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spk10: Thank you for standing by. This is the conference operator. Welcome to the Scholz Technology Group, Inc. Second Quarter 2022 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Megan Peet's general counsel. Please go ahead.
spk11: Thank you, operator, and thank you, everyone, for joining us today. Hosting the call with me are CEO Jason Whitaker and interim CFO Kevin Hubbard. On this call, management will be making projections or other forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. As you listen and consider these comments, you should understand that these statements, including the guidance regarding full year 2022, are not guarantees of performance or results. Actual results could differ materially from our forward-looking statements if any of our assumptions are incorrect or because of other factors. These factors include, among other things, the risk factors described in our filings with the Securities and Exchange Commission, as well as economic and market circumstances, industry conditions, company performance, and financial results, the COVID-19 pandemic, supply chain disruptions, availability and price of our components and materials, project cancellation, decreased demand for our products, and policy and regulatory changes. Although we may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect, and therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. We caution that any forward-looking statement included in this discussion is made as of the date of this discussion and do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's second quarter press release for definitional information and reconciliations of historical non-GAAP measures to comparable financial measures. With that, let me turn the call over to Jason.
spk06: Thank you very much, Megan, and good afternoon, everyone. I'll start off by providing a snapshot of our second quarter performance, followed by an update of our growth initiatives, and then wrap up with our take on recent developments in the U.S. global market. I'll then turn it over to Kevin, who will provide an overview of our financial results. We delivered record revenue and gross profit in the second quarter, which grew 23% and 9% year-over-year, respectively, despite the significant challenges and uncertainty facing the industry. To put some perspective on that statement, this quarter represents the sixth consecutive quarter where Shoals has delivered record year-over-year quarterly revenue and gross profit. Gross margin in the quarter was 38.9%. Gross margin was lower this quarter than last year because the second quarter of 2021 benefited from an exceptionally high mix of BLA sales relative components, whereas this quarter was more in line with our historical mix. We also had higher raw material and logistics costs as a percentage of sales this quarter than in the prior year. Adjusted EBITDA increased sequentially but declined slightly year over year, reflecting our continued investment in SG&A to support our growth initiatives. We're beginning to see a return on these investments and expect the year over year rate of growth in our SG&A to slow and keep forward this year. Demand for our products remains very strong. and we ended the second quarter with record backlog and awarded orders of $327.2 million, an increase of 63% year-over-year and 8% sequentially. Backlog and awarded orders have grown even further in Q3 and are expected to continue expanding through the remainder of the year. Components revenue increased 97% year-over-year, driven by increases in shipments of battery storage products as well as shipments of solar products to a significant number of new customers. New customers' projects are typically designed as home run systems, and they generally start the relationship with Shoals by buying components that will work with these types of systems. Once they see the performance, quality, reliability, installation savings, and customer service that Shoals offers, they become open to trying our combine-as-you-go architecture and buy the BLE. Once customers make the transition, this usually marks the start of a long-term relationship. System Solutions revenue grew 11% year-over-year as a result of continued strong demand for BLA and market share gains. During the quarter, we converted four additional EPCs and developers to our system solutions and had 29 exits in Q2, representing a greater than seven-fold increase in the number of BLA customers since the time of our IPO last year. Customer interest in our recently introduced products continues to grow, with wire management, battery storage, and EV charging products experiencing the greatest demand. We continue to ramp our production with our new wire management products to meet customer demand. To provide more context, backlog and award orders for wire management products increased more than threefold since the beginning of the year. While these products are relatively small contributors to revenue, they carry high gross margins and add to our profitability. Some of our energy storage products also contributed to revenue growth in the quarter, and backlog in that part of our business continues to grow. We are on track to complete the certification process for our VLA 2.0 and high-capacity plug-and-play harnesses in the second half of the year. We expect these products to further accelerate our growth. as VLA 2.0 will have a higher average selling price per megawatt than our current product, and the high-capacity plug-and-play harness will allow us to serve a new and fast-growing application. We also continue to make strides in our international expansion. More recently, subsequent to quarter end, we announced that we had successfully transitioned a customer to VLA in Honduras. This is an excellent proof point, given Honduras is a low-cost labor market. and provide the powerful endorsement of the benefits that our system brings, even in areas where field labor is less expensive than in the U.S. and Europe. BLA can reduce labor costs, improve safety, increase reliability, and reduce maintenance expenses. In Europe, our products are fully qualified, and our sales team remains focused on building pipeline and converting that pipeline into backlog. We're also beginning to see further tracks in the international market, resulting from the Biden administration's support of export-import bank financing. Now, turning to our EV business, customer demand is exceeding our expectations, and we're seeing rapid order growth largely due to the team's progress with commercial fleets and school bus operators. We've recently completed UL certification for many of our products and expect the balance to be certified by the end of the year. During the quarter, we received orders for complete charging systems for commercial fleets that are transitioning to electric vehicles. Those orders represent our first sales of charging system solutions and a key milestone in the commercialization of our EV product line. Prior to this quarter, we had only sold components. We also received our first orders from school bus electrification customers who were attracted to the portability and ease of installation of our EV charging products. Demand from this segment is accelerating following the EPA's $5 billion Clean School Bus Program announced in May. Now I'll take a moment to talk about the recent positive developments in the solar market. The beginning of the quarter was marked by delays and uncertainty caused by the U.S. Department of Commerce's investigation of an ADCVD claim on solar cells and panels supplied from certain Southeast Asian countries. A significant portion of the uncertainty was alleviated when the White House announced a two-year tariff exemption for solar panels. Our conversations with customers indicate that the tariff safe harbor created by President Biden's executive action was an important turning point in customer sentiment. And we've seen projects that have been delayed or placed on hold pick back up. While we cannot quantify the full impact of the recently passed Inflation Reduction Act yet, we see it as a tremendous positive for the market. The increase and extension of the ITC, coupled with new incentives for storage and EVs, should accelerate demand for our products, although how much and how fast is something we don't know yet. We have done a lot of work since the beginning of 2021 to position shares to succeed in the challenging and uncertain landscape faced by the solar industry in the first half of this year. and we think the strong performance of the company reflects that. Now that many of those headwinds are abating, we see the potential for upside to our market expectations. The low capital intensity and flexibility of our manufacturing process allows us to adjust rapidly to changes in demand. We are well prepared to meet increases in demand as the production ramp at our new facility is ahead of schedule. And despite the tight labor market, We expanded our manufacturing headcount, adding more than 100 hourly teammates in the second quarter, who will be essential as we continue to scale our production. Finally, I'm excited to welcome Dominic Bardos as our new Chief Financial Officer. Dominic brings over 30 years of global finance and accounting experience across multiple industries, including automotive, retail, and industrial services. Dominic is currently the CFO of Holley, a publicly traded designer, marketer, and manufacturer of high-performance products for concert enthusiasts. Dominic will start in the beginning of the fourth quarter, and we're excited to have him on board. Kevin has done a tremendous job leading the finance team. Prior to stepping in as our interim CFO, Kevin was a long-time consultant to our company, and he will continue to support us in that capacity as Dominic transitions into our organization. I'm also pleased to announce the addition of Jeanette Mills and Robert Julian to our board of directors. Jeanette and Robert are both seasoned executives with a proven track record of successful corporate governance and leadership across a range of functions and industries. Jeanette will be replacing Peter Jonah, who resigned from our board concurrently with Jeanette Jordan. I want to thank Peter for his service and valuable contributions to show us as a director and welcome Jeanette and Robert to our board. We are excited about the benefits that Jeanette and Robert's significant experience can bring to our company. Now I'll turn it over to Kevin, who will discuss our second quarter 2022 financial results. Kevin?
spk04: Thank you, Jason. For the second quarter, revenue grew 23% versus the prior year period to $73.5 million, driven by increases of 11% in system solutions and 97% in components. similar to the last quarter the strength in components revenue was driven by the combination of battery storage shipments as well as the onboarding of a significant number of new customers which can initially lead to more of a component level opportunity as we work towards converting them over to our system solutions growth and system solutions reflect strong demand for shoals combined as you go system system solutions represented 77 percent of revenue in the quarter versus 86% in the prior year period and 69% in the prior quarter. Gross profit increased 9% to $28.6 million compared to $26.2 million in the prior year period. Gross profit as a percentage of revenue was 38.9% compared to 43.8% in the prior year period. As Jason mentioned, the decrease in gross margin year-over-year was partially a function of Q2 2021 having a particularly high proportion of BLA sales relative to components, while Q2 2022 was more in line with our historical mix. We also had higher raw material and logistic costs as a percentage of sales this quarter than in the prior year. Second quarter general and administrative expenses were $13.3 million, compared to 10 million during the same period in the prior year. This change was primarily a result of higher stock-based compensation, planned increased payroll due to higher headcount to support our growth in product initiatives, and new public company costs. Adjusted EBITDA for the second quarter was 19.8 million compared to 20.6 million for the prior year period. As we have discussed previously, we expect adjusted EBITDA to grow at a slower rate this year, reflecting the pull forward of several investments to support our multi-year growth outlook and growth initiatives over the next several years. We remain confident that the substantial growth we are experiencing will support expansion in our adjusted EBITDA margin as we get leverage on SG&A exiting this year. Adjusted net income was $11.8 million in the second quarter compared to 14.7 million in the prior year period. Please see the adjusted EBITDA and adjusted net income reconciliation tables in our second quarter press release for a bridge to our GAAP results. As of June 30, 2022, backlog and awarded orders were 327.2 million, representing a new record for the company and an increase of 63% and 8% versus the same time last year and March 31, 2022, respectively. The increase in backlog in awarded orders reflects continued robust customer demand for Shoals products. Turning to our four-year outlook, based on the current market conditions and input from our customers and team, we are reaffirming our previous guidance and expect 2022 revenue to be in the range of $300 million to $325 million. of 41% to 52% year over year. We expect adjusted EBITDA to be in the range of $77 million to $86 million and adjusted net income to be in the range of $45 million to $53 million. Further, we expect 2022 capital expenditures to be in the range of $7 million to $8 million. In addition, at the midpoint of our outlook, we currently expect to generate 45% to 50% of our second half revenue, adjusted EBITDA, and adjusted net income in the third quarter. Now back to you, Jason, for closing remarks.
spk06: Thanks, Kevin. I'd like to close by thanking all of our customers for their commitment to SHOLES, our employees for their contributions to our company's success, and our shareholders for their continued support. The first half of 2022 is off to a strong start. and will not be facing many of the headwinds we confronted in the first and second quarters in the second half of this year. That together with strong demand for solar and EVs, the success of our new products and sales initiatives, and the tremendous strength of our core VLA products gives us optimism for what we can achieve for shareholders in the coming quarters. And with that, thank you everyone, and I appreciate your time today. We will now open the line for questions.
spk10: Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. Please limit yourself to one question and one follow-up in order to accommodate everyone in the queue. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. Our first question comes from Brian Lee of Goldman Sachs. Please go ahead.
spk13: Hey, guys.
spk14: Good afternoon. Thanks for taking the questions.
spk00: I guess the first one was just you talked about the backlog and awarded orders growing here into 3Q and then expecting it to expand through the rest of the year. Maybe, Jason, can you give us a sense of what type of growth you're speaking to, if there's any way to quantify that? And then how you typically think about backlog coverage at this point in the year? You know, we're sitting in mid-August. As you sort of start to think ahead to the growth for 2023, like where's the typical level you'd hope to be at in terms of, you know, coverage levels as you think about the potential for revenue growth in the out year? And then I'd follow up. Thank you.
spk06: Yeah, no problem, Brian. Good to speak with you today. You know, when you look at backlogging award orders, as we've talked about in the past, right, our goal is for that always to continue to increase quarter over quarter. You know, as we've also discussed, you know, that there can be some seasonality there. We've not experienced that in the not-so-distant past. But very excited about what we're able to accomplish in Q2, you know, especially considering the headwinds that we had in front of us, you know, prior to the, you know, the announcement of the two-year tariff exemption on solar panels. What I can tell you is that, you know, since that point, our customers have have indicated that was definitely a turning point, you know, when you look at, you know, customer sentiment and the fact that we have started to see, you know, our order patterns normalized as a result of that. You know, not to mention, you know, the recent announcement of the IRA is definitely accelerating that as well. But, you know, as of exact specifics right now, Brian, you know, we've got nothing to share today on that.
spk02: Okay, fair enough.
spk00: And then I guess on the margin targets here, I appreciate the additional color. You know, it seems like the full year guidance implies that you're going to be at like 26% or so adjusted EBITDA margin level for the second half of the year. I think in the past you've talked about, you know, sort of 30% plus as being the right sort of target range for the company. So as you think about the pull forward in these investments and how quickly should we see those translate into returns? Is this something where, you know, you get back to that 30% level on the first half of 23, or is this going to take longer than that, maybe even into the middle part or second half of next year?
spk02: Thanks, guys. You know, Ron, when you take a look at the margin profile, you know, as we talked about,
spk06: You know, the growth that we saw in the backlog and award orders throughout the first part of this year that's also continued as this trend is very much, you know, pointed towards, you know, our full system solution, you know, specifically VLA. You know, and as we've talked about, you know, our VLA, you know, do carry a higher margin profile. As a matter of fact, as we mentioned, you know, in our prepared remarks, you know, if you look at 2Q a year ago, you know, where we generated north of 80% of our revenue from system solutions, you know, that resulted in gross margins of, you know, almost 44%. So as we continue converting customers over to our full system bill A solution, you know, we expect our mix to continue and ultimately to improve and drive gross margins north, which is a flow through all the way to the bottom. And as we look at, you know, the SG&A investments, as we also mentioned, you know, we do expect, you know, to start gaining leverage on that, you know, as we move throughout, you know, the latter part of this year, moving into the beginning of next. So very excited about, you know, we've been able to accomplish,
spk02: you know, specifically on the full system BLA solution side of things. Okay. Thanks a lot. I'll pass it on.
spk10: Our next question comes from Philip Shen of Roth Capital. Please go ahead.
spk08: Hey, guys. Thanks for taking my questions. First one's on the Inflation Reduction Act. I know you just talked about how things are accelerating If there's any way you can quantify how the IRA is impacting business to the upside, that would be interesting, especially on the quoting front. And then also, can you talk through what the IRA benefits might be for you guys? Unlike some other manufacturers, it seems like you don't have necessarily a manufacturing production tax credit, and maybe the key benefit is the 30% ITC benefiting your customers, uh, along with the bonus, um, ITC adders, but was wondering perhaps if we missed something and, and if there's something else that you see that, you know, maybe in the EV business or elsewhere that ultimately, um, uh, benefits you guys. And if you can quantify that, it'd be great. Thanks.
spk02: Yeah, no problem at all, Phil.
spk06: So, you know, as you can imagine, I think a lot of people would share this sentiment. You know, we're very excited about the prospects that, uh, Inflation Reduction Act creates for the industry as a whole. And I would say it's actually arguably probably one of the most impactful pieces of legislation that the solar industry has ever received thus far. And we've already started having customers reach out to us talking about domestic manufacturing and the like. I think a couple of things I want to point out, Phil, is when you look at the impact from prevailing wage, that will essentially continue to increase the value of our manufacturing process and the savings that we're able to provide versus labor in the field. Not to mention, standalone IPC for storage is definitely a tailwind when you look at our storage offering. And on the EV side, the tax credit was reinstated. I think they actually removed the 200,000 unit cap, coupled with about $3 billion being provisioned towards electrifying the USPS fleet. And obviously, that's going to require a lot of infrastructure. When you look at, as you mentioned, right, when you look at some of the provisions that are out there, I mean, there's a lot of provisions for panel manufacturers, steel components, inverters, and the like. But what I do want to point out is the detailed appropriations are really yet to be defined, and I think there still is an opportunity for us here. But regardless, as I said before, it is a huge positive for the industry as a whole, especially with us being a domestic manufacturer.
spk08: Thanks. Thanks, Jason. My second question is on the UFLPA detention situation. You know, the detentions have been going on since the end of June for some companies, some key companies. If that situation sustains, do you see any downside risk for your back half revenue, or do you think you're fully insulated from that situation? And if anything, if that UFLPA situation resolves earlier than expected, there could actually be some upside to your backup numbers. Thanks.
spk06: Yeah, I think, Phil, as we talked about before, you know, our bottoms-up analysis, you know, gives us comfort in being able to, you know, reiterate guidance today. Look, you know, I don't want to discount, you know, UFLPA at all, but, you know, the effect of it, we're not really seeing directly. And what I mean by that, Phil, is, you know, we still continue to support what I would call multiple eBoss designs throughout the optimization project. And that's something that has been increasing, but it hasn't really come into effect as a result of UFLPA. It was really driven more, I think, based upon, you know, what had transpired in the past with WRO and some of the ADCVD things. And I think that the work that the industry as a whole has done so far allowed most of the projects to move ahead without any particular delay.
spk02: So, you know, not seeing any direct, you know, changes in the industry as a direct result of UFLPA at the moment. Great, thanks. I'll pass it on. Our next question comes from Mahid Mandeloy of Credit Suisse.
spk10: Please go ahead.
spk02: Hey, good afternoon.
spk09: Mahid Mandeloy here from Credit Suisse. One question is on the mix over here. We saw strong growth in the confidence in Q2. Could you talk about what drove that, and should we expect a similar mix for the second half and can achieve for you guys?
spk02: Yeah, Mahit, Jason here.
spk06: So, you know, as we've talked about in the past, you know, over time our expectation is that, you know, components will stabilize and essentially be relatively flat from an absolute dollar perspective. You know, a couple things, you know, to consider, you know, as we bring in new projects, They're typically designed as home run systems. And so our relationships with new customers, you know, start off with them buying components that will be able to work in that type of infrastructure. And as I pointed out before, you know, throughout the first part of the year, as it has continued, we've seen very strong growth in our backlog and awarded orders that's really driven by, you know, the BLA side of things. It does carry a higher margin profile. So that in combination with the fact that in Q2 of 21, we had an outsized quarter for full-system solutions compared to components this year. We do expect that with the backlog and award orders containing a meaningful amount of BLA itself, that will ultimately continue to grow as components start to remain relatively flat.
spk09: That's a great clarification. Just on the cash position here, you said it's a quarter of $10 million here. Talk about the cash. You said the growth in the second half. How should we think about it? And working capital issues you foresee, if in case the UFLP issue can attract around over here?
spk02: Yeah, this is Kevin.
spk04: Working capital, I mean, certainly we built some cash during the quarter. We used it to... pay down debt. As we really start to look at third quarter and fourth quarter, we see our inventory starting to flatten out a little bit as we come out of Q3 and into Q4. And then working capital needs should stabilize a little bit. But keep in mind, as we continue to accelerate growth, we're going to be a user and use cash during some quarters and borrow cash some quarters. So we're going to see some variability in that.
spk09: And just a follow-up, can you remind us of the liquidity you have on hand right now?
spk04: Well, as of June 30, we had $10 million in cash. And we had, I think, about $75 million under the revolver available.
spk02: Great. I'll take the rest of it. Thank you.
spk10: Our next question comes from Colin Rush of Oppenheimer. Please go ahead.
spk03: Thanks so much, Ash. Can you talk a little bit about the competitive environment and any sort of new entrance or evolution of that backdrop that you're seeing here, especially in the last few weeks?
spk06: Yeah, so when you look at the competitive landscape in general, it really remains very similar to what we've talked about in the past. You know, still not seeing any meaningful competition coming in the form of, you know, our EV system solutions and, you know, the competitive landscape, you know, still really remains the same on the solar side. So I have not seen any changes in that, you know, in the past or even as of most recent, you know, since the announcement of the IRAs. excellent and then when you look at your backlog you know are you able to break out how much of it is coming from the ev side or is that 100 solar well it's definitely not 100 solar um you know at this point we're not breaking out you know backlog specifics whether it be uh new products um or new segments like ev or even international uh but what i can say is we're very very excited about what we've been able to accomplish um you know, on the e-mobility side of things. And when you consider we just literally released out that product offering, you know, definitely ahead of plan, you know, based upon, you know, the cell team going after, you know, the electrification of fleets as well as, you know, the school bus, you know, incentives that are out there. So, you know, again, e-mobility continues to increase as well as we talked about, you know, not only new products in the form of wire management that's already been released out as well as the storage side of things.
spk02: Okay. Thanks so much, guys. Thanks, Paul.
spk10: Our next question comes from Joseph Osha of Guggenheim Partners. Please go ahead.
spk07: So this is actually Hillary on for Joe, and most of my questions have been answered. So just one thing I kind of wanted to touch on, and that was the international markets, particularly as you continue to gain traction. You had the Honduras project announced this quarter, but I was just hoping you could give us some some color on when we might start to see the international market start to account for a larger share of the business. And any color you could share there would be great. Thank you.
spk06: Absolutely. So, you know, as you mentioned, right, and we touched base on our prepared remarks, just recently awarded, you know, a BLA opportunity in Honduras, which just further solidifies the value that our product brings You know, when you look at not only the labor side of things, but also, you know, quality, reliability, O&M, you know, over the life of the asset. From your perspective, you know, our products, as we've talked about in the past, are fully qualified. And our sales team focus today is really continuing to build off that pipeline and focus on converting that pipeline over to backlog, which the group is doing as well. And we're also seeing, I want to mention, you know, further traction in the international markets, you know, as a direct result of, you know, the Biden administration's support of export-import bank financing. And, you know, as you do look, although we're not breaking out exact specifics right now, but, you know, as we continue to, you know, gain further traction on expanding our international side of things and other growth initiatives, you know, we do expect our business to become more diversified, geographically speaking, over time.
spk02: Great. Thank you. That's all I had. Our next question comes from Kashi Harrison of Piper Sandler.
spk10: Please go ahead.
spk12: Good afternoon, everyone. Thanks for taking the questions. Maybe just a follow up on the HEAPS question. As you move beyond 2022 and you think about just this business structurally, you know, 23 and beyond, you know, how do you think about just the cash? What's like a good cash conversion cycle for Shoals on a consolidated basis?
spk04: Yeah, when we think about, you know, just looking forward and where we're at on our free cash flow, right, certainly we consider a couple things. We look at our TP&E purchases. Really the other thing that we're obligated to is our distribution for the non-controlling interest. So from that perspective, the cash cycle really moves forward and we expect to gain leverage on that and really see a debt pay down from it as we go through the third quarter and the fourth quarter.
spk02: Okay.
spk12: And just, you know, maybe not necessarily just with the second half of the year, but as you move beyond the second half, you know, what do you think that number looks like? Is it, you know, 170?
spk02: Just any ballpark would be helpful.
spk04: Yeah, I think what we think about that, just moving forward in 2023, I don't think we've looked that far, but we'll have to get back to you on that question.
spk12: Fair enough. And then just a follow-up on the EV product. Congrats on the launch. Just wondering when you expect to see, you know, a meaningful, you know, pickup in orders to the point that, you know, maybe you might consider disclosing, you know, the proportion of your backlog that's associated with that new business. Just when you expect your gain, you know, significant momentum in the EV business.
spk06: Yeah, I mean, you know, again, very, you know, very happy and excited about what we've been able to accomplish in the short term. Again, we're, you know, we're well ahead of plan, you know, based on our product offering. And I think it just solidifies, you know, the opportunity ahead when you look at the amount of infrastructure that has to be put in place and you look at the significant amount of savings we're able to offer while increasing reliability at the time of install. You know, as with anything else, you know, when you look into benchmarks, you know, once we gain, you know, additional traction and a little more stability, it's something that we're definitely, you know, considering breaking out. But as of right now, you know, we're not doing that today.
spk12: Fair enough. And just a quick housekeeping question. How should we think about the mix of systems to components for the second half of the year?
spk02: We've not released out, you know, a number.
spk06: But, again, you know, what I can say is that a meaningful portion of the backlog and award orders that were booked at the beginning of this year, you know, comes in the form of our full system solution, specifically BLA. And that trend, you know, literally continues to grow as we speak. So, you know, we would expect, you know, the BLA side of things to become a more outsized, you know, contributor. as we move throughout Q3 and Q4 and even into the start of beginning of next year.
spk02: Very helpful. Thank you.
spk10: Our next question comes from Jeff Osborne of Cowan & Co. Please go ahead.
spk05: Hey, Jason. I had two quick questions following up on Phil's question on the USLPA. I was just curious with any of the new orders that you've received in Recent weeks since the June 6th announcement from President Biden, are anyone delaying orders or dictating that the orders are contingent upon clearing customs? I'm just trying to understand sort of the mechanics with the potential uncertainty there. Is that leading to a little bit of a lull or no?
spk06: Great question, Jeff. Good to speak with you again. From a UFLPA perspective or just in general, we're not seeing any orders that are delayed You know, as a result of that, you know, not seeing any solar orders that cancel as a result of that. So, you know, as I kind of mentioned before, we're not really seeing any what I would call direct impacts that you can attribute specifically to UFLPA today.
spk05: Got it. And then what are lead times? You mentioned 100 additional staff with the expansion that's running out of time. Can you remind us, like, what lead times were when you were constrained in the past and what those are now or what you anticipate they'll be?
spk06: I mean, you know, lead times, yeah, lead times do vary, you know, depending upon, you know, exactly where that project is at. I mean, we've not released out any exact lead time value because it does vary so much project to project. You know, I mean, for example, you know, Jeff, I mean, you look at, you know, things as simple as, you know, one of the subcomponents is an end feed into the BLA side of things, maybe a connector, right, which is a meaningless, you know, portion from a COGS perspective. Um, but you know, when you have a panel manufacturer itself that is, you know, made it itself to a specific connector, um, you know, we have to consume that mating portion of that connector, which can drive lead time. So it really does vary quite a bit. Um, but again, you know, pointing back to, you know, the additional team members that were able to add, um, you know, very, very, very happy, um, you know, to have them on board and that continues to grow as we continue, um, you know, throughout the year. I'm very excited about, you know, the plan that the company as a whole set forth to be able to accomplish. bringing those team members on and look forward to what we're able to accomplish in subsequent quarters.
spk05: Good to hear. And just very quickly, is there any transition from your customers with the 2.0 version coming out, like any training or getting up to speed with that that might be something to watch in the coming months?
spk06: Yeah, so we are having some initial conversations, but we haven't – get released at a full product launch. But yeah, I definitely would stay tuned as to how that progresses in the coming months here.
spk02: Great, thank you. Our next question comes from Brett Castelli of Morningstar.
spk10: Please go ahead.
spk14: Yeah, hi.
spk01: Maybe just staying on the BLA 2.0, Jason, I think you mentioned in the prepared remarks that that would maybe have a higher average selling price on a dollar per megawatt.
spk14: I was wondering if you could maybe quantify that anymore.
spk06: We haven't given any exact figures out as of yet regarding VLA 2.0, but again, when you stand back and you see the product that we're bringing to market, it does incorporate additional features into the product itself. With those features itself, we're going to come additional increase and ultimately allow us to have a higher potential revenue per instance, which ultimately equates to dollars per megawatt. So in doing that, that also provides additional value that we're going to be able to create back to our customer in the form of the fact when they deploy our product itself, you know, coming with that feature, coming with the features that we're building into the BLA 2.0 will also allow them to capture additional savings and labor in the field simultaneously.
spk14: Okay.
spk01: And then on the EV charging side, can you remind me, is your product there focused more on the level 2 or AC market or on more the fast charge DC market?
spk06: Much like all of our different product lines that are out there, whether you're talking about solar storage or EV, we're really agnostic to technology. When you look at the sites that we continue to work on and we serve and are in production on, They're really a combination of both, you know, level two, you know, and level three or DC fast chargers.
spk02: So, it really depends on the site specifics and we can work with all the configurations. Thanks, Jason. That's all I had.
spk10: This concludes the question and answer session. and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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