FTC Solar Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 13, 2024

There are 10 speakers on the call.

Operator

Thank you

Speaker 1

for standing by, and welcome to the FTC Solar 4th Quarter 2023 Earnings Conference Call. All participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's call is being recorded. I would now like to turn the conference over to your host, Mr.

Speaker 1

Bill Michalek, Vice President, Investor Relations. Please go ahead.

Speaker 2

Thank you, and welcome everyone to the FTC Solar's 4th quarter 2023 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, they're available on the Investor Relations section of our website at ftcsolar.com. I'm joined today by Ahmad Chachila, a member of the Board of Directors and the company founder Kathy Behnan, the company's Chief Financial Officer and Patrick Cook, the company's Chief Commercial Officer. Before we begin, I remind everyone that today's discussion contains forward looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current date.

Speaker 2

As such, these forward looking statements include risks and uncertainties, and actual results and events could differ materially from our current expectations. Please 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 as required by law. As you'd expect, we'll discuss both GAAP and non GAAP financial measures today. Please note that earnings release issued this afternoon include the full reconciliation of each non GAAP financial measure to the nearest applicable GAAP measure.

Speaker 2

In addition, we'll discuss our backlog and our definition of this metric is included in our press release. With that, I'll turn the call over to Ahmad.

Speaker 3

Thanks, Bill, and good afternoon, everyone. I'm joining the call today as the representative of the Board as the company progresses through this interim period prior to announcing our next CEO. As discussed on last call, I've been helping facilitate communication between management and the Board and monitoring key growth activities and initiatives during this interim period. On today's call, I'll touch on some of the recent progress the team has made in address the CEO search before turning it over to Kathy to review the financials. At a high level, I'd summarize the key takeaways from this call in the following way.

Speaker 3

1, Q4 financial results were in line with our targets 2, following an 18 month stretch with limited purchase orders, which has led to depressed revenue levels, the company has seen an acceleration in closing purchase orders, which improves visibility and lays the foundation for a second half revenue recovery. And 3, the company is progressing well in improving efficiencies and lowering the breakeven revenue level. Based on the management team's current outlook, the company expect to grow revenue in 2024 and transition into profitability on a quarterly basis in the second half of the year. So what are some of the issues the company has faced and what progress has been made recently? First and most importantly, the company has seen an acceleration of contracted projects or signed purchase orders.

Speaker 3

From January 2022 through June 2023, while we continue to grow our contracted and awarded projects largely through project awards, we had depressed levels of contracted projects and slower rate of conversion from awarded to contracted. That has led to current depressed revenue levels, which we now expect to trough here in the first half of twenty twenty four. More recently, the company has been laser focused on customers, spending as much time with them as possible in a cross functional effort to improve engagement and best support the full range of customer needs. Aside from intense customer focus, the company has also been enhancing its product portfolio. The combination of these efforts has resulted in a significant increase in the rate of contracted projects about $50,000,000 per month over the past 8 months, and it has been accelerating every quarter.

Speaker 3

This includes greater success in converting previously awarded projects into contracted projects with purchase orders. The sustained booking success we've seen now is the foundation for the revenue recovery that will start in earnest in the second half of this year. Frankly, that rate should be many times larger than $50,000,000 per month and that's how we are driving it, But we are heading in the right direction and rebuilding. Based on this success, contracted projects are now approximately $415,000,000 dollars of the total backlog. On the backlog, the Board has reviewed and is comfortable with the company's $1,700,000,000 in backlog.

Speaker 3

However, it has been heavily skewed towards awarded versus contracted historically, resulting in less visibility as to when such awarded but uncontracted projects will convert to purchase orders on revenue. As noted, we have made significant progress recently on having a higher percentage of the backlog be attributable to contracted projects. Backlog also continues to be heavily skewed towards U. S. And 2P projects.

Speaker 3

The U. S. Currently represents 80% of backlog. In terms of technology, about 72% of backlog is 2P and the remaining 18% being either 1P or a combination of 1P and 2P. The majority of projects added over the last two quarters have been 1P helping to diversify backlog.

Speaker 3

2nd, the market for 2P tractors have recovered and have and we have our strongest and most comprehensive product portfolio to date. In 2022, amid the module shortage, there was about 80% drop in the market for 2P trackers as more scarce modules were largely allocated to relatively easier project sites with tended to be 1P. With module availability improved, we're seeing a more normalized market for 2P with a very good pipeline activity. We're also seeing a ramp in interest in our 1P Pioneer tracker, which was certified in Q3 of last year. Pioneer brings to 1P much of what customers have loved about our 2P technology.

Speaker 3

When the company added a 1P tracker alongside our 2P solution and software, we touted our ability to be truly solution oriented partner for our customers and that we could truly be technology agnostic and optimize each individual project site to maximize the benefit to our customers. We now have several examples of projects or portfolios of projects that we have won that had combined both 1P and 2P technologies with many more in the pipeline. 3rd, we are improving business processes. As Shekhar noted on the November call that while the company has become more efficient and lowered product costs, there were opportunities to accelerate decision making, close gaps within the product portfolio faster and increase customer interaction. The company under the leadership of Kathy, Sasan and Patrick has been diligently focused on improving business processes across the board, emphasizing customer engagement, customer satisfaction and purchase orders.

Speaker 3

Customer visits have increased tenfold and broadened across functions to accelerate the feedback loop on quality, product roadmap and future needs and enhance overall customer experience. This is augmented by newly formed customer advisory board to which we've appointed renewable expert, Anthony Carroll as Chairman. We've also implemented a net promoter score system to help us better measure and drive engagement and satisfaction. 4th, we continue to further improve our cost roadmap to enable higher sustainable long term gross margins. The company's cost roadmap has historically been hampered by high steel content due to the shift to large format modules, which was exacerbated during the steel price dislocation in 2021.

Speaker 3

The company has made great strides in optimizing steel content and bringing manufacturing costs in line with those of its leading competitors. This has helped us significantly improve average new project margins, which has started to show through our financials. In addition, we expect continued cost improvements over the next 18 months as the company continues to work on its design to value and design to manufacturing initiatives supported by rigorous process and excellent engineering team. We are confident that these improvements and strength of our average new project margins will enable greater than 20% gross margin in the future as our revenue level scales. And finally, our breakeven cost has been greatly improved.

Speaker 3

Our breakeven revenue level has historically been over well over $100,000,000 per quarter. We've now brought that down to what we believe to be approximately $50,000,000 to $60,000,000 going forward, depending whether or not we pay a bonus. This reduction has been driven by higher direct margins as well as a reduction and keen focus on OpEx and overhead costs. Our operating expenses in Q4, for example, were the lowest level in nearly 2 years as we have focused on operational efficiency, while maintaining or increasing investment in key areas that support growth and pipeline conversion like a strengthened sales team. So overall, while the near term depressed revenue level is disappointing, I believe the company is making good progress in repositioning for a strong recovery.

Speaker 3

The company has an expanding portfolio of excellent tracker solutions that are well regarded in the industry. Customer engagement is a top priority. We're already seeing an improvement in purchase orders that are the foundation for our revenue growth in the future. The market for 2P trackers is improving. Are improving our systems and process across the board, including pricing.

Speaker 3

We have a product cost structure to enable 20% plus long term gross margin and company cost structure, which has been reduced to enable quarterly profitability in 2024. We have a lot of things going for us. With a great team, it's really just a matter of getting revenue level up to see the profitability and cash flow potential to start to show through. And the last topic for me is just a quick update on the Seraf CEO search. As Shekhar outlined on the November call, we want to be very deliberate in our approach.

Speaker 3

We did not want to disrupt the progress on key initiatives of the company and wanted to take our time to find the right CEO. That said, we have started the process and have seen great deal of interest. The Board is focusing the process on highly qualified candidates, both within the industry and adjacent industries to identify CEO capable of leading the company for a long tenure. We have a short list of excellent candidates. The Board will plan to name a successor at the appropriate time when the process has concluded.

Speaker 3

With that, I'll turn it over to Kathy.

Operator

Thanks, Ahmad, and good afternoon, everyone. I'll provide some additional color on our Q4 performance and our outlook. Beginning with the discussion of the 4th quarter, revenue came in at $23,200,000 which was at the midpoint of our target range. This revenue level represents a decrease of 24.1 percent relative to last quarter and 11.5% relative to the year ago quarter. GAAP gross profit was $700,000 or 3 percent of revenue compared to gross profit of $3,400,000 or 11.1 percent of revenue in the prior quarter.

Operator

On a non GAAP basis, gross profit was $1,100,000 or 4.8 percent of revenue. While down sequentially from a normalized 9.5 percent in Q3 on lower revenue and cost absorption, the 4th quarter margin represents our 4th consecutive quarter of positive gross margin and was towards the high end of our guidance range. We continue to believe that we have significant margin upside when our revenue level recovers. Our GAAP operating expenses were $12,400,000 On a non GAAP basis, excluding stock based compensation and certain other costs, operating expenses were $10,800,000 which includes a $3,100,000 credit loss provision relating to specific customer count that was not included in our guidance ranges. Excluding this charge, our non GAAP operating expenses would have been $7,800,000 below or better than our guidance range and representing the lowest level in more than 2 years as we have diligently looked for efficiencies across the company, while continuing to invest strategically in areas that support growth.

Operator

That normalized $7,800,000 would compare to a normalized $9,200,000 in the prior quarter $10,000,000 in the year ago quarter. GAAP net loss was $11,200,000 or $0.09 per share compared to a loss of $16,900,000 or $0.14 per share in the prior quarter and a net loss of $20,500,000 or $0.20 per share in the year ago quarter. Adjusted EBITDA loss, which excludes approximately $1,100,000 including stock based compensation expense and other non cash items was $10,100,000 compared to losses of $9,700,000 in the prior quarter and $11,000,000 in the year ago quarter. Excluding the $3,100,000 charge, adjusted EBITDA loss would have been $7,000,000 better than the midpoint of our guidance. To touch briefly on annual results, full year 2023 revenue was $127,000,000 representing a 3.2% increase versus 2022.

Operator

The increase was primarily attributable to higher product volumes and ASPs, partially offset by a decline in logistics revenue and ASP. GAAP gross profit was $8,300,000 or 6.5 percent of revenue compared to gross loss of $27,200,000 or negative 22.1 percent of revenue in the prior year. On a non GAAP basis, gross profit was $10,600,000 or 8.4 percent of revenue compared to a gross loss of $23,300,000 or 18.9 percent of revenue in the prior year. The company's product cost reduction efforts, including its design value initiatives to improve product rent margins is the primary driver of the significant year over year improvement. GAAP operating expenses were $59,100,000 On a non GAAP basis, OpEx was $43,900,000 which includes approximately $7,400,000 in credit loss provision.

Operator

Excluding this amount, our operating expenses would have been $36,500,000 This compares to $41,500,000 on a similar basis in the prior year. GAAP net loss was $50,300,000 compared to 99 point $6,000,000 in 2022. Adjusted EBITDA loss, which excludes stock based compensation expense and other non cash items, was $34,100,000 compared to a loss of $66,400,000 in 2022. Finally, regarding liquidity, we ended the quarter with $25,200,000 in cash on the balance sheet. Our receivables are about 5 times our payables and based on expected timing of payments and deposits, we expect cash to be about flat sequentially in Q1.

Operator

We continue to hold no debt on the balance sheet and have about $65,000,000 remaining under the ATM program at the end of the quarter. As previewed on the last call, we did not utilize the ATM in Q4 and we similarly don't plan to utilize it in Q1. With all these factors and the expected customer deposits, we will tightly manage those deposits and supplier payments. Our backlog has now grown to $1,700,000,000 with approximately $213,000,000 added since November 8. With that, let us turn our focus to the outlook.

Operator

Based on our current view, we expect Q1 revenues to be down sequentially and represent the trough in the revenue for the year. Specifically, our target targets for the Q1 call for the following: revenue between $10,000,000 $15,000,000 non GAAP gross loss between $3,800,000 $1,800,000 or between negative 38% 12% of revenue. As you might expect, the percentage ranges vary more greatly at these lower revenue levels. Non GAAP operating expenses between $8,000,000 $8,900,000 and finally, adjusted EBITDA loss between $12,600,000 $9,800,000 Beyond Q1, we expect to see sequential revenue growth for the remainder of the year with revenue being weighted towards the second half. We expect to be approximately break even on an adjusted EBITDA basis in the 3rd quarter before moving squarely profitable in the 4th quarter.

Operator

With that, we conclude our prepared remarks, and I will turn it over to the operator for any questions. Operator?

Speaker 1

Thank you. Our first question comes from the line of Philip Shen of ROTH. Your line is open.

Speaker 4

Hi, everyone. Thanks for taking my questions. A couple of years ago, your business customer wins and momentum were rising pretty quickly in an oligopolistic market. I believe the Jinko and Long G module UFLPA detentions really hurt you guys. That said, these module vendors have been cleared and are shipping actively into the U.

Speaker 4

S. And have been for some time. Why haven't you been able to ramp your revenues with them? Were there previously awarded orders, for example, that you ended up losing to others? Can you give us some color on what's happening as these guys ramp up, although on your side, you're not able to ramp up as quickly?

Speaker 4

Thanks.

Speaker 3

No, Phil. Thanks for the question.

Speaker 5

I mean, I think we haven't seen any material contract order orders that are moving from our backlog into our into POs and revenue. That ramp has been quite frankly a little slower than what anybody was expecting.

Speaker 4

Okay. Thanks, Patrick. Shifting over to I think you guys said of the $1,700,000,000 of backlog, maybe $450,000,000 or ish, roughly that number is contracted. Can you kind of correct that figure? And then also how much is expected to be delivered in 2024?

Speaker 4

So if you just look at the contracted volumes, how much is set up for 2024? Thanks.

Speaker 5

Yes. So let me clarify the kind of $1,700,000,000 So $415,000,000 of the $1,700,000 has purchase orders. Some of those have defined schedules and some of those schedules we're working through with the customers. And Kathy, we're not giving quarterly kind of breakdown of guidance on where that $415,000,000 is ultimately going to play out. Right.

Speaker 4

Can you give it by year though, if not quarterly, like how much of that 415 is in 2024 versus 2025 or beyond?

Operator

We're not giving the full year guidance, but that those are starting to move. And if you look at kind of how we laid it out, we've given you what our Q1 guidance is. We've showed you that we're moving to breakeven in Q3 and that will be profitable in Q4. So I think if you kind of model that out, that gives you a baseline of what's coming through in 2024 and the rest will be coming in beyond that.

Speaker 4

Okay. All right. I see the sequential growth. I just we just don't know what is the rate of growth. So it's a little bit tough to get I guess with the breakeven and profitability in Q4, that helps.

Speaker 4

Execution has been tough, I know. Some of our recent checks suggest you may need to win back the trust of customers. Like how do you go about doing that? I know it's one step at a time and execution improvement, but have you guys thought through or can you communicate what that plan might be? Thanks.

Speaker 3

Yes. Thank you, Phil. This is Ahmad. You're correct. We had missteps in the past.

Speaker 3

That's why we are where we are. But the team has done an amazing job over the last 8 months. Actually, the prior even the prior management teams, they really have worked very hard to correct a lot of issues in the past. And by having intense external focus, upgrading the quality systems, improving our cost roadmap, broadening our portfolio so that the sales teams when they go meet customers, they have more than just 2P to sell. And even in the 2P product, there was not enough variety in it, what we're finding.

Speaker 3

And that portfolio got improved a lot over the last couple of years, and we continue to improve it now. And because of that, we're able to really book $50,000,000 a month. That's a significant number, like $150,000,000 a quarter. And that's how the team is correcting itself.

Speaker 4

Okay. Thank you for the color, Ahmad, Patrick, Kathy. I'll pass it on.

Speaker 3

Thank you.

Speaker 1

Thank you. One moment please. Our next question comes from the line of Pavel Molchanov of Raymond James. Your line is open.

Speaker 6

Yes, thanks for taking the question. So you've clearly been taking quite a bit of corporate costs out of the system. That Q1 run rate of between $8,000,000 $9,000,000 in non GAAP operating expenses, Is that the kind of the steady state for the rest of the year? Or does it have further room to decline?

Speaker 3

I'll start with this and Kathy you can add. The answer is this is the run rate. We might increase it in the second half of the year a little bit, Pavel. We really the team is trying to invest in sales and engineering. I think we cut a lot of the overhead, the things that we didn't need as much.

Speaker 3

But you can expect that that's around rate and it might increase a little bit in the second half of the year because we want to add more salespeople, we want to add more engineering.

Operator

Yes. And I would just add on to that, that we have really worked on this diligently, and we do keep a very laser focus on our operating expenses and just continue to drive it, right? So we control the things we can control. And so we've really managed that. We have improved our processes and systems to really continue that control and have that monitoring through good metrics and from reviews on a period over period basis.

Speaker 6

You mentioned that bulk of the backlog and new additions are domestic. If we go back a few years, you were making Australia, parts of Africa and so Australia, parts of Africa and so forth. Given the amount of headcount that you've cut, are you able to play in these overseas geographies?

Speaker 3

The answer is yes, Pavel, Desimard. Absolutely, we can. Some of the overhead we cut is because we learned that we don't need it. And we might need to add a little bit more salespeople, more effective salespeople in various regions. Let me go back also to your prior question.

Speaker 3

We cut OpEx because it's not because we want to be a company that is smaller in revenue. We're trying to be efficient. We're not going to scale the company to be a $30,000,000 a quarter company. We do not believe that. We're booking at $50,000,000 a month.

Speaker 3

I recognize that we cannot be $50,000,000 in revenue a month soon, but as long as we continue that trend and it's accelerating actually in Q3, Q4 is better than Q3 and so far in Q1, it's better than Q4. One day, the revenue can expand. So we actually want to set the company for nice growth and high profitability while being efficient. We have enough resources to be in the $50,000,000 to $75,000,000 booking a month. I think if we want to grow to $150,000,000 then we might add more people and expand internationally more aggressively.

Speaker 3

I hope that gives you some color.

Speaker 6

Yes. And then maybe just following up on the international aspect. Last August, you announced a good sized deal with a developer in Italy and Spain. And I think the plan was to start delivering late 2023 and kind of continue through 2024. Is that timetable still correct?

Speaker 5

Yes. From those projects, that was the announcement we did with 5E, the 3 50 Megawatt portfolio, we're looking still the majority of that revenue to be delivered kind of in 2024 and like we said into 2025. We saw a couple of project delays in small nature in 2023, but largely the portfolio is still intact.

Speaker 6

All right. Thanks very much.

Speaker 1

Thank you. Our next question comes from the line of Jeff Osborne of TD Cowen. Your line is open.

Speaker 7

Hey, good evening. A couple of questions on my side. I was wondering, Ahmad, if you could just address in looking back, the awarded backlog conversion into the contracted under the prior management team, as you diagnose why that was a challenge, is there a way of framing that?

Speaker 3

Yes, Jeff, first of all, I want to thank the private management team to really growing the business to that level. I think a lot of it had to do that we needed everyone to be on the road also to help customers move the awarded to contracted and adding more salespeople, getting stuff done internally and that's what it is really. It's a lot of blocking and tackling. And I think we learned our lessons and now we're going to intensify that activity, Jeff.

Speaker 7

Good to hear. And then you made some comments that I just wanted to tie in into the financials as well, but you made reference to to using more steel than your peers and then a 12 to 18 month sort of design to value and redesign of the portfolio to use less steel, if I heard you right, to get to the 20% gross margin level. Is the comment about the $50,000,000 to $60,000,000 in revenue in the 3rd quarter, depending on the bonus payment schedule, does that assume that you hit a 20% gross margin? Or do you hit 20% after that 18 month time period of revenue?

Speaker 3

We do not hit 20% gross margin in Q3 because we have absorption issues. So the way I look at it is direct margin. And the answer is we are in a good path already at this moment, we are competitive on steel content. Maybe with a little bit better scale, we can negotiate better with steel manufacturers. I think maybe that's an area we can improve or some of our logistics and supply chain networks in certain international areas we can improve.

Speaker 3

I think to get to 20% gross margin, we need more than $60,000,000 How much CapEx do you think we need to be at, like $100,000,000 a quarter?

Operator

Yes.

Speaker 3

Yes. I would say we need to be at 1 $105,000,000 a quarter and we'll get to 20% gross margin. Yes, dollars 105,000,000 Okay.

Speaker 7

Got it. Thanks for being precise. Last question is just as it relates to the IRA. Is there any credits assumed in the guidance for Q1? Or how do we think about

Speaker 3

that for the outlook

Operator

for the year? No. We have not assumed the credits into our guidance. We are utilizing our facility at Atlas Steel. So we have capacity to manufacture domestic content and provide that to our customers as needed.

Operator

But we have not put that into our forecasted P and L.

Speaker 7

Perfect. That's all I had. Thank you, Kathy.

Speaker 3

Thank you. Thank you, Josh.

Speaker 1

Thank you. One moment, please. Our next question comes from the line of Donovan Shafer of Northland Capital Markets. Your line is open.

Speaker 3

Hey, guys.

Speaker 8

Thanks for taking the questions. So Ahmad, first, I just want to clarify with your comment around you're being at a rate you have a monthly run rate, I guess, right now of booking $50,000,000 per month, or adding that to the backlog. Do those do you mean $15,000,000 that goes into that PO bucket, a purchase order that's contracted? Or is it some of that does that include awards or projects that go into the awarded bucket? And if it's not one or the other, can you give any kind of rough if it's not 100% one or 100% the other, can you give some rough sense of what kind of a mix we're talking there?

Speaker 3

Yes. It's 100 percent POs, purchase orders contracted. The awarded is higher than that.

Speaker 8

Okay, fantastic. Okay. And then for accounts receivable, yes, I think in the past so that's come down a bit, but not a lot just on a quarter over quarter basis. And given the fairly low level of revenues in Q3 and Q4, I would have expected it to maybe come down a bit more. And I think in the past, you've maybe even talked about improving those collections as a way of providing some of the near term funding.

Speaker 8

So just wondering if we can get an update there. It looks like there were I think Kathy mentioned that some of that was written down. But are there other amounts in the accounts receivable that are past 90 days or could be coming under pressure for additional write downs? Just any updates or clarification there would be helpful.

Operator

Yes, sure, Donovan. No, I'm not anticipating any other write downs in the accounts receivable balance.

Speaker 8

Okay. And then just let's see. For the talking about Q1 as the trough, on the Q3 call, I think I look back at the transcript and Patrick, you made the comment that you were expecting to improve revenue performance in the Q1. And obviously with the guidance that's come out, that hasn't played out as expected. So what is it that gives you that what gives you confidence this time around, I guess, that Q1 will be the trough and that you'll see that additional growth in Q2, Q3 that gets you to the breakeven.

Speaker 8

What do you see now that's different?

Speaker 3

Thank you, Donovan. This is Ahmad again. What we see is a more contracted than before. That's what we see. I mean, let me make a statement about infrastructure projects.

Speaker 3

By default, they are never on time, but we do not want to use that excuse. Our problem is we are a smaller company and because of that we get a lot of whiplash because we're smaller and subscale. And as we increase our bookings every all the time and get to hopefully $150,000,000 a month, then our forecasting will become much, much better. So that's our issue. But what happened since last time is we have a lot more contracted than before.

Speaker 3

So we are more confident right now than the last time that we did the forecast.

Speaker 8

Okay. Thank you. That's helpful. All right. I'll take the rest of my questions offline.

Speaker 3

Thank you, Donovan.

Speaker 1

Thank you. Our next question comes from the line of Amit Dayal of H. C. Wainwright. Your line is open.

Speaker 9

Thank you. Good afternoon, everyone. Of my questions have been asked, but I just wanted to touch on the backlog number. And on the footnotes in the press release, you indicate some of the backlog is verbal. Just wanted to understand what the extent of the backlog in that number is from the verbal side of things.

Speaker 9

And what are the triggers that convert this backlog into contracted orders?

Speaker 5

Yes. We didn't break it out by what's verbal and what's not. I mean, I think the disclosure we put in here was really more tied to the purchase orders and $415,000,000 of the $1,700,000 has purchase orders associated with it. The way we look at kind of the rest of the backlog is through LOIs or not or LOIs or verbal agreements in which we check with the customers on a monthly and quarterly basis to make sure these projects progressing. A lot of this is candidly working with the customers to define the delivery schedules.

Speaker 5

They're getting models. And some of these projects we talked about in previous quarters are 2025 NTP type projects that are out into the future as well. So there's a little bit of mix and breakdown as it relates to that.

Speaker 9

Okay. Thank you for that. And maybe just last one for me. As you sort of get into a recovery phase, revenue start climbing, etcetera, to the $50,000,000 plus levels. How do you feel with respect to your working capital situation to sort of meet that level of

Speaker 3

demand with what your balance sheet looks like right now?

Operator

Yes. And I think that we're managing our ramp that we have that we see in the back half of the year. We really look at managing the cash. We look at the fact that we have no debt and we look at the fact that we have significantly more receivables than we have payables and we continue to manage that. Our projects, we look at from a cash flow a cash flow positive approach in terms of deposits that we receive from customers.

Operator

So it really helps us to manage through working capital needs.

Speaker 3

All right, guys. Thank you. That's all I have. I appreciate it. Thank you.

Speaker 1

Thank you. I'm showing no further questions at this time. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect.

Speaker 1

Have a great day.

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Key Takeaways

  • FTC Solar reported Q4 2023 revenue of $23.2 million at the midpoint of guidance, delivered a positive GAAP gross margin of 3%, and recorded its lowest operating expenses in nearly two years.
  • The company’s total backlog grew to $1.7 billion, including $415 million of contracted purchase orders, with conversion rates accelerating to roughly $50 million per month—laying the foundation for H2 revenue recovery.
  • Management expects Q1 2024 revenues to trough at $10–15 million, followed by sequential growth that leads to adjusted EBITDA breakeven in Q3 and full profitability in Q4 2024.
  • Key operational enhancements—expanded 1P/2P tracker portfolio, intensified customer engagement, streamlined business processes, and a rigorous cost roadmap—are aimed at achieving sustained 20%+ gross margins.
  • The company has lowered its breakeven revenue threshold from over $100 million to approximately $50–60 million per quarter, maintains a cash balance of $25.2 million, and carries no debt.
A.I. generated. May contain errors.
Earnings Conference Call
FTC Solar Q4 2023
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