Press-Releases

FTC Solar Announces Fourth Quarter 2023 Financial Results


  • Fourth quarter revenue of $23.2 million
  • Continue to improve cost structure to lower break-even revenue level
  • Added approximately $213 million to backlog1 since Nov. 8; acceleration in contracted projects
  • Anthony Carroll appointed Chairman of Customer Advisory Board

AUSTIN, Texas, March 13, 2024 (GLOBE NEWSWIRE) — FTC Solar, Inc. (Nasdaq: FTCI), a leading provider of solar tracker systems, software and engineering services, today announced financial results for the fourth quarter ended December 31, 2023.

Fourth Quarter Results
“The company’s fourth-quarter results were in line with our targets,” said Shaker Sadasivam, Chairman of the Board of FTC Solar. “Along with those results, the company is making good progress advancing key initiatives that will support the company’s future growth and profitability. These include:

  • Accelerating contracted projects through improved customer engagement and an enhanced product portfolio;
  • Improving gross margin potential by reducing product cost;
  • Further lowering the breakeven revenue level through continued operating efficiencies; and
  • Improving business processes across the business with particular emphasis on customer engagement, customer satisfaction, and purchase orders.”

“As it relates to our CEO succession plan, we have begun searching for our next CEO and have seen great interest. The Board is focusing the processes on highly qualified candidates both within the industry and adjacent industries to identify a CEO capable of leading the company for a long tenure. We have a shortlist of excellent candidates and will plan to name a successor at the appropriate time when the process has concluded.”

Approximately $213 million has been added to backlog1 since November 8, with total backlog now standing at approximately $1.7 billion.

Summary Financial Performance: Q4 2023 compared to Q4 2022

    U.S. GAAP     Non-GAAP  
    Three months ended December 31,  
(in thousands, except per share data)   2023     2022     2023     2022  
Revenue   $ 23,201     $ 26,220     $ 23,201     $ 26,220  
Gross margin percentage     3.0 %     (7.3 %)     4.8 %     (3.4 %)
Total operating expenses   $ 12,428     $ 17,947     $ 10,848     $ 9,971  
Loss from operations(a)   $ (11,736 )   $ (19,861 )   $ (10,050 )   $ (10,976 )
Net loss   $ (11,177 )   $ (20,501 )   $ (9,657 )   $ (11,499 )
Diluted loss per share   $ (0.09 )   $ (0.20 )   $ (0.08 )   $ (0.11 )

(a) Adjusted EBITDA for Non-GAAP

Total fourth-quarter revenue was $23.2 million, coming in at the mid-point of our target range. This revenue level represents a decrease of 24.1% compared to the prior quarter, on both lower product and logistics volumes. Compared to the year-earlier quarter, revenue decreased 11.5%, driven by lower logistics volumes.

GAAP gross profit was $0.7 million, or 3.0% of revenue, compared to gross profit of $3.4 million, or 11.1% of revenue, in the prior quarter. Non-GAAP gross profit was $1.1 million or 4.8% of revenue. The result for this quarter compares to a non-GAAP gross loss of $0.9 million in the prior-year period, with the difference driven primarily by significantly improved product direct margins and lower warranty, retrofit and other indirect costs.

GAAP operating expenses were $12.4 million. On a non-GAAP basis, excluding stock-based compensation and certain other costs, operating expenses were $10.8 million. This result compares to operating expenses of $10.0 million in the year-ago quarter. 

GAAP net loss was $11.2 million or $0.09 per share, compared to a loss of $16.9 million or $0.14 per share in the prior quarter and a net loss of $20.5 million or $0.20 per share in the year-ago quarter. Adjusted EBITDA loss, which excludes approximately $1.1 million, including stock-based compensation expense and other non-cash items, was $10.1 million, compared to losses of $9.7 million in the prior quarter and $11.0 million in the year-ago quarter.

Outlook
We expect first quarter 2024 revenue to be down from the fourth quarter and represent the trough in revenue for the year. Beyond the first quarter, we expect to see continued sequential revenue growth for the remainder of the year, with revenue being weighted toward the second half of the year. We expect to approximate breakeven on an Adjusted EBITDA basis in the third quarter and be profitable in the fourth quarter.

  4Q’23   4Q’23   1Q’24
(in millions) Guidance   Actual   Guidance
Revenue $18.0 – $28.0   $23.2   $10.0 – $15.0
Non-GAAP Gross Profit $(1.3) – $2.0   $1.1   $(3.8) – $(1.8)
Non-GAAP Gross Margin (7%) – 7%   4.8%   (38%) – (12%)
Non-GAAP operating expenses $10 – $11   $10.8   $8.0 – $8.9
Non-GAAP adjusted EBITDA $(13.0) – $(2.5)   $(10.1)   $(12.6) – $(9.8)


Fourth Quarter 2023 Earnings Conference Call

FTC Solar’s senior management will host a conference call for members of the investment community at 5:00 p.m. E.T. today, during which the company will discuss its fourth 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 ‘backlog’ or ‘contracted and awarded’ 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, or that a contract once executed may be subsequently amended, supplemented, rescinded, cancelled or breached, including in a manner that impacts the timing and amounts of payments due thereunder, 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 December 31,     Year ended December 31,  
(in thousands, except shares and per share data)   2023     2022     2023     2022  
Revenue:                        
Product   $ 20,945     $ 20,083     $ 101,872     $ 63,760  
Service     2,256       6,137       25,130       59,306  
Total revenue     23,201       26,220       127,002       123,066  
Cost of revenue:                        
Product     19,620       21,966       93,314       84,766  
Service     2,889       6,168       25,381       65,528  
Total cost of revenue     22,509       28,134       118,695       150,294  
Gross profit (loss)     692       (1,914 )     8,307       (27,228 )
Operating expenses                        
Research and development     1,450       2,411       7,166       9,949  
Selling and marketing     4,924       1,766       14,811       8,659  
General and administrative     6,054       13,770       37,107       53,736  
Total operating expenses     12,428       17,947       59,084       72,344  
Loss from operations     (11,736 )     (19,861 )     (50,777 )     (99,572 )
Interest expense, net     (59 )     (96 )     (253 )     (978 )
Gain from disposal of investment in unconsolidated subsidiary     421             1,319       1,745  
Other income (expense), net     8       (124 )     (257 )     (373 )
Loss from unconsolidated subsidiary     (324 )           (660 )      
Loss before income taxes     (11,690 )     (20,081 )     (50,628 )     (99,178 )
(Provision for) benefit from income taxes     513       (420 )     338       (435 )
Net loss     (11,177 )     (20,501 )     (50,290 )     (99,613 )
Other comprehensive income (loss):                        
Foreign currency translation adjustments     219       289       (232 )     (68 )
Comprehensive loss   $ (10,958 )   $ (20,212 )   $ (50,522 )   $ (99,681 )
Net loss per share:                        
Basic and diluted   $ (0.09 )   $ (0.20 )   $ (0.44 )   $ (0.98 )
Weighted-average common shares outstanding:                        
Basic and diluted     125,107,426       103,869,160       115,546,150       101,408,263  
FTC Solar, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
 
(in thousands, except shares and per share data)   December 31,
2023
    December 31,
2022
 
ASSETS            
Current assets            
Cash and cash equivalents   $ 25,235     $ 44,385  
Accounts receivable, net     65,279       49,052  
Inventories     3,905       14,949  
Prepaid and other current assets     14,089       10,304  
Total current assets     108,508       118,690  
Operating lease right-of-use assets     1,819       1,154  
Property and equipment, net     1,823       1,702  
Intangible assets, net     542       1,113  
Goodwill     7,353       7,538  
Equity method investment     240        
Other assets     2,785       4,201  
Total assets   $ 123,070     $ 134,398  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities            
Accounts payable   $ 7,979     $ 15,801  
Accrued expenses     34,848       23,896  
Income taxes payable     88       443  
Deferred revenue     3,612       11,316  
Other current liabilities     8,138       8,884  
Total current liabilities     54,665       60,340  
Operating lease liability, net of current portion     1,124       786  
Other non-current liabilities     4,810       6,822  
Total liabilities     60,599       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 December 31, 2023 and December 31, 2022            
Common stock par value of $0.0001 per share, 850,000,000 shares authorized; 125,445,325 and 105,032,588 shares issued and outstanding as of December 31, 2023 and December 31, 2022     13       11  
Treasury stock, at cost; 10,762,566 shares as of December 31, 2023 and December 31, 2022            
Additional paid-in capital     361,886       315,345  
Accumulated other comprehensive loss     (293 )     (61 )
Accumulated deficit     (299,135 )     (248,845 )
Total stockholders’ equity     62,471       66,450  
Total liabilities and stockholders’ equity   $ 123,070     $ 134,398  
FTC Solar, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
 
   
    Year ended December 31,  
(in thousands)   2023     2022  
Cash flows from operating activities            
Net loss   $ (50,290 )   $ (99,613 )
Adjustments to reconcile net loss to cash used in operating activities:            
Stock-based compensation     8,295       20,303  
Depreciation and amortization     1,375       900  
(Gain) loss from sale of property and equipment     (2 )     183  
Amortization of debt issue costs     709       703  
Provision for litigation settlement           4,493  
Provision for obsolete and slow-moving inventory     706       1,813  
Loss from unconsolidated subsidiary     660        
Gain from disposal of investment in unconsolidated subsidiary     (1,319 )     (1,745 )
Gain on extinguishment of debt            
Warranty and remediation provisions     4,310       8,228  
Warranty recoverable from manufacturer     90       (302 )
Credit losses and bad debt expense     7,373       1,159  
Deferred income taxes     138       (135 )
Lease expense and other     996       705  
Impact on cash from changes in operating assets and liabilities:            
Accounts receivable     (23,600 )     57,337  
Inventories     10,338       (7,902 )
Prepaid and other current assets     (3,681 )     7,189  
Other assets     383       (1,019 )
Accounts payable     (7,960 )     (22,940 )
Accruals and other current liabilities     10,582       (32,670 )
Deferred revenue     (7,704 )     9,895  
Other non-current liabilities     (3,083 )     (599 )
Lease payments and other, net     (972 )     (493 )
Net cash used in operations     (52,656 )     (54,510 )
Cash flows from investing activities:            
Purchases of property and equipment     (816 )     (985 )
Proceeds from sale of property and equipment           86  
Equity method investment in Alpha Steel     (900 )      
Acquisitions, net of cash acquired           (5,093 )
Proceeds from disposal of investment in unconsolidated subsidiary     1,319       1,745  
Net cash provided by (used in) investing activities     (397 )     (4,247 )
Cash flows from financing activities:            
Sale of common stock     34,007        
Stock offering costs paid     (283 )      
Proceeds from stock option exercises     226       903  
Net cash provided by financing activities     33,950       903  
Effect of exchange rate changes on cash and cash equivalents     (47 )     54  
Decrease in cash and cash equivalents     (19,150 )     (57,800 )
Cash and cash equivalents at beginning of period     44,385       102,185  
Cash and cash equivalents at end of period   $ 25,235     $ 44,385  


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 for (benefit from) income taxes, (ii) interest expense, net (iii) depreciation expense, (iv) amortization of intangibles, (v) stock-based compensation, and (vi) non-routine legal fees, severance and certain other costs (credits). We also deduct the contingent gains from the disposal of our investment in an 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 an 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 and twelve months ended December 31, 2023 and 2022, respectively:

    Three months ended December 31,     Year ended December 31,  
(in thousands, except percentages)   2023     2022     2023     2022  
U.S. GAAP revenue   $ 23,201     $ 26,220     $ 127,002     $ 123,066  
U.S. GAAP gross profit (loss)   $ 692     $ (1,914 )   $ 8,307     $ (27,228 )
Depreciation expense     139       117       478       389  
Stock-based compensation     283       771       1,596       3,292  
Severance           145       252       145  
Other costs                       102  
Non-GAAP gross profit (loss)   $ 1,114     $ (881 )   $ 10,633     $ (23,300 )
Non-GAAP gross margin percentage     4.8 %     (3.4 %)     8.4 %     (18.9 %)

The following table reconciles Non-GAAP operating expenses to the most closely related GAAP measure for the three and twelve months ended December 31, 2023 and 2022, respectively:

    Three months ended December 31,     Year ended December 31,  
(in thousands)   2023     2022     2023     2022  
U.S. GAAP operating expenses   $ 12,428     $ 17,947     $ 59,084     $ 72,344  
Depreciation expense     (99 )     (67 )     (355 )     (242 )
Amortization expense     (133 )     (134 )     (542 )     (269 )
Stock-based compensation     1,032       (4,277 )     (6,699 )     (17,011 )
Non-routine legal fees     (33 )     (2,753 )     (214 )     (8,495 )
Severance     (2,347 )     (296 )     (4,170 )     (1,333 )
Other (costs) credits           (449 )     (3,241 )     (2,251 )
Non-GAAP operating expenses   $ 10,848     $ 9,971     $ 43,863     $ 42,743  

The following table reconciles Non-GAAP Adjusted EBITDA to the related GAAP measure of loss from operations for the three and twelve months ended December 31, 2023 and 2022, respectively:

    Three months ended December 31,     Year ended December 31,  
(in thousands)   2023     2022     2023     2022  
U.S. GAAP loss from operations   $ (11,736 )   $ (19,861 )   $ (50,777 )   $ (99,572 )
Depreciation expense     238       184       833       631  
Amortization expense     133       134       542       269  
Stock-based compensation     (749 )     5,048       8,295       20,303  
Non-routine legal fees     33       2,753       214       8,495  
Severance     2,347       441       4,422       1,478  
Other costs           449       3,241       2,353  
Other income (expense), net     8       (124 )     (257 )     (373 )
Loss from unconsolidated subsidiary     (324 )           (660 )      
Adjusted EBITDA   $ (10,050 )   $ (10,976 )   $ (34,147 )   $ (66,416 )

The following table reconciles Non-GAAP Adjusted EBITDA and Adjusted Net Loss to the related GAAP measure of net loss for the three months ended December 31, 2023 and 2022, respectively:

    Three months ended December 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   $ (11,177 )   $ (11,177 )   $ (20,501 )   $ (20,501 )
Reconciling items –                        
Provision for (benefit from) income taxes     (513 )           420        
Interest expense, net     59             96        
Amortization of debt issue costs in interest expense           177             177  
Depreciation expense     238             184        
Amortization of intangibles     133       133       134       134  
Stock-based compensation     (749 )     (749 )     5,048       5,048  
Gain from disposal of investment in unconsolidated subsidiary(a)     (421 )     (421 )            
Non-routine legal fees(b)     33       33       2,753       2,753  
Severance(c)     2,347       2,347       441       441  
Other costs(d)                 449       449  
Adjusted Non-GAAP amounts   $ (10,050 )   $ (9,657 )   $ (10,976 )   $ (11,499 )
                         
Adjusted Non-GAAP net loss per share (Adjusted EPS):                        
Basic and diluted   N/A     $ (0.08 )   N/A     $ (0.11 )
                         
Weighted-average common shares outstanding:                        
Basic and diluted   N/A       125,107,426     N/A       103,869,160  
(a) Our management excludes the gain from collections of contingent contractual amounts from the sale in 2021 of our investment in an unconsolidated subsidiary.
(b) Non-routine legal fees represent legal fees and other costs incurred for specific matters that were not ordinary or routine to the operations of the business.
(c) Severance costs were incurred in 2023 and 2022 due to restructuring changes involving executive turnover and a headcount reduction event.
(d) Other costs in 2022 included the write-off of deferred costs relating to certain uncompleted transactions.

 

FTC Solar Inc



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