First Quarter Highlights and Recent Developments
- Revenue growth of 56% quarter over quarter (q/q)
- Gross margin of 5.0%, or 7.3% Non-GAAP, up >10 points q/q & 57 points over last 2 quarters
- New Pioneer 1P tracker shipping ahead of schedule, with first orders in U.S. and Australia
- Project backlog reaches $1.4B, with $235 million added
- Solar module constraints appear to be easing, which is an encouraging sign for 2H'23 into 2024
AUSTIN, Texas, May 10, 2023 (GLOBE NEWSWIRE) -- FTC Solar, Inc. (Nasdaq: FTCI), a leading provider of solar tracker systems, software and engineering services, today announced financial results for the first quarter ended March 31, 2023. “Results for the first quarter came in at the high-end of our target ranges on all metrics,” said Sean Hunkler, FTC Solar President and Chief Executive Officer. “Our strategy is working, the multiple initiatives we’ve executed on over the past year are improving our operating performance. For example, our improved cost structure has enabled us to post our first positive gross margin since our IPO, one that is 14-points higher today than it was in the fourth quarter of 2021 when we had two and a half times the revenue, and one that is 57 points higher than just two quarters ago.
“In addition to improving our cost and margin profile by eliminating more than a fifth of the steel from our products and launching a higher-margin Distributed Generation (DG) business, we have taken several other steps to improve our overall competitive positioning. We expanded our product offering and available market opportunity by adding a thin-film solution to our 2P Voyager tracker and introducing a new and differentiated 1P tracker called Pioneer, for which we just won our first project awards in the U.S. and Australia. And we strengthened our geographic positioning – in the U.S. by announcing a joint venture with a leading manufacturer to support customers with domestic content, and internationally by growing project awards outside the U.S., which to date now stands at 10 countries, which further diversifies our revenue base.
“Our enhanced portfolio and positioning, along with our signature strong service, allows us to engage with customers as a truly differentiated and technology-agnostic partner to optimize each individual customer project site, wherever it may be. Customers have taken notice and our overall pipeline1 has reached a new record high at 134 gigawatts and our backlog2 has grown to $1.4 billion, with another $235 million added since March 1.
“On the market front, while our U.S. customers’ ability to obtain solar modules has been a headwind for the past year, the constraints seem to be easing to some degree. We’re seeing increasingly more project opportunities appear in our funnel that have visibility to solar modules. This is a great sign as we look ahead with customers to the back half of 2023 and into 2024.”
Summary Financial Performance: Q1 2023 compared to Q1 2022
| U.S. GAAP | Non-GAAP | |||||||||||||||
| Three months ended March 31, | ||||||||||||||||
| (in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | $ | 40,894 | $ | 49,553 | $ | 40,894 | $ | 49,553 | ||||||||
| Gross margin percentage | 5.0 | % | (18.7 | %) | 7.3 | % | (17.8 | %) | ||||||||
| Total operating expenses | $ | 14,432 | $ | 18,491 | $ | 10,053 | $ | 11,177 | ||||||||
| Loss from operations(a) | $ | (12,397 | ) | $ | (27,778 | ) | $ | (7,152 | ) | $ | (19,965 | ) | ||||
| Net loss | $ | (11,762 | ) | $ | (27,793 | ) | $ | (7,358 | ) | $ | (20,284 | ) | ||||
| Diluted loss per share | $ | (0.11 | ) | $ | (0.28 | ) | $ | (0.07 | ) | $ | (0.20 | ) | ||||
| (a) Adjusted EBITDA for Non-GAAP | ||||||||||||||||
Total first quarter revenue was $40.9 million, slightly above our prior guidance range. This revenue level represents an increase of 56.0% compared to the prior quarter, continuing the momentum off the third-quarter 2022 lows as product volume increases. Compared to the year-earlier quarter, revenue decreased 17.5%, driven primarily by lower logistics volume, partially offset by higher product ASP.
GAAP gross profit was $2.0 million, or 5.0% of revenue, compared to a loss of $1.9 million, or 7.3% of revenue in the prior quarter. Non-GAAP gross profit was $3.0 million or 7.3% of revenue. The result for this quarter compares to a non-GAAP gross loss of $8.8 million in the prior-year period, with the difference driven primarily by significantly improved product and logistics direct margins, partially offset by lower volumes.
GAAP operating expenses were $14.4 million. On a non-GAAP basis, excluding stock-based compensation and certain other expenses, operating expenses were $10.1 million, compared to $11.2 million in the year-ago quarter. The year-over-year decrease was driven primarily by lower personnel-related costs and spending on professional services.
GAAP net loss was $11.8 million or $0.11 per share, compared to a loss of $20.5 million or $0.20 per share in the prior quarter and compared to a net loss of $27.8 million or $0.28 per share in the year-ago quarter. Adjusted EBITDA loss, which excludes approximately $4.6 million, including stock-based compensation expense, certain consulting and legal fees, severance and other non-cash items, was $7.2 million. This result compares to an Adjusted EBITDA loss of $11.0 million in the prior quarter and $20.0 million in the year-ago quarter.
Outlook
For the second quarter of 2023, we are targeting continued sequential growth in revenue. Importantly, we expect continued improvement in gross margin as our product cost-reduction initiatives continue to positively impact the income statement.
| (in millions) | 1Q'23 Guidance | 1Q'23 Actual | 2Q'23 Guidance | |||||
| Revenue | $36 - $40 | $40.9 | $42.5 - $52.5 | |||||
| Non-GAAP Gross Profit | $0.7 - $3.2 | $3.0 | $4.0 - $6.5 | |||||
| Non-GAAP Gross Margin | 2% - 8% | 7.3% | 9% - 12% | |||||
| Non-GAAP operating expenses | $10 - $11 | $10.1 | $10 - $11 | |||||
| Non-GAAP adjusted EBITDA | $(10.3) - $(6.8) | $(7.2) | $(7.0) - $(3.5) | |||||
Looking beyond the second quarter, the increase in project opportunities we are seeing today with visibility to modules gives us increasing confidence in the potential for a strong revenue ramp in the second half of the year and into 2024.
First 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 first 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: IR@FTCSolar.com
| FTC Solar, Inc. Condensed Consolidated Statements of Comprehensive Loss (unaudited) | ||||||||
| Three months ended March 31, | ||||||||
| (in thousands, except shares and per share data) | 2023 | 2022 | ||||||
| Revenue: | ||||||||
| Product | $ | 32,579 | $ | 30,968 | ||||
| Service | 8,315 | 18,585 | ||||||
| Total revenue | 40,894 | 49,553 | ||||||
| Cost of revenue: | ||||||||
| Product | 31,767 | 34,963 | ||||||
| Service | 7,092 | 23,877 | ||||||
| Total cost of revenue | 38,859 | 58,840 | ||||||
| Gross profit (loss) | 2,035 | (9,287 | ) | |||||
| Operating expenses | ||||||||
| Research and development | 1,922 | 2,701 | ||||||
| Selling and marketing | 1,711 | 1,972 | ||||||
| General and administrative | 10,799 | 13,818 | ||||||
| Total operating expenses | 14,432 | 18,491 | ||||||
| Loss from operations | (12,397 | ) | (27,778 | ) | ||||
| Interest expense, net | (58 | ) | (295 | ) | ||||
| Gain from disposal of investment in unconsolidated subsidiary | 898 | 337 | ||||||
| Other income (expense), net | (74 | ) | 19 | |||||
| Loss before income taxes | (11,631 | ) | (27,717 | ) | ||||
| Provision for income taxes | (131 | ) | (76 | ) | ||||
| Net loss | (11,762 | ) | (27,793 | ) | ||||
| Other comprehensive income (loss): | ||||||||
| Foreign currency translation adjustments | (5 | ) | 57 | |||||
| Comprehensive loss | $ | (11,767 | ) | $ | (27,736 | ) | ||
| Net loss per share: | ||||||||
| Basic | $ | (0.11 | ) | $ | (0.28 | ) | ||
| Diluted | $ | (0.11 | ) | $ | (0.28 | ) | ||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 106,791,198 | 99,211,792 | ||||||
| Diluted | 106,791,198 | 99,211,792 | ||||||
| FTC Solar, Inc. Condensed Consolidated Balance Sheets (unaudited) | ||||||||
| (in thousands, except shares and per share data) | March 31, 2023 | December 31, 2022 | ||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 41,493 | $ | 44,385 | ||||
| Accounts receivable, net | 61,306 | 49,052 | ||||||
| Inventories | 8,610 | 14,949 | ||||||
| Prepaid and other current assets | 9,487 | 10,304 | ||||||
| Total current assets | 120,896 | 118,690 | ||||||
| Operating lease right-of-use assets | 2,401 | 1,154 | ||||||
| Property and equipment, net | 1,557 | 1,702 | ||||||
| Intangible assets, net | 977 | 1,113 | ||||||
| Goodwill | 7,562 | 7,538 | ||||||
| Equity method investment | 900 | — | ||||||
| Other assets | 4,744 | 4,201 | ||||||
| Total assets | $ | 139,037 | $ | 134,398 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 23,704 | $ | 15,801 | ||||
| Accrued expenses | 20,523 | 23,896 | ||||||
| Income taxes payable | 565 | 443 | ||||||
| Deferred revenue | 8,639 | 11,316 | ||||||
| Other current liabilities | 9,612 | 8,884 | ||||||
| Total current liabilities | 63,043 | 60,340 | ||||||
| Operating lease liability, net of current portion | 1,681 | 786 | ||||||
| Other non-current liabilities | 6,072 | 6,822 | ||||||
| Total liabilities | 70,796 | 67,948 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock par value of $0.0001 per share, 10,000,000 shares authorized; none issued as of March 31, 2023 and December 31, 2022 | — | — | ||||||
| Common stock par value of $0.0001 per share, 850,000,000 shares authorized; 110,277,096 and 105,032,588 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 11 | 11 | ||||||
| Treasury stock, at cost; 10,762,566 shares as of March 31, 2023 and December 31, 2022 | — | — | ||||||
| Additional paid-in capital | 328,903 | 315,345 | ||||||
| Accumulated other comprehensive income loss | (66 | ) | (61 | ) | ||||
| Accumulated deficit | (260,607 | ) | (248,845 | ) | ||||
| Total stockholders’ equity | 68,241 | 66,450 | ||||||
| Total liabilities and stockholders’ equity | $ | 139,037 | $ | 134,398 | ||||
| FTC Solar, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||
| Three months ended March 31, | ||||||||
| (in thousands) | 2023 | 2022 | ||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (11,762 | ) | $ | (27,793 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Stock-based compensation | 4,890 | 4,610 | ||||||
| Depreciation and amortization | 334 | 121 | ||||||
| Amortization of debt issue costs | 177 | 173 | ||||||
| Provision for obsolete and slow-moving inventory | 1,261 | — | ||||||
| Gain from disposal of investment in unconsolidated subsidiary | (898 | ) | (337 | ) | ||||
| Warranty provision | 1,543 | 516 | ||||||
| Warranty recoverable from manufacturer | (54 | ) | (205 | ) | ||||
| Bad debt credit | — | (30 | ) | |||||
| Deferred income taxes | 216 | — | ||||||
| Lease expense and other | 229 | 198 | ||||||
| Impact on cash from changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (11,412 | ) | (24,652 | ) | ||||
| Inventories | 5,078 | (58 | ) | |||||
| Prepaid and other current assets | 817 | 3,440 | ||||||
| Other assets | (882 | ) | (40 | ) | ||||
| Accounts payable | 7,882 | 7,258 | ||||||
| Accruals and other current liabilities | (616 | ) | (17,044 | ) | ||||
| Deferred revenue | (2,677 | ) | 1,679 | |||||
| Other non-current liabilities | (2,212 | ) | (752 | ) | ||||
| Lease payments and other, net | (230 | ) | (190 | ) | ||||
| Net cash used in operating activities | (8,316 | ) | (53,106 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (28 | ) | (523 | ) | ||||
| Investment in Alpha Steel | (900 | ) | — | |||||
| Proceeds from disposal of investment in unconsolidated subsidiary | 898 | 337 | ||||||
| Net cash used in investing activities | (30 | ) | (186 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Sale of common stock | 5,450 | — | ||||||
| Stock offering costs paid | (32 | ) | — | |||||
| Proceeds from stock option exercises | 51 | 428 | ||||||
| Net cash provided by financing activities | 5,469 | 428 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (15 | ) | 62 | |||||
| Net decrease in cash, cash equivalents and restricted cash | (2,892 | ) | (52,802 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 44,385 | 102,185 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 41,493 | $ | 49,383 | ||||
Notes to Reconciliations of Non-GAAP Financial Measures to Nearest Comparable GAAP Measures
We present Non-GAAP gross profit (loss), Non-GAAP operating expense, Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS as supplemental measures of our performance. We define Adjusted EBITDA as net loss plus (i) provision (benefit) for income taxes, (ii) interest expense, net (iii) depreciation expense, (iv) amortization of intangibles, (v) stock-based compensation, and (vi) non-routine legal fees, certain severance and other costs (credits). We also deduct the contingent gains from the disposal of our investment in unconsolidated subsidiary from net loss in arriving at Adjusted EBITDA. We define Adjusted Net Loss as net loss plus (i) amortization of debt issue costs and intangibles, (ii) stock-based compensation, (iii) non-routine legal fees, severance and certain other costs (credits), and (iv) the income tax expense (benefit) of those adjustments, if any. We also deduct the contingent gains from the disposal of our investment in unconsolidated subsidiary from net loss in arriving at Adjusted Net Loss. Adjusted EPS is defined as Adjusted Net Loss on a per share basis using our weighted average diluted shares outstanding.
Non-GAAP gross profit (loss), Non-GAAP operating expense, Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). We present these non-GAAP measures, many of which are commonly used by investors and analysts, because we believe they assist those investors and analysts in comparing our performance across reporting periods on an ongoing basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS to evaluate the effectiveness of our business strategies.
Non-GAAP gross profit (loss), Non-GAAP operating expense, Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP, and you should not rely on any single financial measure to evaluate our business. These Non-GAAP financial measures, when presented, are reconciled to the most closely applicable GAAP measure as disclosed below.
The following table reconciles Non-GAAP gross profit (loss) to the most closely related GAAP measure for the three months ended March 31, 2023 and 2022, respectively:
| Three months ended March 31, | ||||||||
| (in thousands, except percentages) | 2023 | 2022 | ||||||
| U.S. GAAP revenue | $ | 40,894 | $ | 49,553 | ||||
| U.S. GAAP gross profit (loss) | $ | 2,035 | $ | (9,287 | ) | |||
| Depreciation expense | 124 | 69 | ||||||
| Stock-based compensation | 816 | 309 | ||||||
| Other costs | — | 102 | ||||||
| Non-GAAP gross profit (loss) | $ | 2,975 | $ | (8,807 | ) | |||
| Non-GAAP gross margin percentage | 7.3 | % | (17.8 | %) | ||||
The following table reconciles Non-GAAP operating expenses to the most closely related GAAP measure for the three months ended March 31, 2023 and 2022, respectively:
| Three months ended March 31, | ||||||||
| (in thousands) | 2023 | 2022 | ||||||
| U.S. GAAP operating expenses | $ | 14,432 | $ | 18,491 | ||||
| Depreciation expense | (70 | ) | (52 | ) | ||||
| Amortization expense | (140 | ) | — | |||||
| Stock-based compensation | (4,074 | ) | (4,301 | ) | ||||
| Non-routine legal fees | (108 | ) | (1,078 | ) | ||||
| Severance | 13 | (615 | ) | |||||
| Other (costs) credits | — | (1,268 | ) | |||||
| Non-GAAP operating expenses | $ | 10,053 | $ | 11,177 | ||||
The following table reconciles Non-GAAP Adjusted EBITDA to the related GAAP measure of loss from operations for the three months ended March 31, 2023 and 2022, respectively:
| Three months ended March 31, | ||||||||
| (in thousands) | 2023 | 2022 | ||||||
| U.S. GAAP loss from operations | $ | (12,397 | ) | $ | (27,778 | ) | ||
| Depreciation expense | 194 | 121 | ||||||
| Amortization expense | 140 | — | ||||||
| Stock-based compensation | 4,890 | 4,610 | ||||||
| Non-routine legal fees | 108 | 1,078 | ||||||
| Severance | (13 | ) | 615 | |||||
| Other costs | — | 1,370 | ||||||
| Other income (expense) | (74 | ) | 19 | |||||
| Adjusted EBITDA | $ | (7,152 | ) | $ | (19,965 | ) | ||
The following table reconciles Non-GAAP Adjusted EBITDA, Adjusted net loss and Adjusted EPS to the related GAAP measure of net loss for the three months ended March 31, 2023 and 2022, respectively:
| Three months ended March 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| (in thousands, except shares and per share data) | Adjusted EBITDA | Adjusted Net Loss | Adjusted EBITDA | Adjusted Net Loss | ||||||||||||
| Net loss per U.S. GAAP | $ | (11,762 | ) | $ | (11,762 | ) | $ | (27,793 | ) | $ | (27,793 | ) | ||||
| Reconciling items - | ||||||||||||||||
| Provision for income taxes | 131 | — | 76 | — | ||||||||||||
| Interest expense, net | 58 | — | 295 | — | ||||||||||||
| Amortization of debt issue costs in interest expense | — | 177 | — | 173 | ||||||||||||
| Depreciation expense | 194 | — | 121 | — | ||||||||||||
| Amortization of intangibles | 140 | 140 | — | — | ||||||||||||
| Stock-based compensation | 4,890 | 4,890 | 4,610 | 4,610 | ||||||||||||
| Gain from disposal of investment in unconsolidated subsidiary(a) | (898 | ) | (898 | ) | (337 | ) | (337 | ) | ||||||||
| Non-routine legal fees(b) | 108 | 108 | 1,078 | 1,078 | ||||||||||||
| Severance(c) | (13 | ) | (13 | ) | 615 | 615 | ||||||||||
| Other costs(d) | — | — | 1,370 | 1,370 | ||||||||||||
| Adjusted Non-GAAP amounts | $ | (7,152 | ) | $ | (7,358 | ) | $ | (19,965 | ) | $ | (20,284 | ) | ||||
| Adjusted Non-GAAP net loss per share (Adjusted EPS): | ||||||||||||||||
| Basic | N/A | $ | (0.07 | ) | N/A | $ | (0.20 | ) | ||||||||
| Diluted | N/A | $ | (0.07 | ) | N/A | $ | (0.20 | ) | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | N/A | 106,791,198 | N/A | 99,211,792 | ||||||||||||
| Diluted | N/A | 106,791,198 | N/A | 99,211,792 | ||||||||||||
(a) Our management excludes the gain from collections of contingent contractual amounts arising from the sale in 2021 of our investment in our unconsolidated subsidiary when evaluating our operating performance.
(b) Non-routine legal fees represent legal fees and other costs incurred for matters that were not ordinary or routine to the operations of the business.
(c) Severance costs were incurred in 2022 related to agreements with certain executives due to restructuring changes. Amounts for 2023 represent adjustments to preexisting accruals associated with our December 2022 reduction in workforce.
(d) Other costs in 2022 include certain costs attributable to accelerated vesting of stock-based compensation awards resulting from our IPO and shareholder follow on registration costs pursuant to our IPO.
