Good day, and thank you for standing by. Welcome to the FTC Solar Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Michalek, Vice President of Investor Relations. Please go ahead.

Thank you, and welcome, everyone, to FTC Solar's fourth quarter 2024 earnings conference call. Before today's call, you may have reviewed our earnings release, slide presentation, and supplemental financial information, which were posted earlier today. If you've not reviewed these documents, they are available on the Investor Relations section of our website at ftcsolar.com. I'm joined today by Yann Brandt, the company's President and Chief Executive Officer, Cathy Behnen, the company's Chief Financial Officer, and Patrick Cook, the company's Head of Capital Markets and BD. 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 would 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 measures to the nearest applicable GAAP measure. With that, I'll turn the call over to Yann.

Thanks, Bill, and good morning, everyone. It's great to speak with you all again here on my second earnings call as CEO of FTC Solar. I'll provide a few updates and commentary, and then turn it over to Cathy to review the financials. During the first six months of my tenure, our primary focus has been on shoring up our near-term backlog, while also adding some incremental liquidity to the business. We have made very significant progress, including adding many multiples of our current annual revenue run rate to our backlog and signing long-term customer agreements. I'll share more on this progress in a moment, but would like to start by briefly reviewing a few comments I made on the last earnings call. During that call, I shared my 90-day observations on the company, my optimism about the path to success for FTC Solar, built on the foundation of a great team, a complete product set, and a cost structure poised to enable strong margin growth and profitability. To summarize those observations briefly, they include, one, FTC Solar is at a clear inflection point, and adoption of our differentiated 1P technology is on the brink of major deployment by some of the biggest solar IPPs and EPCs in the world. Two, our relationships with the global customer base are in great position. In this moment of the solar market, knowing how to bring a solar to completion is critical, and our team's collective experience is very well regarded in that way. Three, the FTC Solar 1P tracker is the latest in this category to come to market. It has features and technology that are clearly differentiated and make it an easier, faster, and safer tracker to install. And four, in 2025, we will see good progress on the conversion of…

Thanks Yann, and good morning, everyone. I'll provide some additional color on our fourth quarter performance and our outlook. Beginning with a discussion of the fourth quarter, revenue came in at $13.2 million, which was at the high end of our target range. This revenue level represents an increase of 30.2% compared to the prior quarter, and a decrease of 43.1% compared to the year earlier quarter due to lower product volumes. GAAP gross loss was $3.8 million, or 29.1% of revenue, compared to gross loss of $4.3 million, or 42.5% of revenue in the prior quarter. Non-GAAP gross loss was $3.4 million or 25.6% of revenue at about the midpoint of our guidance. The result for this quarter compares to a non-GAAP gross loss of $3.9 million or 38.3% of revenue in the prior quarter. GAAP operating expenses were $9.6 million on a non-GAAP basis, excluding stock-based compensation and certain other costs. Operating expenses were $7.4 million, down from $10.8 million in the same quarter last year. This represents the lowest level of OpEx since early 2021, as we have found efficiencies across the company while continuing to invest to support growth. This result compares the non-GAAP operating expense of $8.1 million in the prior quarter. GAAP net loss was $12.2 million or $0.96 per diluted share, compared to a loss of $15.4 million or $1.21 per diluted share in the prior quarter as adjusted for the reverse split, and compared to a net loss of $11.2 million or $0.89 per diluted share post-split in the year ago quarter. Adjusted EBITDA loss, which excludes an approximate $2.4 million from stock-based compensation expense and other non-cash items, was $9.8 million, which was better than our guidance range. This compares to losses of $12.2 million in the prior quarter and $10.1…

[Operator Instructions] Our first question comes from Philip Shen with ROTH Capital Partners. Your line is open.

Hey guys, thanks for taking the questions, and congrats on the strong bookings momentum in this difficult environment. So, wanted to talk through some of that, specifically on Recurrent, that's a big five-gigawatt agreement there. Was wondering if you could share what the mix of 1P versus 2P is, the mix of the geographies. So, is it more dominated outside of the US, or is it a U.S. kind of centric agreement? And then also you talked about the first project being put in place in the back half of this year. Which geography would that be? And then if you can just speak more about the basis for the win beyond what you said in the prepared remarks, that would be great. Thanks.

All right, good to talk to you, Phil. Yes, I mean, look, we're really excited about the partnership with Recurrent, and ultimately it came down to, to answer the last part of your question first, we do have a really wide product set having really strong 1P offering now that's latest to market, really easy to use. And then we have the 2P product that we're one of the few manufacturers in the world that has it. So, the ability to do both I think was a strong consideration for Recurrent. The 2025 project set, the diversity around where we're going to be building and supplying trackers, like we said, is going to be U.S., Europe, and Australia. U.S. and Europe are likely to go first based on the work we're now doing in terms of engineering and design. And I think you're going to have numbers of projects be greater in Europe just because the project size is smaller and you're going to have larger, more significant projects here in the U.S But obviously, from our standpoint, our preference is - our goal is to supply the best product we can to wherever Recurrent is developing and deploying capital in into these projects. They play a role as a developer and asset owner. So, it takes into account all of the value propositions that we're providing. Just that last part of your question, 1P and 2P is really going to be geographically oriented. 2P is a really strong offering still, especially where land density, the power density is important. But you have to have the right sort of environment in terms of wind loads and other technical considerations. So, I think you'll have some utilization of 2P in Europe and some parts of the U.S., but predominantly it's going to be 1P. I think overall it'll be in line with where our current sort of pipeline and bid rate is, which is 85%, 90% 1P.

Okay, thanks, Yann. I appreciate that. Shifting over to the outlook for revenue, you gave an official guide for Q1, and that's sequentially higher versus Q4. I know you don't have an official outlook for Q2 or 3, but can you talk about that trajectory? Maybe loosely speak through, should we expect Q2 to be flat versus Q1, or should we see a ramp as we go through the year? And if so, what needs to happen and what are the - what needs to happen in order to hit those expectations? And then what are some lines of potential risk? Thanks.

Yes, we certainly expect the year to be back half-weighted, right? This is a commercial focus of deploying 1P and getting contracts signed. Certainly, we're working with our developer partners and getting the projects to the finish line, going through the engineering. We're very optimistic about continued growth through the year. But I think the way that I would frame it is definitely focus on the second half and waiting from that standpoint. There's definitely a step up in Q1 from the guidance, up 45% sequentially, and we would expect another step-up at the back half of the year.

Okay. And then that would suggest Q2 might be more flat versus Q1?

I think - I don't want to overpromise for Q2. It could - the way that I would think about FTC is every single project matters. So, if one project pulls in, it could be up, it could be flat, but the optimism is quite strong. We'll focus on the execution side of the house and getting to breakeven, EBITDA breakeven by the back half of the year.

Got it. Thank you. And then one more, and then I'll pass it on. In terms of your bookings momentum, you have had a bunch of these agreements since you've joined. So, I was wondering if we should expect this kind of train of agreements to continue as we get through the first half of the year?

That's certainly the expectation, bringing Kent James in, having been one of the founding members of Primoris, we’re taking a very dual approach in both focusing on the value proposition that we're bringing to EPCs, helping them lower their labor burden by making it easier and faster to install, but also partnering with IPPs like Dunlieh and Sandhills to help early stage engineering. I think we'll have continued demand of folks to do something on the early stage. These supply arrangements or MSAs or purchase orders are ahead of shipment. I think those are going to be some of our tactics, but also I think quite a bit of focus like we had announcing sort of our new contract signings, which is actually showing those projects come to fruition. At a certain moment, like our peers, we'll have the translation of early stage actually becoming projects that will start shipment. We expect that to happen to be a big part of our back half of the year as those projects go through the development process. We're making a lot of traction in our bidding. I think that's always the top of the funnel. Getting our 1P product through approved vendor lists has been a strong - something we've been doing quite a bit over the last six months. And getting products approved by the biggest IPPs and their backers, that allows us to bid. And we are bidding almost double the gigawatts on a monthly basis than we were a year ago. So, the top of the funnel is really strong, and I think it shows the appetite for the technical value that our Pioneer trackers bring to the table.

Great. Okay. Thanks, Yann. I'll pass it on.

One moment for our next question. Our next question comes from Jeff Osborne with TD Cowen. Your line is open.

Yes. Thank you. Good morning. Just a couple of quick ones on my side. Yann, I was wondering if you could quantify the 1P and how much faster you're seeing some of the partners that you've announced today, what the anticipated experience is. I think in the past, you guys had talked about 30% to 40% faster, if my memory is right, but that was under a prior management team. What's the pitch these days?

Yes, the pitch is there's a duality, right? And I'll sort of put all of those on the umbrella that it also has a safety component to it, which is an important one, obviously for - because no labor is faster if it's not safer, right? So, for EPCs particularly, this is of utmost importance. I think overall when you think about it, the mechanical installation of the tracker represents something like 60% or more, depending on the region of the overall labor need by an EPC. We see an opportunity. Again, that 30% to 40% remains true. Depending on where the project is, there's also the ability for lower cost labor to be used for particular parts of the installation, like installing our Cinch clips, for example. That's a much faster, much easier process that not only is less time, but also less cost. So, you could see three plus cents a watt of benefit by using Pioneer. And we're certainly working to continuously improve the process and bring some lean methodology to our process. We have quite a big team working on the software and productivity side of how to install our tracker and just getting even better at that. We’re definitely looking to measure man hours per megawatt in a way that has return data to each EPC. The more people use our trackers, the more return data they'll have, and they'll actually start including it in their bids. That's always the leading edge of bringing a new product to market and why it takes a little bit of time sometimes. But as they use it once, people get comfortable with it, and then they start recognizing opportunities to optimize, and that's the stage we'll be in over the next 12 to 18 months. As these EPCs trial a product the 1P product, they'll start seeing opportunities to win more work with it.

That's helpful. And just given you're now announcing five-year sort of framework agreements and broad strokes across multiple geographies, how should investors think about the broader lens of sort of target gross margins for the business? I know you're not giving revenue guidance, but three, five years ago, people in the industry would say there’s sort of a low 20s gross margin prior to the IRA. What do you think FTC’s gross margin entitlement is longer term?

Yes, I mean, I think without getting specific and just getting sort of qualitative on it, our track on margins is in line with our peers. Obviously, where do we have differentiation that's sort of a headwind for us is we have a little bit higher logistics costs given that we don't have the supply chain base in quite as many as our largest peers. And then also from a volume standpoint, there's obviously some room to make up on our side. I think the important one is - sort of tying it back to your initial question is, it's not all about CapEx in the long run, the value proposition of Pioneer, not just for the installation of our tracker, but if you think of - if you take a step back and think about all things automation, my LinkedIn is full of it at this point. It's one of the most automation-friendly trackers, both for the installation as well as for O&M. It has the ability to lower cost. As that value proposition is learned by our partners, both EPCs and IPPs, that's going to give us a little bit of pricing room. But ultimately right now we’re competitive. Our gross margins will increase as our volume increases, certainly, and we see ourselves in line with at scale being able to be competitive with our peers. Lastly, one thing we don't talk a lot about, because we talk about hardware mostly, our product SunPath, which is our terrain-based backtracking software, is on a - if you were to take a step back, and obviously I have a biased view, but unbiased opinion, it's one of the best backtracking softwares out there. It has obviously row to row capabilities. Right now, backtracking software is one of these learned products in the market. We have some peers that see a lot of pricing strength in it. We have some peers that give it away. Ultimately, we see SunPath as a huge opportunity for us to either provide value to win more work in high volumes, but also the ability to monetize it as we show real tangible return data to the IPPs as the system is performing. I would say we're quite ahead of a lot of our peers with SunPath, and I wouldn't underestimate the value it brings in the long run to gross margins.

Perfect. And my last question is just in recent weeks, we've seen quite a bit of steel price volatility. How should we think about what transpired for Q1, but also for the next quarter or two, what your supply chain management is in light of the tariff environment and just price volatility in general, what your exposure is, et cetera?

Yes, our exposure is quite limited. Ultimately, as a company, we secure our steel right when sort of the purchase orders are negotiated. So, there's really - it's a back-to-back procurement nature. It's probably, at much higher volumes, you have much greater exposure, and there's always the discussion of what can you pass on and what can't you pass on. The reality is every single cost that increases on a project, whether it's tariffs or commodity, often those two things are linked. The project itself needs to continue to pencil. So, everyone's sort of at the table figuring out how to keep the project moving forward. The tariffs and commodity prices moving in a higher direction is going to increase cost of projects. But from an exposure standpoint, I would say it's zero to limited. We certainly haven't had meetings internally where it's a great concern to us. We update it with each of our each of our proposals.

Perfect. That's all I had. Thank you.

[Operator instructions] And I'm not showing any further questions at this time. As such, this does conclude today's presentation. You may now disconnect and have a wonderful day.