FTC Solar Announces Second Quarter 2024 Financial Results

Rhea-AI Summary

FTC Solar (Nasdaq: FTCI) reported Q2 2024 financial results with revenue of $11.4 million, down 64.7% year-over-year. The company faced challenges, posting a GAAP net loss of $12.2 million or $0.10 per diluted share. Key highlights include:

- Appointment of Yann Brandt as new CEO, effective August 19
- Contracted backlog of $505 million
- Non-GAAP gross loss of $1.9 million (16.8% of revenue)
- Adjusted EBITDA loss of $10.5 million

FTC Solar expects Q3 2024 revenue to be flat to slightly down compared to Q2, with a significant revenue increase projected for Q4. The company now anticipates reaching adjusted EBITDA breakeven on a quarterly basis in 2025.

Positive

• Appointment of industry veteran Yann Brandt as new CEO
• Strong contracted backlog of $505 million
• Projected significant revenue increase for Q4 2024
• Lowered breakeven revenue level to enable margin improvement as revenue grows

Negative

• Q2 2024 revenue decreased 64.7% year-over-year to $11.4 million
• GAAP net loss of $12.2 million in Q2 2024
• Non-GAAP gross loss of $1.9 million in Q2 2024
• Adjusted EBITDA loss of $10.5 million in Q2 2024
• Delayed customer projects due to interconnection or financing issues
• Adjusted EBITDA breakeven pushed to 2025

Insights

Financial Analyst

FTC Solar's Q2 2024 results paint a challenging picture. Revenue of $11.4 million represents a significant 64.7% year-over-year decline, reflecting ongoing industry headwinds. The gross loss of 20.5% is concerning, indicating difficulties in covering fixed costs at current revenue levels. While the contracted backlog of $505 million provides some future visibility, the company's revised outlook suggests continued near-term struggles.

The appointment of Yann Brandt as CEO could bring fresh strategic direction, but the immediate focus will likely be on cost management and operational efficiencies. The projected doubling of revenue in Q4 2024 and push of adjusted EBITDA breakeven to 2025 highlight the uphill battle FTC Solar faces in achieving profitability. Investors should closely monitor the company's ability to execute on its growth plans and improve margins in the coming quarters.

Market Research Analyst

FTC Solar's performance reflects broader challenges in the solar industry, particularly in project delays related to interconnection and financing issues. The 64.7% year-over-year revenue decline suggests significant market headwinds that are likely affecting competitors as well. However, the $505 million contracted backlog indicates potential for future growth if execution improves.

The company's focus on both 1P and 2P tracker configurations could provide flexibility in addressing diverse market needs. The lowered breakeven revenue level is a positive step towards profitability, but the delayed timeline for achieving adjusted EBITDA breakeven until 2025 may test investor patience. As the solar market evolves, FTC Solar's ability to navigate project delays and capitalize on its backlog will be important for its competitive positioning and long-term viability.

Second Quarter Highlights and Recent Developments

• Second quarter revenue of $11.4 million
  
• Industry veteran Yann Brandt named new CEO, effective August 19
• Contracted portion of backlog now stands at $505 million
• Company continues to identify operational efficiencies while investing strategically in sales resources

AUSTIN, Texas, Aug. 08, 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 second quarter ended June 30, 2024.

Second Quarter Results
“Results for the second quarter were in line with our targets,” said Shaker Sadasivam, Chairman of the Board of FTC Solar. “The company continues to drive key initiatives to support future growth and profitability and is well positioned with a robust product offering across 1P and 2P configurations, and a lowered breakeven revenue level to enable strong margin improvement as revenue grows. We were pleased to announce last month that Yann Brandt will be joining the company as our new CEO and a member of the Board of Directors, effective August 19. He is an exceptional, strategic leader and industry insider with deep experience and relationships throughout the solar industry. We believe he is the right leader to build on this strong foundation and take the company to the next level.”

The contracted portion of the company’s backlog¹ now stands at $505 million.

Summary Financial Performance: Q2 2024 compared to Q2 2023

		U.S. GAAP								Non-GAAP (b)
		Three months ended June 30,
(in thousands, except per share data)		2024				2023				2024				2023
Revenue		$	11,430			$	32,359			$	11,430			$	32,359
Gross margin percentage			(20.5	%)			6.8	%			(16.8	%)			8.2	%
Total operating expenses		$	9,581			$	12,568			$	8,278			$	9,740
Loss from operations(a)		$	(11,924	)		$	(10,367	)		$	(10,451	)		$	(7,239	)
Net loss		$	(12,241	)		$	(10,414	)		$	(10,730	)		$	(7,163	)
Diluted loss per share		$	(0.10	)		$	(0.09	)		$	(0.09	)		$	(0.06	)
(a) Adjusted EBITDA for Non-GAAP
(b) See below for reconciliation of Non-GAAP financial measures to nearest comparable GAAP measures

Total second-quarter revenue was $11.4 million, within our target range. This revenue level represents a decrease of 9.2% compared to the prior quarter and a decrease of 64.7% compared to the year-earlier quarter, on both lower product and logistics volumes.

GAAP gross loss was $2.3 million, or 20.5% of revenue, compared to gross loss of $2.1 million, or 16.7% of revenue, in the prior quarter. Non-GAAP gross loss was $1.9 million or 16.8% of revenue. The result for this quarter compares to non-GAAP gross profit of $2.6 million in the prior-year period, with the difference driven primarily by the impact of lower current quarter revenues which were not sufficient to cover certain relatively fixed indirect costs.

GAAP operating expenses were $9.6 million. On a non-GAAP basis, operating expenses were $8.3 million. This result compares to non-GAAP operating expenses of $9.7 million in the year-ago quarter. 

GAAP net loss was $12.2 million or $0.10 per diluted share, compared to a loss of $8.8 million or $0.07 per diluted share in the prior quarter and a net loss of $10.4 million or $0.09 per diluted share in the year-ago quarter. Adjusted EBITDA loss, which excludes an approximate $1.8 million net loss from stock-based compensation expense and other non-cash items, was $10.5 million, compared to losses of $10.7 million in the prior quarter and $7.2 million in the year-ago quarter.

Outlook
While we still expect a better second-half relative to the first half, our 2H results will be lower than our prior expectations as customer projects have seen delays, primarily related to interconnection or financing.

We expect third quarter 2024 revenue to be approximately flat to slightly down relative to the second quarter. We expect this to be followed by a more than doubling of revenue in the fourth quarter relative to the third. We now expect to achieve adjusted EBITDA breakeven on a quarterly basis in 2025.

(in millions)		2Q'24 Guidance		2Q'24 Actual		3Q'24 Guidance
Revenue		$10.5 – $15.5		$11.4		$9.0 – $11.0
Non-GAAP Gross Profit (Loss)		$(3.1) – $(1.1)		$(1.9)		$(4.3) – $(1.5)
Non-GAAP Gross Margin		(29.5%) – (7.1%)		(16.8%)		(47.8%) – (13.5%)
Non-GAAP operating expenses		$8.6 – $9.2		$8.3		$9.3 – $10.0
Non-GAAP adjusted EBITDA		$(12.6) – $(9.8)		$(10.5)		$(14.7) – $(11.0)

Second Quarter 2024 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 second 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 https://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 global 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.

<sup>Footnotes
1. The term ‘backlog’ or ‘contracted and awarded’ refers to the combination of our executed contracts (contracted) and awarded orders (awarded), 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.</sup>

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 June 30,								Six months ended June 30,
(in thousands, except shares and per share data)		2024				2023				2024				2023
Revenue:
Product		$	8,776			$	21,074			$	19,681			$	53,653
Service			2,654				11,285				4,336				19,600
Total revenue			11,430				32,359				24,017				73,253
Cost of revenue:
Product			10,467				19,152				22,834				50,919
Service			3,306				11,006				5,634				18,098
Total cost of revenue			13,773				30,158				28,468				69,017
Gross profit (loss)			(2,343	)			2,201				(4,451	)			4,236
Operating expenses
Research and development			1,535				1,873				2,974				3,795
Selling and marketing			2,036				1,852				4,424				3,563
General and administrative			6,010				8,843				12,577				19,642
Total operating expenses			9,581				12,568				19,975				27,000
Loss from operations			(11,924	)			(10,367	)			(24,426	)			(22,764	)
Interest income (expense), net			1				(28	)			(135	)			(86	)
Gain from disposal of investment in unconsolidated subsidiary			—				—				4,085				898
Other income (expense), net			(7	)			(141	)			29				(215	)
Loss from unconsolidated subsidiary			(246	)			—				(511	)			—
Loss before income taxes			(12,176	)			(10,536	)			(20,958	)			(22,167	)
(Provision for) benefit from income taxes			(65	)			122				(54	)			(9	)
Net loss			(12,241	)			(10,414	)			(21,012	)			(22,176	)
Other comprehensive income (loss):
Foreign currency translation adjustments			36				(408	)			(145	)			(413	)
Comprehensive loss		$	(12,205	)		$	(10,822	)		$	(21,157	)		$	(22,589	)
Net loss per share:
Basic and diluted		$	(0.10	)		$	(0.09	)		$	(0.17	)		$	(0.20	)
Weighted-average common shares outstanding:
Basic and diluted			126,171,278				112,669,296				125,816,080				109,632,336

FTC Solar, Inc. Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except shares and per share data)		June 30, 2024				December 31, 2023
ASSETS
Current assets
Cash and cash equivalents		$	10,779			$	25,235
Accounts receivable, net			41,511				65,279
Inventories			17,061				3,905
Prepaid and other current assets			14,969				14,089
Total current assets			84,320				108,508
Operating lease right-of-use assets			1,926				1,819
Property and equipment, net			2,446				1,823
Intangible assets, net			264				542
Goodwill			7,169				7,353
Equity method investment			1,529				240
Other assets			2,696				2,785
Total assets		$	100,350			$	123,070
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	17,580			$	7,979
Accrued expenses			22,835				34,848
Income taxes payable			106				88
Deferred revenue			2,595				3,612
Other current liabilities			8,202				8,138
Total current liabilities			51,318				54,665
Operating lease liability, net of current portion			1,107				1,124
Other non-current liabilities			3,684				4,810
Total liabilities			56,109				60,599
Commitments and contingencies
Stockholders’ equity
Preferred stock par value of $0.0001 per share, 10,000,000 shares authorized; none issued as of June 30, 2024 and December 31, 2023			—				—
Common stock par value of $0.0001 per share, 850,000,000 shares authorized; 127,002,580 and 125,445,325 shares issued and outstanding as of June 30, 2024 and December 31, 2023			13				13
Treasury stock, at cost; 10,762,566 shares as of June 30, 2024 and December 31, 2023			—				—
Additional paid-in capital			364,813				361,886
Accumulated other comprehensive loss			(438	)			(293	)
Accumulated deficit			(320,147	)			(299,135	)
Total stockholders’ equity			44,241				62,471
Total liabilities and stockholders’ equity		$	100,350			$	123,070

FTC Solar, Inc. Condensed Consolidated Statements of Cash Flows (unaudited)
		Six months ended June 30,
(in thousands)		2024				2023
Cash flows from operating activities
Net loss		$	(21,012	)		$	(22,176	)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation			2,924				7,852
Depreciation and amortization			812				666
Amortization of debt issue costs			236				355
Provision for obsolete and slow-moving inventory			177				1,261
Loss from unconsolidated subsidiary			511				—
Gain from disposal of investment in unconsolidated subsidiary			(4,085	)			(898	)
Warranty and remediation provisions			1,639				2,852
Warranty recoverable from manufacturer			238				30
Credit losses and bad debt expense			587				203
Deferred income taxes			223				184
Lease expense and other			609				497
Impact on cash from changes in operating assets and liabilities:
Accounts receivable			23,181				(17,879	)
Inventories			(13,333	)			7,643
Prepaid and other current assets			(864	)			70
Other assets			(562	)			(1,422	)
Accounts payable			9,483				11,247
Accruals and other current liabilities			(13,463	)			(7,895	)
Deferred revenue			(1,017	)			(8,804	)
Other non-current liabilities			(1,331	)			(4,264	)
Lease payments and other, net			(588	)			(331	)
Net cash used in operations			(15,635	)			(30,809	)
Cash flows from investing activities:
Purchases of property and equipment			(1,131	)			(195	)
Equity method investment in Alpha Steel			(1,800	)			(900	)
Proceeds from disposal of investment in unconsolidated subsidiary			4,085				898
Net cash provided by (used in) investing activities			1,154				(197	)
Cash flows from financing activities:
Sale of common stock			—				20,640
Stock offering costs paid			—				(114	)
Proceeds from stock option exercises			3				51
Net cash provided by financing activities			3				20,577
Effect of exchange rate changes on cash and cash equivalents			22				(139	)
Decrease in cash and cash equivalents			(14,456	)			(10,568	)
Cash and cash equivalents at beginning of period			25,235				44,385
Cash and cash equivalents at end of period		$	10,779			$	33,817

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 arising from earnout payments and project escrow releases relating to 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 arising from earnout payments and project escrow releases relating to 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 six months ended June 30, 2024 and 2023, respectively:

		Three months ended June 30,								Six months ended June 30,
(in thousands, except percentages)		2024				2023				2024				2023
U.S. GAAP revenue		$	11,430			$	32,359			$	24,017			$	73,253
U.S. GAAP gross profit (loss)		$	(2,343	)		$	2,201			$	(4,451	)		$	4,236
Depreciation expense			183				125				351				249
Stock-based compensation			240				316				456				1,132
Non-GAAP gross profit (loss)		$	(1,920	)		$	2,642			$	(3,644	)		$	5,617
Non-GAAP gross margin percentage			(16.8	%)			8.2	%			(15.2	%)			7.7	%

The following table reconciles Non-GAAP operating expenses to the most closely related GAAP measure for the three and six months ended June 30, 2024 and 2023, respectively:

		Three months ended June 30,								Six months ended June 30,
(in thousands)		2024				2023				2024				2023
U.S. GAAP operating expenses		$	9,581			$	12,568			$	19,975			$	27,000
Depreciation expense			(91	)			(71	)			(193	)			(141	)
Amortization expense			(134	)			(136	)			(268	)			(276	)
Stock-based compensation			(1,045	)			(2,646	)			(2,468	)			(6,720	)
Non-routine legal fees			(33	)			25				(66	)			(83	)
Severance credit			—				—				—				13
Non-GAAP operating expenses		$	8,278			$	9,740			$	16,980			$	19,793

The following table reconciles Non-GAAP Adjusted EBITDA to the related GAAP measure of loss from operations for the three and six months ended June 30, 2024 and 2023, respectively:

		Three months ended June 30,								Six months ended June 30,
(in thousands)		2024				2023				2024				2023
U.S. GAAP loss from operations		$	(11,924	)		$	(10,367	)		$	(24,426	)		$	(22,764	)
Depreciation expense			274				196				544				390
Amortization expense			134				136				268				276
Stock-based compensation			1,285				2,962				2,924				7,852
Non-routine legal fees			33				(25	)			66				83
Severance credit			—				—				—				(13	)
Other income (expense), net			(7	)			(141	)			29				(215	)
Loss from unconsolidated subsidiary			(246	)			—				(511	)			—
Adjusted EBITDA		$	(10,451	)		$	(7,239	)		$	(21,106	)		$	(14,391	)

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 June 30, 2024 and 2023, respectively:

		Three months ended June 30,
		2024								2023
(in thousands, except shares and per share data)		Adjusted EBITDA				Adjusted Net Loss				Adjusted EBITDA				Adjusted Net Loss
Net loss per U.S. GAAP		$	(12,241	)		$	(12,241	)		$	(10,414	)		$	(10,414	)
Reconciling items -
Provision for (benefit from) income taxes			65				—				(122	)			—
Interest (income) expense, net			(1	)			—				28				—
Amortization of debt issue costs in interest expense			—				59				—				178
Depreciation expense			274				—				196				—
Amortization of intangibles			134				134				136				136
Stock-based compensation			1,285				1,285				2,962				2,962
Non-routine legal fees (credits)(a)			33				33				(25	)			(25	)
Adjusted Non-GAAP amounts		$	(10,451	)		$	(10,730	)		$	(7,239	)		$	(7,163	)
Adjusted Non-GAAP net loss per share (Adjusted EPS):
Basic and diluted		N/A				$	(0.09	)		N/A				$	(0.06	)
Weighted-average common shares outstanding:
Basic and diluted		N/A					126,171,278			N/A					112,669,296
(a) Non-routine legal fees (credits) represent legal fees and other costs (credits) incurred for specific matters that were not ordinary or routine to the operations of the business.

The following table reconciles Non-GAAP Adjusted EBITDA and Adjusted Net Loss to the related GAAP measure of net loss for the six months ended June 30, 2024 and 2023, respectively:

		Six months ended June 30,
		2024								2023
(in thousands, except shares and per share data)		Adjusted EBITDA				Adjusted Net Loss				Adjusted EBITDA				Adjusted Net Loss
Net loss per U.S. GAAP		$	(21,012	)		$	(21,012	)		$	(22,176	)		$	(22,176	)
Reconciling items -
Provision for (benefit from) income taxes			54				—				9				—
Interest expense, net			135				—				86				—
Amortization of debt issue costs in interest expense			—				236				—				355
Depreciation expense			544				—				390				—
Amortization of intangibles			268				268				276				276
Stock-based compensation			2,924				2,924				7,852				7,852
Gain from disposal of investment in unconsolidated subsidiary(a)			(4,085	)			(4,085	)			(898	)			(898	)
Non-routine legal fees(b)			66				66				83				83
Severance credit(c)			—				—				(13	)			(13	)
Adjusted Non-GAAP amounts		$	(21,106	)		$	(21,603	)		$	(14,391	)		$	(14,521	)
Adjusted Non-GAAP net loss per share (Adjusted EPS):
Basic and diluted		N/A				$	(0.17	)		N/A				$	(0.13	)
Weighted-average common shares outstanding:
Basic and diluted		N/A					125,816,080			N/A					109,632,336
(a) We exclude the gain from collection of contingent contractual amounts arising 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 credit represents an adjustment to the restructuring accrual relating to a December 2022 reduction in force.

FAQ

What was FTC Solar's revenue for Q2 2024?

FTC Solar reported revenue of $11.4 million for Q2 2024, which was within their target range but represented a 64.7% decrease compared to the same quarter in the previous year.

Who is the new CEO of FTC Solar and when does he start?

Yann Brandt has been named the new CEO of FTC Solar. He will assume the role effective August 19, 2024.

What is FTC Solar's current contracted backlog?

FTC Solar's contracted portion of the backlog stands at $505 million as of Q2 2024.

When does FTC Solar expect to achieve adjusted EBITDA breakeven?

FTC Solar now expects to achieve adjusted EBITDA breakeven on a quarterly basis in 2025, which is later than previously anticipated.

What are FTC Solar's revenue expectations for Q3 and Q4 2024?

FTC Solar expects Q3 2024 revenue to be approximately flat to slightly down relative to Q2. For Q4 2024, the company projects more than doubling of revenue compared to Q3.