FTC Solar, Inc.

Good day and thank you for standing by. Welcome to the FTC Solar first quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Michalik, Vice President, Investor Relations. Please go ahead.

Thank you, and welcome, everyone, to FTC Solar's first quarter 2024 earnings conference call. Before today's call, you may have reviewed our earnings release and supplemental financial information, which are posted earlier today. If you've not reviewed these documents, they're available on the Investor Relations section of our website at fdcsolar.com. I'm joined today by Imad Jatila, a member of the Board of Directors and a company founder, Kathy Beynon, the company's chief financial officer, and Patrick Cook, the company's chief commercial officer. Before we begin, I remind everyone that today's discussion contains forward-looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current date. As such, these forward-looking statements include risks and uncertainties, and actual results and events could differ materially from our current expectations. Please refer to our press release and other SEC filings for more information on the specific risk factors. We assume no obligation to update such information except as required by law. As you'd expect, we'll discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes a full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure. In addition, we'll discuss our backlog, and our definition of this metric is also included in our press release. With that, I'll turn the call over to Umar. Thanks, Bill, and good morning, everyone.

It's been a relatively short time since our last call. so our remarks today will be fairly brief. The key takeaways from my perspective are, one, first quarter financial results were in line with the targets we provided. Two, the company continues to focus on advancing key initiatives that will support future growth and profitability. And three, we continue to target being break-even on an adjusted EBITDA basis in the third quarter and crossing into profitability in the fourth quarter. Last quarter, we reviewed some of the issues that the company has faced and the progress that has been made recently. I'll briefly review those and note some additional progress. First, we discussed how the company has seen an acceleration of contracted projects or signed purchase orders from what has been about 6 million per month in 2022 and early 2023 to about 50 million per month for the past 10 months. Our bookings remain healthy and the sustained booking success we've seen lays the foundation for revenue recovery that will start in the second half of the year. We remain laser focused on customers, spending as much time with them as possible in a cross-functional effort to improve engagement and best support the full range of customer needs with a robust product roadmap. We also continue to enhance our product portfolio, and we recently awarded our first purchase order for a high wind version of our Pioneer 1P tracker. Our contracted and awarded total increased by 70 million to 1.8 billion, with contracted projects representing approximately 485 million of the total. Second, the market for 2P trackers has improved and we have our strongest and most comprehensive product portfolio to date. With module availability improved from where it was, we've seen a more normalized market for 2P with good pipeline activity. With strong 1P and 2P solutions along with software, we can be truly technology agnostic and optimize each individual project site to maximize the benefits for our customers. While most of our new awards are 1P, we now have several examples of project awards that combine 1P and 2P technologies with more in the pipeline. Third, we continue to improve business properties. Customer visits, which had increased tenfold, remain elevated with a broad cross-functional approach to accelerate the feedback loop on quality, product roadmap, and future needs and enhance overall customer experience. and we continue to roll out our Net Promoter Score system to help us better measure and drive engagement and satisfaction. Fourth, we continue to further improve our cost roadmap to enable higher sustainable long-term gross margins. After making great strides reducing steel content and bringing manufacturing costs in line with those of our leading competitors, We continue to further optimize our design to value and design to manufacturing initiatives and expect cost improvements continue over the next 15 months. We are confident that these improvements and the strength of our average new project margin will enable greater than 20% gross margins in the future as our revenue level scales. And finally, our break-even cost has greatly improved, driven by higher direct margins, as well as a reduction and keen focus on OPEX and overhead costs, including adding an incremental labor in low-cost countries. Our break-even revenue level has historically been well over $100 million per quarter. Last quarter, we discussed how we have now brought that down to approximately $50 to $60 million, depending on whether or not we pay a bonus. Our margins on new US bookings, which are higher than international, have been very healthy and may enable us to achieve adjusted EBITDA break even below 50 million. So that's the latest on our key profitability initiatives. As it relates to the CEO search, we have been very deliberate in our approach to finding the right candidate and not wanting to disrupt progress on key initiatives. We continue to focus on candidates with significant industry knowledge and we have seen strong interest. I expect we could be in a position to make an announcement on or before our next earnings call in August. So in summary, we continue to make good progress in positioning the company for a healthy recovery. We have a strong and expanding product portfolio that is well regarded in the industry and can optimize our customers' project portfolios. Customer engagement is the top priority, and we continue to see healthy bookings. The market for 2P trackers is improving, and we are improving our systems and processes across the board, including pricing. We have a product cost structure to enable 20% plus long-term gross margins and company cost structure, which has been reduced to enable quarterly profitability in 2024. As revenue levels improve, the profitability and cash flows potential of the business can show through. With that, I'll turn it over to Cathy.