Second Quarter Highlights and Recent Developments
- Gross margin expansion of 180 basis points q/q GAAP, 90 bps Non-GAAP, despite project push-outs
- Project backlog reaches $1.6 billion, with $259 million recently added
- Awarded landmark 1GW solar project, part of Cat Creek’s renewables agreement with Bayer
- Awarded 300MW of solar projects in Spain and Italy, expanding served market
- Awarded 120MW solar project in South Africa
AUSTIN, Texas, Aug. 09, 2023 (GLOBE NEWSWIRE) -- FTC Solar, Inc. ( FTCI), a leading provider of solar tracker systems, software and engineering services, today announced financial results for the second quarter ended June 30, 2023.
“Project delays, including some related to domestic content discussions around the Inflation Reduction Act, have continued to challenge us as certain revenue anticipated in the second quarter has been pushed into future periods resulting in an overall disappointing quarter,” said Sean Hunkler, FTC Solar President and Chief Executive Officer. “However, on the positive side, we were pleased to show continued gross margin expansion in the quarter, with non-GAAP gross margin improving another 90 basis points over the prior quarter. Improved margins and continued cost controls allowed us to report Adjusted EBITDA flat with the prior quarter, despite the lower revenue.
“While we’re disappointed that customer project delays have impacted near-term revenue, we are pleased to report that we have seen a significant uptick in project wins in the last few weeks, including several notable projects, which should set us up for meaningful revenue growth into 2024. Among these wins is a multi-year exclusive one-gigawatt award with Cat Creek Energy. The largest portion of this will supply the solar PV component of the landmark Cat Creek Energy & Water Storage facilities in Idaho, as part of the recently signed Bayer/Cat Creek contract to produce 1,400 GWh of clean renewable energy annually. We are also pleased to announce our expansion in Europe with a 300-megawatt tracker award in Spain and Italy, which includes utility-scale agrivoltaic projects, and marks our first projects in each country. Other notable wins include a new 120 megawatt award in South Africa.
“With these new project awards, our total backlog2 has grown to $1.6 billion, with another $259 million added since May 10. While our larger revenue ramp has pushed out slightly, we now have line-of-sight to meaningful improvement as we head into 2024.
Summary Financial Performance: Q2 2023 compared to Q2 2022
U.S. GAAP | Non-GAAP | |||||||||||||||
Three months ended June 30, | ||||||||||||||||
(in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 32,359 | $ | 30,721 | $ | 32,359 | $ | 30,721 | ||||||||
Gross margin percentage | 6.8 | % | (21.2 | %) | 8.2 | % | (17.5 | %) | ||||||||
Total operating expenses | $ | 12,568 | $ | 18,727 | $ | 9,740 | $ | 12,448 | ||||||||
Loss from operations(a) | $ | (10,367 | ) | $ | (25,239 | ) | $ | (7,239 | ) | $ | (17,741 | ) | ||||
Net loss | $ | (10,414 | ) | $ | (25,683 | ) | $ | (7,163 | ) | $ | (18,226 | ) | ||||
Diluted loss per share | $ | (0.09 | ) | $ | (0.26 | ) | $ | (0.06 | ) | $ | (0.18 | ) | ||||
(a) Adjusted EBITDA for Non-GAAP | ||||||||||||||||
“We’re also excited about our competitive positioning. Our manufacturing costs have never been better, and will further improve with scale. Our project margins put us on track to achieve our stated gross margin targets, including 20%+ long-term. We are now in the market with our new and differentiated 1P tracker solution, which significantly expands our market opportunity, and for which we have recently received UL certification and a new 140+ megawatt project award which is part of the 1 GW Cat Creek award. Our international business is gaining traction, now with awards in more than a dozen countries to-date, and our backlog continues to grow nicely. And we are focused on controlling expenses while investing in areas that support and accelerate our long-term growth,” Hunkler concluded.
Total second-quarter revenue was $32.4 million, coming in short of our target range, as customer project delays pushed revenue to future periods. This revenue level represents a decrease of 20.9% compared to the prior quarter, on lower product volume. Compared to the year-earlier quarter, revenue increased 5.3%, driven primarily by higher product volume.
GAAP gross profit was $2.2 million, or 6.8% of revenue, compared to gross profit of $2.0 million, or 5.0% of revenue, in the prior quarter. Non-GAAP gross profit was $2.6 million or 8.2% of revenue. The result for this quarter compares to a non-GAAP gross loss of $5.4 million in the prior-year period, with the difference driven primarily by significantly improved product direct margins.
GAAP operating expenses were $12.6 million. On a non-GAAP basis, excluding stock-based compensation and certain other costs, operating expenses were $9.7 million, compared to $12.4 million in the year-ago quarter. The year-over-year decrease was driven largely by lower R&D and personnel-related expenses.
GAAP net loss was $10.4 million or $0.09 per share, compared to a loss of $11.8 million or $0.11 per share in the prior quarter and a net loss of $25.7 million or $0.26 per share in the year-ago quarter. Adjusted EBITDA loss, which excludes approximately $3.2 million, including stock-based compensation expense and other non-cash items, was $7.2 million, which was flat compared to the prior quarter and compares to $17.7 million in the year-ago quarter.
Outlook
We expect third-quarter revenue to be approximately flat to down relative to the second quarter. Gross margin performance will directionally follow revenue and increase with higher revenue or decline if lower, driven by cost absorption. We expect this to be followed by a return to revenue growth in the fourth quarter with margin expansion (above Q2 levels), as production from recent project wins is reflected.
(in millions) | 2Q'23 Guidance | 2Q'23 Actual | 3Q'23 Guidance | ||||||
Revenue | $42.5 - $52.5 | $32.4 | $24.0 - $34.0 | ||||||
Non-GAAP Gross Profit | $4.0 - $6.5 | $2.6 | $0.7 - $3.1 | ||||||
Non-GAAP Gross Margin | 9% - 12% | 8.2% | 3% - 9% | ||||||
Non-GAAP operating expenses | $10 - $11 | $9.7 | $10 - $11 | ||||||
Non-GAAP adjusted EBITDA | $(7.0) - $(3.5) | $(7.2) | $(10.3) - $(6.9) | ||||||
The recent uptick in project wins gives us increased confidence that the revenue ramp expected in the fourth quarter should continue into 2024, with meaningful improvement.
Second Quarter 2023 Earnings Conference Call
FTC Solar’s senior management will host a conference call for members of the investment community at 8:30 a.m. E.T. today, during which the company will discuss its second quarter results, its outlook and other business items. This call will be webcast and can be accessed within the Investor Relations section of FTC Solar's website at investor.ftcsolar.com. A replay of the conference call will also be available on the website for 30 days following the webcast.
About FTC Solar Inc.
Founded in 2017 by a group of renewable energy industry veterans, FTC Solar is a leading provider of solar tracker systems, technology, software, and engineering services. Solar trackers significantly increase energy production at solar power installations by dynamically optimizing solar panel orientation to the sun. FTC Solar’s innovative tracker designs provide compelling performance and reliability, with an industry-leading installation cost-per-watt advantage.
Footnotes
1. The term ‘pipeline’ refers to the total amount of uncontracted projects in the solar energy market to which the company has visibility as a potential sale opportunity for its trackers. The size of our pipeline does not guarantee future sales results or revenues, which will depend on our ability to convert pipeline opportunities to binding sales orders.
2. The term ‘backlog’ refers to the combination of our executed contracts and awarded orders, which are orders that have been documented and signed through a contract, where we are in the process of documenting a contract but for which a contract has not yet been signed, or that have been awarded in writing or verbally with a mutual understanding that the order will be contracted in the future. In the case of certain projects, including those that are scheduled for delivery on later dates, we have not locked in binding pricing with customers, and we instead use estimated average selling price to calculate the revenue included in our contracted and awarded orders for such projects. Actual revenue for these projects could differ once contracts with binding pricing are executed, and there is also a risk that a contract may never be executed for an awarded but uncontracted project, or that a contract may be executed for an awarded but uncontracted project at a date that is later than anticipated, thus reducing anticipated revenues. Please refer to our SEC filings, including our Form 10-K, for more information on our contracted and awarded orders, including risk factors.
Forward-Looking Statements
This press release contains forward looking statements. These statements are not historical facts but rather are based on our current expectations and projections regarding our business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements are only predictions and as such are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. You should not rely on our forward-looking statements as predictions of future events, as actual results may differ materially from those in the forward-looking statements because of several factors, including those described in more detail above and in our filings with the U.S. Securities and Exchange Commission, including the section entitled “Risk Factors” contained therein. FTC Solar undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations, except as required by law.
FTC Solar Investor Contact:
Bill Michalek
Vice President, Investor Relations
FTC Solar
T: (737) 241-8618
E: [email protected]
FTC Solar, Inc. | ||||||||||||||||
Condensed Consolidated Statements of Comprehensive Loss | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in thousands, except shares and per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue: | ||||||||||||||||
Product | $ | 21,074 | $ | 9,166 | $ | 53,653 | $ | 40,134 | ||||||||
Service | 11,285 | 21,555 | 19,600 | 40,140 | ||||||||||||
Total revenue | 32,359 | 30,721 | 73,253 | 80,274 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Product | 19,152 | 16,426 | 50,919 | 51,389 | ||||||||||||
Service | 11,006 | 20,807 | 18,098 | 44,684 | ||||||||||||
Total cost of revenue | 30,158 | 37,233 | 69,017 | 96,073 | ||||||||||||
Gross profit (loss) | 2,201 | (6,512 | ) | 4,236 | (15,799 | ) | ||||||||||
Operating expenses | ||||||||||||||||
Research and development | 1,873 | 2,711 | 3,795 | 5,412 | ||||||||||||
Selling and marketing | 1,852 | 2,927 | 3,563 | 4,899 | ||||||||||||
General and administrative | 8,843 | 13,089 | 19,642 | 26,907 | ||||||||||||
Total operating expenses | 12,568 | 18,727 | 27,000 | 37,218 | ||||||||||||
Loss from operations | (10,367 | ) | (25,239 | ) | (22,764 | ) | (53,017 | ) | ||||||||
Interest expense, net | (28 | ) | (427 | ) | (86 | ) | (722 | ) | ||||||||
Gain from disposal of investment in unconsolidated subsidiary | — | — | 898 | 337 | ||||||||||||
Other income (expense), net | (141 | ) | 73 | (215 | ) | 92 | ||||||||||
Loss before income taxes | (10,536 | ) | (25,593 | ) | (22,167 | ) | (53,310 | ) | ||||||||
(Provision) benefit for income taxes | 122 | (90 | ) | (9 | ) | (166 | ) | |||||||||
Net loss | (10,414 | ) | (25,683 | ) | (22,176 | ) | (53,476 | ) | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | (408 | ) | 60 | (413 | ) | 117 | ||||||||||
Comprehensive loss | $ | (10,822 | ) | $ | (25,623 | ) | $ | (22,589 | ) | $ | (53,359 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.26 | ) | $ | (0.20 | ) | $ | (0.54 | ) | ||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic and diluted | 112,669,296 | 100,321,943 | 109,632,336 | 99,752,707 |
FTC Solar, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(unaudited) | ||||||||
(in thousands, except shares and per share data) | June 30, 2023 | December 31, 2022 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 33,817 | $ | 44,385 | ||||
Accounts receivable, net | 69,728 | 49,052 | ||||||
Inventories | 6,045 | 14,949 | ||||||
Prepaid and other current assets | 10,276 | 10,304 | ||||||
Total current assets | 119,866 | 118,690 | ||||||
Operating lease right-of-use assets | 2,217 | 1,154 | ||||||
Property and equipment, net | 1,508 | 1,702 | ||||||
Intangible assets, net | 792 | 1,113 | ||||||
Goodwill | 7,173 | 7,538 | ||||||
Equity method investment | 900 | — | ||||||
Other assets | 4,979 | 4,201 | ||||||
Total assets | $ | 137,435 | $ | 134,398 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 27,049 | $ | 15,801 | ||||