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FTC Solar Inc (FTCI) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges and ...

GuruFocus Research
·4-min read

  • Revenue: $12.6 million in Q1 2024, a decrease of 45.7% from the previous quarter and 69.2% year-over-year.

  • Gross Margin: GAAP gross loss of $2.1 million or -16.7% of revenue; non-GAAP gross loss of $1.7 million or -13.7% of revenue.

  • Net Income: GAAP net loss of $8.8 million, or -$0.07 per share.

  • Adjusted EBITDA: Loss of $10.7 million, including a $1.9 million net benefit from an earn-out and other adjustments.

  • Liquidity: Ended the quarter with $60 million in cash and restricted cash.

  • Backlog: $1.8 billion, with $485 million contracted.

  • Outlook for Q2: Revenue projected between $10.5 million and $15.5 million; non-GAAP gross loss between $3.1 million and $1.1 million; adjusted EBITDA loss between $12.6 million and $9.8 million.

Release Date: May 10, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • FTC Solar Inc (NASDAQ:FTCI) reported first quarter financial results in line with the targets provided, indicating effective guidance and forecasting.

  • The company has seen a significant acceleration in contracted projects, increasing from about $6 million per month in early 2023 to approximately $50 million per month over the last 10 months, laying a solid foundation for future revenue recovery.

  • FTC Solar Inc (NASDAQ:FTCI) continues to enhance its product portfolio, including the introduction of a high wind version of its Pioneer 1P tracker, which has contributed to an increase in contracted and awarded totals to $1.8 billion.

  • The company has made substantial improvements in business processes and customer engagement, including a tenfold increase in customer visits and the rollout of a Net Promoter Score system to enhance customer satisfaction.

  • FTC Solar Inc (NASDAQ:FTCI) has significantly improved its cost structure, reducing steel content and manufacturing costs, which is expected to enable greater than 20% gross margins in the future as revenue levels scale.

Negative Points

  • Revenue for the first quarter was $12.6 million, representing a decrease of 45.7% compared to the prior quarter and a decrease of 69.2% compared to the same quarter last year, indicating a substantial drop in product and logistics volumes.

  • The company reported a GAAP gross loss of $2.1 million or 16.7% of revenue, compared to a gross profit in the previous quarter, reflecting challenges in achieving profitability at lower revenue levels.

  • FTC Solar Inc (NASDAQ:FTCI) is still experiencing a GAAP net loss, which was $8.8 million for the quarter, although this is an improvement from previous quarters.

  • The company's adjusted EBITDA loss was $10.7 million, despite improvements, indicating ongoing challenges in reaching operational profitability.

  • FTC Solar Inc (NASDAQ:FTCI) faces uncertainties in the market, including potential impacts from new tariffs in Southeast Asia that could affect project timelines and profitability in the second half of the year.

Q & A Highlights

Q: Can you discuss the potential impacts of the Southeast Asia AD/CVD on your projects in Q3 and Q4? Are there risks of delays due to new tariffs? A: (Patrick Cook, Chief Commercial Officer) - It's early to fully assess the impact as customers are still evaluating scenarios. However, for projects in the latter half of the year, we've secured module clarity and anticipate minimal impact.

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Q: Have there been any de-bookings or cancellations in your $118 million bookings, similar to what other companies have experienced? A: (Cathy Behnen, Chief Financial Officer) - The $118 million represents net bookings. We've had no significant cancellations or de-bookings in our backlog.

Q: As you approach EBITDA breakeven in Q3, what gross margin are you assuming? A: (Ahmad Chatila, Director) - We anticipate a gross margin around 16-17% for Q3.

Q: What is the geographic and product mix in your $1.8 billion backlog? How much of this is international, and what's the split between 1P and 2P trackers? A: (Patrick Cook, Chief Commercial Officer) - The majority of the backlog is in the US, with growing portions in Australia, South Africa, Europe, and Latin America. The backlog includes a higher proportion of 2P trackers due to their longer presence, but recent bookings have increasingly favored the 1P system.

Q: Can you provide details on the $4.1 million gain from the disposal of investment noted in the income statement? A: (Cathy Behnen, Chief Financial Officer) - This gain is from an earn-out on a subsidiary we sold in 2021, recognized as it was earned.

Q: Regarding the second half of the year, can you categorize the growth in terms of project size or developer type in the US? A: (Ahmad Chatila, Director) - The growth is primarily with smaller developers in the US. As our financial position strengthens post-Q3, we aim to engage more with larger accounts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.