FTC Solar Inc Q3 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Philip Shen - ROTH Capital Partners, LLC - Analyst : Yes, thanks for taking my questions. First one here is on the guidance for Q4 and Q1. I think it came in lighter than what the Street was looking for in a meaningful way. You talked about in your prepared remarks that you'll see a ramp up and it's been impacted by module delays. Is it fair to say that you guys have been more exposed to the LONGi detentions as opposed to Jinko because Jinko has been flowing pretty smoothly for some time now. And then recently only LONGi was able to get their OCI poly module released. So as that starts to ramp, would you expect much better expectations ahead as a result of that detention release from LONGi? Thanks.

Question: Philip Shen - ROTH Capital Partners, LLC - Analyst : Great. So we've (technical difficulty) fair amount recently about challenges with some project delays as a result of elevated rates for a long period of time and so forth. Can you walk through the rationale for each of those project pushouts. If you touched on it earlier, sorry if I missed it, but just curious if you can give a little more color as to why the gigawatt and the 700 megawatt projects were pushed to the right.

Question: Philip Shen - ROTH Capital Partners, LLC - Analyst : Okay, great. Thanks, Patrick. One last one for me, I'll pass it on as it relates to working capital, you have a healthy amount of cash $30 million, but you have a bunch of cash tied up in accounts receivables at $71 million and pretty high [data count]. Just wondering if you can talk us through balance sheet working capital, how you expect to manage through. Thanks.

Question: Philip Shen - ROTH Capital Partners, LLC - Analyst : Great. Thanks, Cathy. In terms of what why are the receivables so chunky at this point? Or why are they so high or are there some -- there's another kind of reflection of what's going on in the market where some of your customers might be trying to preserve cash?

Question: Philip Shen - ROTH Capital Partners, LLC - Analyst : Got it. And do you have a credit facility and can you talk about the capacity available?

Question: Philip Shen - ROTH Capital Partners, LLC - Analyst : Okay. Thanks, guys. I'll pass it on.

Question: Donovan Schafer - Northland Capital Markets - Analyst : Hey, guys. So thanks for taking the questions. I first want to ask, so with the transition with the CEO and the CFO, kind of wondering if you know, Shaker still on maybe we can get a response from him on this, but is the issue here is kind of the way everything is the way you guys are describing and all these dynamics that are out of your control it seems or at least being framed that way, but also lined up for acceleration? I think the word acceleration was used a lot in the prepared remarks. If all that's lined up that way and unfolding as best as possible within what you can control here, then why replace the CEO and CFO and, you know or otherwise more candidly, what is the Board's view of what going on here and tied to that, why should we continue to put faith in Q1 guidance, Q4 guidance, and even the backlog at this point? Has all that been reviewed and re-reviewed by the Board? Any clarification would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2023 / 1:30PM, FTCI.OQ - Q3 2023 FTC Solar Inc Earnings Call

Question: Donovan Schafer - Northland Capital Markets - Analyst : Okay. And then with the -- actually, did anyone else want to comment on that question? Okay. Well, then as a follow up talking about if module imports have improved, we've talked before about that really being the hang up and two, the backlog being skewed or 2P project, and that does tend to be more complex sites. And so those have moved to the back of the queue. Since module supply has improved so much, it feels like those waiting in the wings should have been able to kick into gear and start going or otherwise that narrative is kind of broken down. If it's just interconnect and financing now, is there a reason on those aspects why you guys would be disproportionately impacted? I mean, some peers -- some other peers haven't been impacted at all, but it seems like you're still being disproportionately impacted. If it's not the modules then how is the disproportionate impact landing you guys are on financing and interconnects?

Question: Donovan Schafer - Northland Capital Markets - Analyst : Okay. That is helpful. And then just if I can get one last question, one last more on the credit charge, so with the $4 million credit provision tied to one customer, can you clarify is that a case you guys and the customer there is agreement or they share your understanding around the idea of what is the total amount of monies owed for goods and services provided? Or is there actually and they just don't have, they're just not paying it? Or is it a case or they're actually in some way disputing or they don't share your view that they don't think they owe or have reasons for withholding that $4 million?

Question: Donovan Schafer - Northland Capital Markets - Analyst : Okay. That's very helpful. Okay. Thank you, guys. I'll take the rest of my questions offline.

Question: Amit Dayal - H.C. Wainwright & Co. - Analyst : Thank you and good morning, everyone. Most of my questions have already been addressed, but I was just wondering if you had any projects that have been canceled. I know backlog is a little bit higher, but are there any project cancellations that are impacting near-term results and outlook?

Question: Amit Dayal - H.C. Wainwright & Co. - Analyst : Okay. Understood. And in non-UFLPA orders, I think you guys gave a number last quarter. I don't see it this time, maybe I missed it. Could you tell us what that number looks like?

Question: Amit Dayal - H.C. Wainwright & Co. - Analyst : Okay, thank you. Thank you for that. So given you have a pretty positive outlook for 2024, do you think you potentially could see sequential improvements through the year in 2024 after the bounce-back, say, relative to [Q4] '23? Or do you not have any visibility at this point to give us that kind of outlook?

Question: Amit Dayal - H.C. Wainwright & Co. - Analyst : Right. So you could potentially be in a situation where we see year-over-year improvements through all four quarters next year.

Question: Amit Dayal - H.C. Wainwright & Co. - Analyst : Okay, thank you. Just one last one, on the 1P offering, how much of the backlog or how much backlog for that product in the overall backlog number?

Question: Amit Dayal - H.C. Wainwright & Co. - Analyst : Understood. Thank you guys. That's all I have. Appreciate it.

Question: Pavel Molchanov - Raymond James & Associates, Inc. - Analyst : Yes, thanks for taking the question. Can we get an update on your manufacturing joint venture, which I think is now maybe a quarter or two since it started operating?

Question: Pavel Molchanov - Raymond James & Associates, Inc. - Analyst : No, please go ahead.

Question: Pavel Molchanov - Raymond James & Associates, Inc. - Analyst : Is there uplift in gross margin that you are anticipating, once that facility is fully ramped up?

Question: Pavel Molchanov - Raymond James & Associates, Inc. - Analyst : Okay. I know you're not giving a formal guidance yet beyond Q1, but as you sort of zoom out on 2024 as a whole, do you anticipate being a cash user or a cash generator?

Question: Pavel Molchanov - Raymond James & Associates, Inc. - Analyst : All right. Thanks very much.

Question: John Wilhelm - UBS Financial Services Inc. - Analyst : Hey, great, thanks for taking the questions. I guess my first one, just quickly, any commentary from the Board on the status of a CEO and CFO permanent replacements and the parameters of which had internal versus external candidates and what sort of timeframe investors should expect from permanent replacements? Thanks.

Question: John Wilhelm - UBS Financial Services Inc. - Analyst : Yeah, it did; appreciate it. And then on a completely separate topic, obviously, there's I think, a healthy amount of skepticism around the $1.6 billion backlog. It's essentially the same size as the competitors that has 13 times the annual revenue. Is there any thought about taking an opportunity to provide more transparency on specifically what's in the backlog like specific projects? Is there anything to stop the company from disclosing specific projects? Again, I think just a little bit of comfortability with just a portion of the backlog would provide a lot of peace of mind for investors. Just your thoughts on that, and I really appreciate taking the questions. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2023 / 1:30PM, FTCI.OQ - Q3 2023 FTC Solar Inc Earnings Call

Question: John Wilhelm - UBS Financial Services Inc. - Analyst : Great. Do well.

Question: Alex Rybalov - BofA Securities, Inc. - Analyst : Hey, guys, it's Alex Rybalov for Julien. Maybe just actually a follow-on to that question on sort of the makeup of the backlog and the opportunity I'll frame it as I guess, to provide a little bit more transparency. I know you guys obviously talked about UFLPA or I guess non-UFLPA orders, but also international as sort of being a shorter cycle faster ramp than in some of the stuff we're seeing in the US. Just curious what's the status of that piece of things? Clearly, things still look a little bit challenged. And just curious, I mean, as far as the slippages, are you seeing the same thing internationally versus the US where obviously the rate environment is still high, but you know, a little bit more muted depending on the kind of [where you are excess]. Thanks.

Question: Alex Rybalov - BofA Securities, Inc. - Analyst : Got it. Makes sense. When you guys think I guess moving forward, I mean, clearly some recovery contemplated for Q1 at least, I think what's interesting is you guys obviously to your point, Patrick started with the 2P company sort of shifted to doing both at this point and also sort of broadened the commercial base outside of the US. It seems to us that there's a little bit of -- I don't want you to call it a flight to quality or to certain EPCs or players in this space. There's little bit of a have and have not. I'm curious, I mean, as you guys look to sort of reposition the business for growth off of a higher margin base, how do you think about sort of targeting that more directly? Is it we just need to win more 1P again? Is it, hey, international looks more attractive than the US? And how would you frame the strategy from here? I guess, we're converting the existing backlog.

Question: Alex Rybalov - BofA Securities, Inc. - Analyst : Got it. Makes sense guys. Appreciate the time.