollars or thirteen point seven percent in the prior quarter
Mahbub: While our project margins remain healthy and our costs are much improved, the revenue level in the second quarter was not high enough to absorb the indirect costs. We continue to believe that we have significant margin upside when our revenue levels recover.
Cathy Behnen: Gap's operating expenses were $9.6 million. On a non-gap basis, excluding stock-based compensation and certain other costs, operating expenses were $8.3 million. This represents the lowest level in more than three years as we have found efficiencies across the company while continuing to invest to support growth. This result compares to non-GAAP operating expenses of $8.7 million in the prior quarter and $9.7 million in the year-ago quarter. Gap's net loss was $12.2 million, or 10 cents per share, compared to a loss of $8.8 million, or 7 cents per share, in the prior quarter and a net loss of $10.4 million, or 9 cents per share, in the year-ago quarter. Adjusted EBITDA loss, which excludes an approximate $1.8 million net loss from stock-based compensation expense and other non-cash items, was $10.5 million, also better than the midpoint of our guidance range.
Mahbub: GAAP operating expenses were $9.6 million. On a non-GAAP basis, excluding stock-based compensation and certain other costs, operating expenses were $8.3 million.
Mahbub: This represents the lowest level in more than three years as we have found efficiencies across the company while continuing to invest to support growth.
Mahbub: this result compares to non-gaap operating expenses of eight point seven million dollars in the prior quarter and nine point seven million dollars in the year ago quarter
Mahbub: Gap's net loss was $12.2 million, or $0.10 per share, compared to a loss of $8.8 million, or $0.07 per share, in the prior quarter and a net loss of $10.4 million, or $0.09 per share, in the year-ago quarter. Adjusted EBITDA loss, which excludes an approximate $1.8 million net loss from stock-based compensation expense and other non-cash items, was $10.5 million, also better than the midpoint of our guidance range.
Mahbub: gaas net loss was twelve point two million dollars or ten cents per share compared to a loss of eight point eight million dollars or seven cent per share in the prior quarter and a net loss of ten point four million dollars or nine cent per share in the year ago quarter
Mahbub: Adjusted EBITDA loss, which excludes an approximate $1.8 million net loss from stock-based compensation expense and other non-cash items, was $10.5 million, also better than the midpoint of our guidance range.
Cathy Behnen: This compares to losses of $10.7 million in the prior quarter and $7.2 million in the year-ago quarter. Finally, regarding liquidity, we ended the quarter with $10.8 million in cash and restricted cash on the balance sheet. Based on our current forecast, we expect cash to grow by the end of the quarter through a combination of deposits and collections. We continue to hold no debt on the balance sheet and have about $65 million remaining under the ATM program at the end of the quarter. We have not utilized the ATM in the past few quarters and don't currently have plans to utilize it.
Mahbub: This compares to losses of $10.7 million in the prior quarter and $7.2 million in the year of the quarter.
Mahbub: Finally, regarding liquidity, we ended the quarter with $10.8 million in cash and restricted cash on the balance sheet.
Bill Michalek: Based on our current forecast, we expect cash to grow by the end of the quarter through a combination of deposits and collections. As Ahmad mentioned, the contracted portion of our backlog increased by $32 million to $505 million. With that, let us turn our focus to the outlook. Our targets for the third quarter call for the following. For the fourth quarter, we expect revenue to more than double relative to the third quarter. With that, we conclude our prepared remarks, and I will turn it over to the operator for questions. Operator?
Bill Michalek: Based on our current forecast, we expect cash to grow by the end of the quarter through a combination of deposits and collections.
Speaker Change: We continue to hold no debt on the balance sheet and have about $65 million dollars remaining under the ATM program at the end of the quarter.
Speaker Change: We have not utilized the ATM in the past few quarters and don't currently have plans to utilize it. With all of those factors, we are actively managing customer deposits and supplier payments.
Cathy Behnen: With all of those factors, we are actively managing customer deposits and supplier payments. As Ahmad mentioned, the contracted portion of our backlog increased by $32 million to $505 million. With that, let us turn our focus to the outlook.
Bill Michalek: As Ahmad mentioned, the contracted portion of our backlog increased by $32 million to $505 million.
Cathy Behnen: Our targets for the third quarter call for the following: revenue between $9 million and $11 million, which would be slightly down from the second quarter. Along with this revenue level, we expect a non-gap gross loss between $4.3 million and $1.5 million, or between a negative 47.8% and 13.5% of revenue. As you might expect, the percentage ranges vary more greatly at these lower revenue levels. Nogap operating expenses between $9.3 million and $10 million, and finally adjusted even a loss between $14.7 million and $11 million. For the fourth quarter, we expect revenue to more than double relative to the third quarter. With that, we conclude our prepared remarks, and I will turn it over to the operator for questions. Operator?
Bill Michalek: With that, let us turn our focus to the outlook.
Bill Michalek: Our targets for the third quarter call for the following.
Speaker Change: revenue between nine mion dollars and eleven million dollars that would be flat ed slightly down from the second quarter
Speaker Change: Along with this revenue level, we expect non-gap gross loss between $4.3 million and $1.5 million, or between negative 47.8% and 13.5% of revenue. As you might expect, the percentage ranges vary more greatly at these lower revenue levels.
Speaker Change: non-GAAP operating expenses between $9.3 million and $10 million, and finally adjusted EBITDA loss between $14.7 million and $11 million.
Bill Michalek: For the fourth quarter, we expect revenue to more than double relative to the third quarter. With that, we conclude our prepared remarks, and I will turn it over to the operator for questions.
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad, raise your hand, and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. Your first question comes from the line of Philip Shen with Ross Capital Markets. Your line is open. Hi, this is Mattingham. I'm on for-
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Again, press star 1 to join the queue.
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Operator: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Operator: Again, press star 1 to join the queue.
Operator: that
Operator: Your first question comes from the line of Philip Shen with the Ross Capital Markets. Your line is open.
Matthew Ingraham: Hi, this is Matt Ingraham on behalf of Phil. For the contracted portion of the backlog of 505, how much of that could be recognized in the next 12 months? And what are the catalysts that you need to see to release more of the backlog sooner? And then, secondly, how do you expect bookings to trend over the next few quarters? And then I have a follow-up.
Unknown Executive: Okay, great. Thanks for the color there.
Matt Ingram: Hi, this is Matt Ingram on behalf of Phil. For the contracted portion of the backlog of 505, how much of that could be recognized in the next 12 months? And what are the catalysts that you need to see to release more of the backlog sooner? And then, secondly, how do you expect bookings to trend over the next few quarters when I have a follow-up?
Speaker Change: hithis is matting remont forful fil
Matt Ingram: For the contracted portion of the backlog of 505, how much of that could be recognized in the next 12 months, and what are the catalysts that you need to see to release more of the backlog sooner? And then secondly, how do you expect bookings to trend over the next few quarters when I have a follow-up?
Cathy Behnen: Thanks, Matt. This is Cathy.
Matt Ingram: Cathie.
cay: thanks not this is cay and thanks for the question so in terms of the five hundred million dollars of contract ed purchase orders you know we've given the guidance for q one and talk about it growing in q four and and we're not giving guidance yet into two thousand and twenty five
Cathy Behnen: Thanks for the question. So, in terms of the $500 million in contracted purchase orders, you know, we've given the guidance for Q1 and talked about it growing in Q4, and we're not giving guidance yet for 2025. But, you know, those projects, you know, the catalyst for those projects is really just customer execution, right? Those projects are all lined up and ready to go. And it's, you know, customer execution. As they move those through, then those will move through our revenue numbers.
Speaker Change: But, you know, those projects, you know, the catalyst for those projects is just, is really just customer execution, right? Those projects are all lined up and ready to go. And it's, you know, customer execution as they move those through, then those will move through our revenue numbers.
Cathy Behnen: And then how do you expect bookings to trend going forward?
Matt Ingram: And then how do you expect bookings to trend going forward?
Cathy Behnen: Well, we've had, you know, been okay.
Speaker Change: Well, we've had, you know, okay, thanks.
Cathy Behnen: Go ahead, Cathy.
Matt Ingram: but
Cathy Behnen: Well, I was going to say that, you know, we've had, you know, the addition of, you know, a really strong sales team. Maude talked about the fact that we've added Alberto for the international market, and we've added Tamara for the US market. And then, you know, in addition to having Yann join us as the CEO with, you know, really great relationships in the industry, we really expect to see continued acceleration of bookings.
Speaker Change: a go i got it go
Speaker Change: Well, I was going to say that, you know, we've had the, you know, the addition, you know, really an addition of, you know, really strong sales teams, you know, Maude talked about the fact that we've added, you know, Alberto for the international market, and we've added Tamara for the U.S. market, and then, you know, in the addition of having Jan join us as the CEO with, you know, really great relationships in the industry, we really expect to see, you know, continued acceleration of the bookings.
Unknown Executive: And then we know that these interconnection and permitting challenges, you know, have been adversely impacting the industry and pushing projects to the right. But have you seen any impact from the new Southeast Asia ADCVD causing module availability constraints and adding an additional headwind on top of the rest of the rest of the headwinds that are out there right now?
Cathy Behnen: Okay, great. Thanks for the color there.
Unknown Executive: Okay, great. Thanks for the color there. And then.
Speaker Change: We know that these interconnection and permitting challenges, you know, have been adversely impacting industry and pushing projects to the right, but have you seen any impact from the new Southeast Asia ADCVD?
Speaker Change: I'm causing module availability constraints and adding an additional headwind on top of the rest of the headwinds that are out there right now.
Matthew Ingraham: And then we know that these interconnection and permitting challenges, you know, have been adversely impacting the industry and pushing projects to the right. But have you seen any impact from the new Southeast Asia ADCVD causing module availability constraints and adding an additional headwind on top of the rest of the rest of the headwinds that are out there right now?
Speaker Change: yes this is a artd we hear all thought about it as we have not seen it specifically on our project although we hear a lot about the industry wide issues but on our current projects we have not seen this issue the surface yet
Ahmad Chatila: Yeah, this is Ahmad. We hear a lot about it, but we have not seen it specifically on our projects. Although we hear a lot about industry-wide issues, on our current projects, we have not seen this issue surface yet. Okay, thank you. I'll pass along.
Unknown Executive: Okay, thank you. I'll pass along.
Unknown Executive: Thank you.
Pavel Molchanov: The next question comes from the line of Pavel Molchanov with Raymond James. Your line is open.
Unknown Executive: Next question comes from the line of Pavel Molchanov with Raymond James. Your line is open.
Pavel Molchanov: Yes, thanks for taking the question. I appreciate the fact that you're not giving guidance for 25, 5. You said that EBITDA should turn positive in 2025. So what revenue and gross margin run rate is that predicated on?
Unknown Executive: Yeah, thanks for taking the question. I appreciate the fact that you're not giving guidance for for 25. But you said that EBITDA should turn positive in 2025. So what revenue and gross margin run rate should we expect?
Speaker Change: Yeah, thanks for taking the question. So I appreciate the fact that you're not giving guidance for 25, but...
Speaker Change: you you said that ebitda should be should turn positive in twenty five so what revenue and gross margin run rate
Unknown Executive: Is that predicated on?
Ahmad Chatila: We need revenue to be between 50 and 60 million per quarter, Pavel, and our current expenses between operating expenses as well as overhead, which are in the 14 million range without bonuses and around 16, 17 million range with bonuses. So at $50 million, we break even with our bonuses. At $60 million, we break even with... Okay, okay. That's fine.
Speaker Change: we need the revenue to be between fifty and fifsixty million per quarter bub
Unknown Executive: and our current expenses between operating expense as well as overhead
Speaker Change: isin the fourteen million range without bonusters and around sixteen seventy million range with burnuses
Unknown Executive: So at $50 million, we break even with our bonuses. At $60 million, we break even with...
Speaker Change: start fifty million we break ven with our bers but sixty we breakkee then with bonuses
Cathy Behnen: Okay, okay, that's helpful. So, um..., in Q4 of this year, do you expect gross margin to be positive?
Unknown Executive: In Q4 of this year,
Speaker Change: Do you expect gross margin to be positive?
Unknown Executive: it
Cathy Behnen: Yeah, we are providing that guidance, but if you kind of look at how we've been progressing and we've been talking about the strong project margins that we have, you definitely see increases in our growth margin. So you'll see improvements as that revenue growth quarter to quarter.
Unknown Executive: caing
Speaker Change: Yeah, we aren't providing that guidance, but if you, you know, kind of look at how we've been progressing and we've been, you know, talking about the strong project margins that we have, you know, as the revenue growth, you definitely see increases in our gross margin. So you'll see improvements as that revenue grows quarter to quarter.
Ahmad Chatila: We believe our product costs are in line with leading competitors, and we continue to execute on opportunities to drive further reduction. We're in a good place from that perspective, and our direct margins today can enable much higher long-term growth margins. Last year, this started to show through.
Cathy Behnen: Okay. And then, Cathy, as you were talking about the balance sheet, you mentioned that you have no plans to, you know, pull on the HEM program. But when we look at cash $10.8 million and EBITDA, It's a negative, call it a negative 10, wouldn't you need to bring in some fresh capital this quarter, potentially?
Unknown Executive: OK, and then, Cathy, as you were talking about the balance sheet, you mentioned.
Unknown Executive: that you have no plans to, you know, pull on the HEM program? Wouldn't you need to bring in some fresh capital this quarter, potentially?
Speaker Change: that you have no plans to you know pull on me a tm program but when we look at cash ten pointtwentyeight million dollars and if ebitd
Speaker Change: is a negative you know call it negative ten
Speaker Change: wouldn't you need to bring in some fresh capital this quarter potentially
Cathy Behnen: You know, when we look at our forecast and timing of, you know, deposits and cash collections on receipts and so forth, you know, the way our projects are set up with, you know, we get down payments on the projects and how we have the timing of our payments to our vendors. You know, we don't need to fund the projects through the balance sheet. So that's how we see it playing out based on the forecast that we're looking at now.
Speaker Change: You know, when we look at our, you know, our forecast and timing of, you know, deposits and, and cash collections on receipts and so forth, you know,
Speaker Change: The way our projects are set up with, you know, we get down payments on the projects and how we have the timing of our payments to our vendors, you know, we don't need to, you know, fund the projects through the balance sheet.
Unknown Executive: so
Speaker Change: so that's that's how we see you know playing now based on the forecast that we're looking at now i mean where' you know we're always you know we have not you know replaced the revolver yet but we do you know we are in discussions on an opportunities like that but that's not that's not how we have this forecastes
Cathy Behnen: I mean, we're, you know, we're always, you know, we have not replaced the revolver yet, but we do, you know, we are in discussions on opportunities like that, but that's not how we have this forecasted. So,
Cathy Behnen: So, in other words, you had a benefit from working capital in Q2, which was nice to see. Do you anticipate more cash inflows from working capital in the second half of the year? Yes, we do. All right.
Unknown Executive: So, in other words, you had a benefit from working capital in Q2, which was nice to see. Do you anticipate more cash inflows from working capital in the second half of the year? Yes, we do.
Unknown Executive: So, in other words, you had a benefit from working capital in Q2, which was nice to see. Do you anticipate more cash inflows from working capital in the second half of the year?
Speaker Change: yes mam
Speaker Change: Alright, thanks very much.
Operator: Again, if you would like to ask a question, press star 1 on your telephone keypad. And we have our last question comes from the line of Donovan Schafer with Northland Capital Markets. Your line is open.
Speaker Change: Again, if you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: keep on
Speaker Change: And we have our last question, comes from the line of Donovan Schafer with Northland Capital Markets. Your line is open.
Operator: Operator, is there another question? There are no further questions at this time. This concludes this conference call. You may now disconnect.
Operator: Operator, is there another question?
Operator: Operator, is there another question?
Speaker Change: There are no further questions at this time. This concludes this conference call. You may now disconnect.
unknown: Please wait, the conference will begin shortly.
Speaker Change: please wait the conce will begin shortly
unknown: Thanks for watching! [Music]
unknown: After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to read your question, again, press star one. Thank you. I would like to turn the conference over to Bill Michalek, Vice President of Investor Relations. Please go ahead.