Shoals Technologies (SHLS) 28 Feb 242023 Q4 Earnings call transcript

Good afternoon, and welcome to the Shoals Technologies Group Fourth Quarter 2023 Earnings Conference Call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A.

At this time, I would like to turn the conference over to Mehgan Peetz, Chief Legal Officer for Shoals Technologies Group. Thank you.

You may begin.

thank for and us operator, you, you, joining everyone, today. Thank CEO, call and with the Brandon me Hosting are Moss; Bardos. CFO, Dominic

On risks and making be based and management other uncertainties. which call, assumptions to statements expectations on projections subject are forward-looking current this or will

including forward-looking year results. listen statements, our XXXX, materially if guarantees performance consider or are results our incorrect that and first could assumptions from regarding you other or comments, you not guidance As understand any of because quarter Actual differ should factors. statements these these the and full are of of

matter; These products factors and such in Exchange accurately things, other our disruptions; from related those our or performance industry materials. to wire supply risk Securities our regulatory economic, potential matter those components including losses manufacturer; factors changes; or and products; market and decreased failure related parts, assets shrinkback estimate including include, price of recover for described availability and among demand and the the other Commission, conditions; to to the our to filings and insulation in the policy with defects and the failure problems chain

believe discussion is the are assumptions And do assumptions of duty realized. in that be we will forward-looking update any statements. as We indicate the forward-looking can caution underlying in be that made statements to statements there this statement date forward-looking discussion, undertake forward-looking therefore, of Although may any prove inaccurate we the the that reasonable, not contemplated and this any included results and the of incorrect. any the could or no assurance

financial measures. also presentation to includes Today's references non-GAAP

for quarter and contained company's fourth definitional of measures. non-GAAP financial the comparable to in the historical information press You to should measures information refer GAAP reconciliations the release

turn me to Shoals' let over the Brandon Moss. call that, CEO, With

I Portland, will and good new I'll and to quarter. conditions follow expand today's then discussion to facility insulation the turning over market will plan Thank Mehgan, overview of strategic relocate some review a and shrinkback wrap year with of provide the XXXX. will update to full on XXXX in Dominic, for much, an call you before our remediation our an highlights discuss financial Tennessee. and, the warranty operations from up solar start it with our priorities everyone. very results who wire I and afternoon, finally, our fourth and key investigation discuss with outlook then a and

year. year execution growing with was of XX% tremendous Shoals for revenue second the approximately XXXX consecutive another for

of has the since fact, XXXX, XX% grown same outpacing revenue CAGR industry's In the Shoals period. significantly at growth XX% over

adjusted leverage compared Our ability full profit revenue to contributed year XX% to to drive the operational prior gross grew we year. as increasing

up expanded basis XX% adjusted compared third raised year. $XXX.X reported EBITDA gross which the earnings. XXX EBITDA, for million, of we year-over-year, adjusted prior with Notably, full margin to while margin almost was the EBITDA quarter when and year of our was Adjusted both XXXX high year end we EBITDA outlook adjusted full points adjusted achieved XXXX

operations was from million, XXXX. And as $XX flow greater detail, XXX% in Dominic up discuss cash will from

a Shoals are into has that pleased company cash We strong generation. transitioned flow with

was $XXX demand strong, in growing of million remained $XXX.X quarter, The quarter in increase revenue quote to volumes for and continued with XXX% year-over-year. products. XX% strong another and year-over-year over XXX% an quarter Further, which $XXX.X flat Turning to million, XX% orders our reflecting the orders million. Shoals sequentially, fourth highlights. growing awarded strong Backlog very year-over-year. year-over-year our were company had approximately added up

continues In rise. to of addition, while the size of number quotes also the growing jobs is the

XX% a into domestic And agreement as backlog solar more growth international top markets and to position after EPC. orders. our Subsequent than a to continue supply entering quarter-end, develop awarded our new master with of driver, leadership bolstered representing we a

Moving rising growing toward are solar to EIA. is growth and to incredibly to electrification. the Demand strong. by driven Analysts market the landscape. shift for through steadily the XXXX, economic energy power for for now according continue electric sustained fundamentals long-term expect The solar U.S. demand

energy offers Solar lowest it X because the requires costs. levelized cost of fuel

expect of to solar the will solar decreasing believe We the solar of will reduced coming due growth panels, We this and additional trend in continue battery storage decades. price drive cost scale. market

In is double by nearly again by expected fact, capacity to XXXX solar generation U.S. and double XXXX.

solar an with Outlook electricity solar Energy XX Short-Term new expected new source EIA in generation the segments next total in solar to X% XXXX. expected capacity the and solar X from the to over of according in across January, all and gigawatts years, be to XXXX X% X% is to up is capacity published addition, incremental coming XXXX, This of In in the online share generation in XXXX. leading of in XXXX additional gigawatts the XX boost

market-leading our of Shoals electrical a transition to balance in is solutions excited energy the with systems. be and space leader

in market utility very outlook in long-term scale our of solar our peers reported While segment, to core QX and utility year. is last contributed have QX delays scale project the by strong, slowdowns

Higher to in for financing is of transformers XXXX, all time. and our impact reverse industry interconnection costs, this first are The extended over will we industry exacerbating equipment and the significant long queues trend slowdown but results expect and lead switchgear, weakness. times, particularly half

increase data X in XXXX XX% EIA of delays, been XXXX. in on first the the over delayed of at the increasing the with there's the years, significant from to XX% a look quarter of quarter you course fourth projects When last project

modeling. Dominic will quarter discuss, guidance As providing analysts first we're assist to with

well in The driven cost creates a sustainability competitiveness the goals, near-term and challenges. proactive to confident renewables, we're exist, fundamentals. mitigating capitalize by to for significant trend our scale hurdles growth industry. projects approach We positioned opportunity toward this utility believe long-term the focus short-term undeniable shift While and on remain on ongoing we through

the for even of context these and discussed opportunity than projects that last high Though of address. they commercial our will smaller chain segment. believe deployment Further, was same utility projects. community-scale on smaller supply we our are to a industrial our we the costs remain compelling scale, proposition call, the We as in challenges see share many value in developed challenges, labor including technology attractive and

To that the a X Community excited in recent still of to Department and this that Partnership the exciting solar turnaround. days, of by gigawatts target an early pledge with offset the about Though projects National utility community which of almost XX today's end, Solar Energy's gigawatts. meet triple it's we're XXXX, provide delays we could opportunity have think pushouts to is faster scale

out advantage take focused to are this opportunity. building We of teams currently

the Moving to international, landscape is evolving.

realized for to target nations This by nations been not have in has emissions on COP some push tripling they Following are renewables XX, as XXXX. there fresh meet goals. commitments resulted a their has

in East showcasing growth muted, expected and confident potential. more actively expertise and to While a XXXX are well the geographies. emerging bright new is We're slowdown our primarily spots, translates stabilizing European Africa opportunities market specifically outlook see to China's that we for due significant crisis, Middle markets, post global exploring energy these growth in

driver. discussed, be have have we As growth international to markets the a potential major

double of and In through largely X% market size orders. markets backlog than Europe, of Latin higher-growth XXXX. than Australia, our fact, America combined which on remain focused the more XX% international of CAGR growing as and U.S. the within are represented specific We at and Africa, awarded more year-end, a

significant and in Colombia, sales are our to team progress, Peru making Nigeria, pleased recently securing projects Angola, is We Serbia. report

We growth our the accelerate begin to suite. EPCs expect as of appreciate value entire to international proposition product

continue traction. will investing we team to ahead, international and further Looking our strategically customer growing and support growth

new facility in to a our invest announcement in to recent now Turning Tennessee. Portland,

to Over and the near to manufacturing expand X million invest and centralize committed $XX XXX,XXX-square-foot, our existing next distribution into Shoals new operations state-of-the-art total facility years, of a existing facilities. is our a

us increasing capacity meet of and the our enhancing and journey. been focused marks a we that to achieve objectives critical demand in these the products. on new beginning We the growing operational to production year, will milestone Since plant believe our for have last efficiencies allow

We confident long-term for way will the it growth. are that company's the pave continued

the of also thriving Tennessee. choice workforce, and investing our further be employer contributing becoming in thrilled of an the to landscape economic We're to in region

the years the for is It's to Department once investment, complete, Economic a capital note plant Governor are most to our this We operational the will ultimately while that of and Community new & Lee look ahead. expect we grateful forward significant strong important support the in efficiencies. Development and of Tennessee partnership drive

Shoals to we keeping are asset-light. committed addition, In

will shrinkback now insulation update our we an with provide issue. warranty wire where I investigation on stand of the and remediation

wire Systems filed caused and that Prysmian between As approximately complaint disclosed and sold to quarter USA, in defective by earnings Shoals call, our Cables recover third to we a XXXX LLC XXXX. damages

as future we seeking Because the publicly. Prysmian XX, to full cash related December identification, had the XXXX, are from to of million already limited we recovery pending and defective as litigation, repair expended $X.X of those discuss well for can wire what the Through is in and replacement of issue. expenses Shoals

updates important some provide. are there we However, can

wire initial the shrinkback First, at wire. XXX of have least Prysmian on XX were insulation had found the defective approximately that sites sites red issues

were experienced filed notices that In those sites sites, addition, service approximately informed after were and incremental approximately issued to complaint customer XXX we our we shrinkback. XX

In Second, of there we those approximately as issue as was not situations display are to sites shrinkback, shrinkback upon working quickly where insulation the did possible. remediate XX inspection. sites, X

still expense detail. continue the appropriate. remediation range have quarter will all last determined and in we that further we of as projections, we of Finally, incoming information to is cover the Dominic analyze communicated

committed is to quality. Shoals

we customers. to defective issue, care remedy work our our As the priority wire taking top Prysmian of is

issue possible and we can. accelerate to remediation are efficiently as the remedy We where as to working seek

want top issue. engagement, to very highlighted through and we this business resolution As new we continue by remains emphasize our our the EPC that flourish to to of expect strong, underlying it

scheduled Moving in of filed ruling evidentiary XXXX, the May to Shoals in November. by final the in the March complaints expected ITC with hearing infringement with is patent a

court that district resume time. cases after Our would

property we defending to As rights. remain previously and our intellectual stated, committed protecting vigorously

highlighting priorities up I'll now by wrap for our XXXX. strategic

electrification to chain will that labor supply markets continue are pursue support skilled constraints. by impacted global and and needs We

delivering Our we core can protect prefabricated our engineering needs. at align scale while high-value product. a higher-quality competency market of with By these much plug-and-play solutions well providing margins solutions, prefabricated

grow continue and solar our includes growth our core accelerating base markets. protect within This and utility-scale solar to in Shoals growing share domestic business. will international

also electrification. our strong inorganic flows growth. balance very We leveraging markets support and This new to organic both and that sheet our by for investing includes expect accelerate into cash diversification

we from efforts in defective for remediation for operations expect the to million spend increase despite our In by XXXX, we which Prysmian to still accelerating wire plan fact, XX%. $XX.X cash

of require on in our profits strive prudently our as solar do will operational make markets we capacity to market our grow from we Growth which attractive investments, will segments. investments some for drive utility-scale position business, to and new shareholders. return we we an reinvestment will organizational core generate our these our domestic leadership build newer to and in As maintain continue in position excellence leadership a to

innovation Shoals is strong leader development product with an capability.

industry While our the with of strong is is orders. going quoting long-term period future a activity transition, through and record bright

to improve, share market Shoals many As and take we conditions outgrow will come. the to expect market years continue for

financial it turn fourth over discuss now I'll Dominic, quarter results. who to will XXXX

Thanks, call. the Brandon, on afternoon to everyone and good

Fourth to period the grew quarter XX% Turning $XXX.X XXXX. our results. net in versus to same million revenue

Our to of higher increased profit were compared our costs. by sales utility-scale in year period, due million percentage increased increased Gross higher in compared $XX.X products for demand in as prior by the fixed XX.X% period. to offset net Gross a leverage to labor driven $XX.X prior domestic profit year million in labor solar projects. slightly was to on the revenue XX.X% was increase costs. The primarily

added adjusted the in did quarterly during have of EBITDA cost the adjusted XXXX of period. reconciliation goods no to During expenses. we point the EBITDA was investor liability sold, we illustrates gross quarterly to a there out wire shrinkback I GAAP expenses insulation our impact quarter, would incur appendix our of to the reconciliation profit shrinkback warranty so of not This necessary the like that presentation. of adjustment

additional QX first elements As second impact I the and and this hope recall, helpful. you last not the incurred QX find XXXX. individually but year-to-date out may of you quarters disclosed quarter, did information full we the in break through we

earlier, loss to defective related continue regarding all Further, wire. potential Prysmian we information the as to Brandon mentioned new analyze the

While range at $XXX.X we $XX.X quarter, high during investigated were last the low which approximately million communicated is consistent end sites remediation with at findings quarter, the XX in million the the end. assumptions we and additional incorporated

section of an During of expenses this in statement. $X.X shrinkback the incurred litigation adjusted That EBITDA associated we additional that insulation quarter, issue issue $X.X million reconciliation will SG&A income indicate you associated our the quarter. why with with million in the the see fourth our is

up ramped did efforts. remediation $X.X we as cash quarter, in Also the during million expend we

You $XX.X will are amount on see the continue estimate we so current will to we move on cash We to during XXXX, is remediation efforts at reflected liability represents have that a This million. the now the positioned million. remaining quarters our balance remediation in faster we sheet liability of we believe next warranty remaining of portion consume the X efforts. $XX.X

and administrative expenses and and Shifting prior expenses administrative wire to legal payroll to during in incurred expense year-over-year was the expense to selling, we for the to year. and patent $XX.X The fees compensation, $XX.X million SG&A related planned supporting in growth. noncash stock-based million increases quarter, higher higher infringement period complaints, increase due insulation headcount in to primarily same compared shrinkback the related general fourth of general the

related specifically As wire I $X.X million litigation. to insulation the mentioned earlier, shrinkback this expense was of

the same the a receivable termination of from traditional from in prior legal in to prior agreement. year The note, period Up-C gain to we the the million a the $XXX.X a fourth related compared tax in year. $XX.X C Net during million corp. income period million quarter on of QX, the benefited On the simplification $XXX.X prior our structure was structure completed transitioning

year lower in $XX.X XX% ago, to in gross was to offset million quarter reflecting compared year partially prior million $XX.X a leverage. margin XX.X% margin, to XX% the increased Adjusted EBITDA by Adjusted compared expense EBITDA operating the fourth period.

did third $XXX adjusted moment $XXX on to earnings, raised of the the implying we that EBITDA was for range to want a year-to-date we EBITDA adjusted XXXX our basis to quarter adjusted when I outlook so that a $XX.X quarter during million for $XXX.X million, take clarify fourth to million to million $XX.X million. EBITDA

the I quarter range of the numbers. fourth additional fourth materials of came million. $XX.X adjusted and the in way, in detail hope to assist quarter million $XX.X million of this deck at tying EBITDA investor end in the another $XX.X Said the you high out implied

with the fourth to operations, million was $XX.X in by in in Adjusted quarter million remained income in million cash flow the of $XX.X $XX.X strong period. capital offset from net investment prior expenditures. year of million quarter flow fourth compared $X.X Cash the

million. For facilities. $XX.X year, term we majority After flow cash the operations XXX% from million, expenditures remaining down the grew used full of to to capital pay loan our cash $XX.X the and of revolver

during of pleased leverage are ratio to improving have trend continued We our period. our again the

in orders, year-over-year, during as XXXX, backlog awarded XX% an added XX, company increase we December of As $XXX of had $XXX.X in over the million and million orders the period.

orders, that It's dates year-end of domestic realize X our delivery orders from orders. times revenue historical months have of and cycle some important to international XX also note Approximately longer lead winning awarded we revenue are that backlog our have beyond to and XXXX. awarded jobs at to domestic beyond than orders million $XXX extend

now Turning outlook. to the

experienced project utility-scale Given the current customers have the in some headwinds our delays. solar of market,

set quarterly it expectations, is ongoing not an As to help intention the slowdown, provide for quarter a guidance note providing result basis. but on to outlook of our the an we current first are that

business be March conditions, the expects EBITDA million million XX, $XX the business for the of other million revenue the to $XX $XX range in to range company XXXX, ending in Based and be trends $XXX of current to factors, on to adjusted million. and quarter

the be million, be to other to million $XXX current expects million, EBITDA in trends $XX $XX of to the and million adjusted million, to the flow full adjusted to be of to XXXX, million from business $XXX to income interest $XX the in conditions, and range range be year the also million the million be to $XX in $XXX expenditures expense on to revenue of $XXX in to company Based in of range factors, cash range of for in of range million. to million, million, net business operations capital the range to $XXX the $XXX $XXX $XX be million

modest quarter to revenue to about Further, decline EBITDA the thinking have we adjusted of improvement half the second year, first in year-over-year expect leverage an the the operating the second quarter, year. achieving over but see prior in cadence still of

to continue shareholder position grow the to are invest our scale always goal in invest Shoals is and maintain of profitably, opportunities we advantage to it value. that business. To leadership business the to to create our continuing we end, will take While long-term to to

generate flow XXXX Finally, expect with the significant and to cash balance in we further Shoals has drive new beyond, shareholder optionality to value. sheet

XX% continue capital with emphasize at of the deployment both and $XXX XXXX operations million to balance Specifically, our the organically million, cash up will flow to and deleveraging further sheet growing of business the inorganically. from midpoint, $XXX

to that, Brandon remarks. over closing for With turn back it I'll

to our customers their Shoals, like our I'd and of effectively us all for support. serve by in to Dominic. their employees close Thanks, our for shareholders confidence for continuous thanking enabling customers our

appreciate that, And everyone. thank today. time your with I you,

for We questions. now open will the line

Mark from & Company. [Operator Instructions] comes question Our first Strouse Chase of the line with JPMorgan

mind? you to loaded guide. wanted or of with cancel they seeing, that -- cancellations, talk start about And delays the are you back-end Or I'm of year the the I any the there sorry, visibility in fixed you start into then that have of in XXXX have do you're all? kind the just Can kind dates delays? indefinite are first

I up operating a Mark, a fantastic first your questions. significant in want -- want first Thank question. I and start look, order the it's XX% to in I'll cash. year and earnings up reverse you congratulate for to year. guess, of team Brandon. XX%, maybe foremost, be the Revenue -- for improvement another

build from So into a year fantastic to XXXX.

in here recent project go, As we've We're some The it growth see rates IRA we've chain, industry-wide same are far it's supply transitory. project seeing of multiyear industry publications. across to this, interconnections, in quarters, confusion. an believe We seen issues reductions Because market. heard financing, issue. we delays as as look, the it's

data EIA going early QX the in We're into in XXXX to back of project seeing specifically. looked also from delays end. XX% We've XX%

really, a purchase from you're quote order. to what for So time longer is is us happening seeing

As quarter book see and in talked our is of project we prepared fourth about January. earnings, late pushouts we with slowdowns order in did signs still robust, the but in

Maybe important recovery, seen some soon too in improvement a but to February. say, to have quote-to-order we February. call we in conversion improvement our this seen definitive have in It's

cancellations. move an to the order longer is necessarily to not order. actual question, us to just quote taking purchase So from a It stage

answer the to you to of it kick I'll maybe the part first Dominic, question.

Yes. With is year, our of of to I'm being within build on achieved we at really the at as the that beginning the exceeded. the XXXX, pride we regards the bottoms-up able or look guide, really that that metric to things kind take we one a business. guide on pleased of guide we that range issued In every

we at pushouts look So perhaps shifted the of workload, have we as that some to quarters. referred our project-by-project

movement Now in but we X would and we X. of out normally have projects of out see Qs did heavier quarters, and some move

With and can year, additional an like regards revenue of some to business go-get. book chase where We we at year. year to awarded enter we book opportunity feel the our orders with and we end backlog within have go and the always of a every build

have we an So standpoint. still sales a from opportunity

our some the doing mentioned, Brandon February was quarter wanted seen out, call where that we in well. improvements activity really we've to As recently in here

not those I issue that and we would pipeline consideration take at business to available answer think that of all We at that us the our are been yet awarded. projects, book in shorter be, we our look jobs do we look at look And guide. our as have into we so our

-- was And that helpful. then Okay.

but kind does thoughts mean I your your in speaks it is order market kind share here, kind latest the aggressive temporary of I competitors? or -- itself, market just of for pullback maybe like this from think creating I get on the of any that to anything pricing wanted activity dynamics.

issue I market-driven, appreciate share-driven. not No, is the question. market The

a the year. value that remains another here first great Our extremely the think shown top by strong, of after of proposition and we've I adding EPC example

sustainable by cost all, of marketplace. projects on operating ability being be Our because holds costs reduce quality and trenching, I still more more the spend, higher very in delivering capital of to install after durability think to need solutions we efficient the reduce and reducing strong our

Our current value proposition remains customer that to understands us. base and committed

Goldman Brian comes question the line of next Our with Lee Sachs. from

in typical prior quarter quick what's guidance or this quarters, you're the conversion Maybe how to then quarter, ] out time vetting follow-up stuff to up you 'XX? kind you on you a for set to of heavier seeing sort just you're what the -- year right. seeing? moving cycle X Brandon, can Can what there backlog It of and and quantify the based right, Dominic [ like sounded But Mark's. first out second

get-go then, mentioned or also And Dominic, you business. book-and-burn business the

year. it's been I like minus or each XX% think past, plus in the

that what the So different that or or like into in guidance $XX this embedding today, given baseline you've you're numbers? imply would million terms the seeing year is of

Sure, Brian.

things think there's lines yes, of I seen So a the to time have project standpoint from unpack an in increase. couple there. it's we taking, And and the

-- the are were Brandon delays. think mentioned there I XXXX out in XX% of XX% the end projects has data that at up number That is the had experiencing of delays year. to EIA of QX that project them that

our that. go seen to some revenue takes The has increased to number the So past, has definitely we've That a that. -- has of from we purchase extension actual that revenue to quote become have it within result said orders awarded would on us XX of and X line the months. the In extended. orders days time as

QX. QX delivery got were those we at now orders expected when of some in be projects delivery of QX, and half dates So the QX in look first year, when and may QX awarded and we or QX these have the the and initially and to

of still of the some backlog. book in They're delays there are haven't but seeing the canceled. reasons And of the that's some why are in pushouts projects. one there. business, we They So in

always question a I want to think your go-gets, To don't the about percentage. of it about terms in

projects of can amount every year. that fair a there's think we I win

XX% But then keep as XX% yes, harder denominator go-get larger, up. our to it's go As actually, or year. number getting that gets will get larger, every projects then

I $XXX that we XXXX. as So we year, of the ended beyond had $XXX million of million is mentioned, backlog,

we have to do this finish work cycle, have the be because to believe we the reasons some half is second lift out our one the And increased that's it of and So some sales and does the year. why opportunity build go-get the the EPCs, go to to materials designed with get it. job, purchase it normal get time take the get secure and the orders going

have do that's of So it little does a we in to why take that time. the opportunity We did. bit issued still that the and we first half, guide the

also worth at business the longer as maybe the times backlog tend XX%, on orders well. just those with probably Brian, to and mentioning be growing international cycle projects

this So it of I right the quarters. approximately project moving well you've think to pushout X summed up

Okay. half range the on the XXX just like levels. strip XX% EBITDA. for well super XXXX XX%, even guidance, that north QX, at helpful, off. implies XXXX margins it That's basis looking second seems we guys. like the of in higher That's the Is First be Maybe guidance points the of fair? If maybe doing out also EBITDA year. you'll than

drivers quite than guess, the to it moving the half some expansion? margins it OpEx of driver Is leverage? I gross there? And most of higher and like saw meaningfully 'XX. seems of for because it Is Maybe are you sort speak then, margin parts what the what's just implied back the

Yes.

are the even revenue in to first definitely down the the SG&A are of going to leverage. year-over-year from perhaps the So all expense the at operating the always -- we be that of with growth negative investment line. experiencing and first We year, first losing be foremost, made point year, be half the leverage In half is, some lower the our critical. to and of is we and where going going look

in it's some that were completed first so I not into SG&A little unusual, both. simplified the We're repeat filings were going some last bit leverage. gaining offerings the had to We've gone we of through would those that the half a secondary and place of And really things. necessary the projects. year. put structure. legal the things say, our We're There We've We year.

We're to it's securing to -- drive possible and value. our look sure external all spend make efficient at review SG&A we'll as of as

believe So and back projecting going the implied that margins achievable, that's we're are what we we're that half do the for after. that are EBITDA

right. All Great. I it squeeze in. one if could Last for me,

Just charge shrinkback the -- QX sorry, in took a or issue, you QX.

in and guess QX overall then liability QX. bigger the took here no in and range charge -- keeping I you're charge You the unchanged.

how forward? we should spend sort Does remediate the to you've got of ring-fenced there. based So that? control, to you that feel of outside interpret under in mean this cash see have you some that shouldn't flow kind we of accruals Is saw helpful on interpretation you the on would the Any P&L of here it going more this of at be point quarter? results just the kind like

say our here. of Yes. limited to litigation, can we would because what always say Brian, I we're

are than have in think quarters. more information here previous I disclose some trying to We we

were note, XX sites red approximately had some customers, of additional those I we displayed out the Prysmian had an required the we What XX that it evidence inspection, shrinkback of to wire. wire sort X sites XXX Since no of customers, notified originally is we've sites shrinkback. displaying and important when disclosed notified additional sites think that we of on

So continue we work to on effort remediation of sites. our known

with lines year we've bit. this our and, time We some pull the a forward internal And opportunity efforts their got are to obviously, working lines. production customers, time remediation

remediation think $XX.X that we've efforts. on to remarks, this I disclosed plan as spend million year the we prepared in

where So today. stand things that's

far point, about reside, to it with have you And the where remediation we that the and the sheet, statement. on expend had charge there play liability on question we just that's as the assumptions would that consistent that's those were cash. balance in final why income the assumptions, was down come necessary would does no point, your it we the the range. have And And thus results the out

we that's at of end So where 'XX. stand the

comes next the from Our Philip Shen question line Capital LLC. of Partners, with ROTH

First of quarterly is cadence the one on revenue.

the guide. QX us given You've

relieved the expect be I over a And these said, year? back the -- there you really so, the risk half confidence the this And what's might of What's in is things right back revenue question the you bottom? QX you in now, level that these think that You if being Do through half. that in see what modest think, you be challenges or to accelerate even half the extend of to guess improvement beyond? into QX or back back thinking? relieving do the things And headwinds half? the that And QX. you improve basis could I do that is, anticipate

Yes.

of unpack Phil. and start some that, me let So

in terms our as first half the in revenues of of the is have I XX% year, the been typically, half. back seen occur of the cadence, growing we've XX% think we about business,

So it's get placed a first natural. and growing we've as orders been A in typically, the quarter. kind of lot of ramping,

mentioned, we here February. had slowdown signs in in into that of we January, some the in we've conversion QX seen of some improvement quota order As and

as be look for at naturally we a of lower us. normal the would So the quarter this, first pacing quarter

will perspective. So a expect from in jobs the reason revenue the a in close. back pushouts as to mentioned, some that seen to the to forecast I bottom we to characterization believe that's think half, year, not We've jobs half. quarterly cancel. were our Clearly, moved We terms do of expected the for those have be fair any continue first of to we've

or immediate much things, the of interest folks chase purchase new factors there. that's the interconnection in the The some financing thinking how I think on perhaps power space. in agreements. I some financing wishful slowdown that People think, to down that. pretty So corrections don't that know on industry number are or the some have necessary There driving was just a there's go and Brandon terms rates cost, mentioned. prognostication about right, of of recovers,

With factors, but there's number work reasons, of a like out, the lines. quarter are to a of going with themselves, And delays that I us push to number customers project them. said, a we'll ask our we for their they do absolutely always on if time

Great.

won? the you a I bit business top there wondering you Second of is way topic can little What if more, quantify you their do on any was here share new percentage of the EPC. you is the order? size think specifically, could

it it sounds because like in the won of like this then sounds quarter. And QX that timing, you

fair the finally -- wasn't or bookings year-end it think QX? similar the then And and are that And book that's last order orders? MSA then the not one. say terms in for to 'XX to backlog is in I normal it included So it's the

it's I questions, they're lot So together. a of tied all but know

that's probably sense. realm is that And Yes. There's some Phil, logically questions we pushing might of optimistic. can't into It EPC, we're -- a I think a very and make top disclose really your publicly.

very very what's they to specifically We about what We about can are in going pleased are not forward. family that a recognize position part quality to was and bring, terms, comment just pleased in, of the we're Shoals not. be their

win grow we as there's still mentioned to and both It's market, And wallet evidence very worth believe current last Shoals. We're saying, customers big new of with for call, to gain room great additional domestic team excited in with and Phil, it. customers. as a I here the this share a is

there. follow-up One Great.

say to will in fair it is the guys standpoint, timing next? be when a period that bookings from this report So QX you number

we're on go with going of comment those Phil, forward that specific timing EPC. the not projects when to

from line question of Andrew Our Stanley. comes Percoco Morgan next the with

you're for out, to totally understand revenue XXXX, you the was could just start for conversation Maybe elaborate But calling retrofit curious of potential inflection half in opportunities. kind I just on growth. continuing a that if back just with

assets products some products. those time highlighted guys you time you I that think of potentially interesting from deploy have have of to terms going to in some to existing

additional maybe the in enough to storage it on embedded terms charging And of XXXX What's and if business guide. in also seeing meaningful the EV growth? battery on of the the what's you're maybe side elaborate opportunity can there? revenue you what Is drive

things This on say is questions. comment base product our Brandon. Great that. on Snapshot, I'll been would particular, that I deployed be like that have can Yes, launched post-installation. in

launch utility-scale a business. today. still We expect early solar mainly product It in very would our growth. are that to domestic from huge factor not come driving going half to our I back that be core with is

As with a product announced to EV, lot Leidos. relates in we strong a it interest today. partnership of Last call, that

domestic We But going again, come from of now, our year of process that are deploying in the this growth solar the will business. well. back-end

utilization total megawatt in as the and follow-up of terms those just revenue can is maybe bring terms in a maybe That's manufacturing And capacity rate expansion, my super the just helpful. on some total stands up you where facilities it. will today, where Got running? your facility us remind then this or number of this facility of capacity additional you and once on

Yes.

facility, enables it, excited are As new reason to employees, our the in that gigawatts This the consolidate for about facility, to have scale investment, we investing and XX. we XX disclosed this and in from area with Portland the to last our to really Tennessee. in to quarter, ability purpose-built is we took XX a which our both production operations us local up are capacity we approximately

are facility the have that again, self-sustaining. within We This apart. have, X Tennessee purpose-built area will us that miles to probably enable in today X a plants is

recently production location, moving closure site. will California location, We of the that announced new be this have our manufacturing into also and

this as we in So facility quarters. we'll build provide more out details specific the coming

with of question next the comes Securities. from Levy Truist line Our Jordan

details. all appreciate the I

think may I customer customer may some consistent challenges on I where as for here. wanted seeing procurement. mentioned few? is be just you driving get a customers points And this procurement across to pain biggest the the base delays one some limited the or of color select to on you're have

Yes.

else I has center the everybody products. and think, industry the like probably issues that transformers chain mentioned, mostly look, in around supply switchgear

delays to also But due that hear time. we due interconnection to from queue permitting, and we look, challenges hear long labor lead many customers. to due So

think and across of hearing we're our phenomenon, I what but mixed why. industry-wide hopefully, a coming over base solve customer an it's bag again, will So the quarters,

you that, as guidance to point. I on transitory And just cash industry, of at your you'd follow-up. flow. maybe I'm the flow, utilization part have a thoughts want some a warranty Appreciate for flows in But sort of the just get potential. that. to of cash free sure on against this Even year strong cash retain a like

a of things. couple Yes, so

loan our you'll down and in term First recall, north of some retire quarter improvement see another The paid we've And think if made XX%. that see I gone. arbitrage and utilizing pay actually interest were quarter, at credit once sheet started our revolving rate down our debt. on we rate expensive the an our penalties and of foremost, you leverage had you'll the ratios little to prepayment interest term to end as that a line balance continue doing the loan, we of

industry. have this an We in invest to opportunity

respected We are a is our space. well that company and in innovative

so always and organically grow And ways and business for the both inorganically. looking invest to we'll be

little to is are be marketplace, we softer the the cash As in to when year significant flows, business a position a invest. across going that. see And continue we generate this revenues grow mentioned, that and a believe yes, we we're to and the

for point we about are do positioning to something our to repurchase, acquisition, those opportunity we if we're our in with always going the have And is that And balance rule we're be a see flexible. share not well. plan sheet or as We not time, at out. talking but an options dividends right for this Board

comes business, So to some is and down debt the forward. some strike pay going be to ready the in invest priority right be probably now, continue to if opportunity

next Osha Our from the with Guggenheim question Partners. Joseph of comes line

questions. Two

all data data a question. there's that. resiliency, of one then First, I'm other recently storage, end I like market, perceive at opportunities? have centers, been on-site lot any you that looking wondering, around stuff center whether talk And

from data is years the business power our And at Joe, previously because which of impacts guess, you. see was than thanks. to modeled. faster good I It's a maybe I in rate think what we'll first and a Look, centers thing. hear consumption foremost, coming good in growth grow consumption,

So it's a Shoals. positive in core our business thing for

we've data plug-and-play relates a unique able proposition markets it to also value markets. we in are be systems at those field, that build issues. electrification, As centers, costs would to scale enable and specific look, in pretty the labor of interest supply reduce be part centers that in got our interested aggregating to chain and data I believe

proposition And looking any large do data believe So space, Shoals at others. like among I that electrification the markets translates. our centers, is value in

at and solar under this end may not second that this Okay. project then forward hit owners try placed-in-service And the for timing timing so sort of All at think of evidence seeing on modules into everyone wondering, call may and ends and -- requirement brought the create that, tariff there's right. knows, a year, the moratorium your forth, target. that I'm you as any at requirement order placed-in-service good. which question, is are and book as module as That's some or all? look pull you country I that developers influencing

of an think growth impact have half year, that certainly. the Look, the could that seeing I in we're back on the

your think there. correct I So is intuition

is If we opportunity on hopefully, unfolds. a offer as maybe a costs. feeling my unique it to market, there's -- not that there I labor So the does, constraint reduce labor

I think for it bodes well Shoals.

Donovan Our next Northland Markets. the question of from with comes line Capital Schafer

months, think, might that cracks, guess, get So where, my first question usually the built, I home first but gets is new few I can issue, getting there's technical, of at it you nature it then when a something, in just stabilizes? some like of, the a is maybe kind like kind say something shrinkback settles you or shrinkback, but that of

deployment. that, whatever XX-month in there's to the to an like initial maybe exposed first the XX- the X shrinkback XX field, see issues and basically like and adjustment, period the so ugly you're it's deployed stuff or kind in later? you for and shrinkback the or shrinkback that the their of don't can a life where head sort it? of that Like of Is gets rear you that elements either good years nature period of years, Or

sorry, shrinkback a after you've that about I'm -- that number occurring explained think is way think the Dominic thermal We of accurate. Donovan, I cycles.

climate then that. power and a also element on, to that power it's So there's relates off

I outlined complaint. think that we've in our really

assumption correct are your you So in there.

time the the something this and the kind of of for orders customer there's win some customer companies they're -- breakers it placing backlog, proof to Intersolar a Okay. equipment. getting to engage a transformers trying the the of with on or -- what some to that, kind And whether has more maybe can that add the that lead or the your from it of items key that right or it's into cases, in evidence awareness shows some aren't peers. for needs done in they and because customer switchgear There or prospect schedule, do, a in January then was were business or long talking high-voltage kind some reluctant pieces to demonstrated of and their unless of get

So not? to applying you your they Do you of we deciding, for expect need it Can they've that project backlog? backlog, the to backlog, your customer for in order in to when discussion the done some that this -- when this it get are they in start? to adding the do time and adding orders purchase there things new add case, to is we do to you're equipment the get show a terms us

Yes.

on They're along this the fundamentally, is is there. Donovan, point they the we that a points the EPC at EPC have products. there's So customer Dominic. know when so the of we're has ones in typically project where build, purchase already in that a Yes, and But are couple the our been record. working The they order, our selected. need interesting

standpoint. If are other does not the we impact up, coming from where are purchase supply chain it order elements

that to realized we our project, hey, guys say, on months transformer few it the push with, you And delivering in with the getting us, something months, project is delivery we a for to a that time we EPCs. work to unless them if they going entire hold piece going us? the or dates to lines impact does delayed finish the few are need be struggle products We is generally not a still can just your for for

purchase work now because fields once we solar to the us standpoint other But of know impact from components where want we with order have schedule. the that's it, we And don't customers. the delivery a always typically our there,

from comes the question Rusch next Oppenheimer. of Colin with line Our

copper talk opportunity are you in about the the scale to As [ materials your point? some for offense this meaningful any up, you guys the at COGS, you there of bill ex ]? Can reduce of opportunities

Yes.

negotiate we gives appreciate suppliers. And on actually discounts have that always visibility into us pricing. out, working demand with going customers We because and Blattner We do question better Colin, that we appreciate So projects gives terms negotiate longer opportunity the visibility with to it that negotiate our we I are us when can us you've the the the to pricing. COGS. better seen announce like so MSAs

gross is products have term to business the margin for all XX% guided believe that that same long we carry margin. Not this But we XX% range.

with We products cost in are jurisdictions, are some introducing other that. and structures different there

we COGS, looking business be So and as are efficient as to want grow always possible win also to with the business. we but

to is XX% -- us still XX% So margin. gross we good believe a mean for target for I COGS

as some many And customers larger you international these Super about, of Excellent. these months obviously, right. with All you're talk next or of an MSA you to of might see testing a in bit able little are with into helpful. those to then, manufacturing that sort move agreements commit pre-informed. to what markets, and in international agreement how need you some some be folks Can might with see the operation? XX to qualification we

that's a question. Yes, great

I think are going pursue can't where for to those. the try domestic stand that master comment supply just internationally always reasons I we we on probably Dominic disclosed. or agreements either to to

past, we see in chain about put intend to, us and manufacturing some talked you of think the supply I As we've will overseas. sort operations or

right in now. and happens We when where are process the of that vetting

order in United be compete, would continue So reduced would I times, for have reason do our tipping of that is got you. we've customers States. the why to particular outside to what and the But we don't offer a we lead put to manufacturing point for know us

comes the with Mizuho. question Mandloi Maheep next line of Our from

on product mid to you system little go just and components then XX, looking for bit David is expect Or the on components looks to solutions. forward. Benjamin was with can my a down started give I a of little over Maheep. high color second that we have It It 'XX XXs? customers to us This half back understanding system shifted up a like half. we guys in that versus first question in was mix to mix? the those Should

Yes.

being that In that In of are before business backlog our just to they They way. In Yes, some we to pass go. the getting cases, the awarded mix do know and to for. the the the we They're switch. full in some solutions. are is going work company be going to making runs to choose and thing components and what cases, do. directly the David. that they to are to doing So some thanks, do home the want quality might this and just be is respond Dominic. about EPCs do us projects cases, main The system

because to So quarter-to-quarter. that baseline is that mix the will and the systems going do maximum value customers. going EPC the generation encourage forward. trying is and business, is have to how to folks There the we're goes shift a of full solution component for mix But always use a lot it to with the

Our that BLA solution business. them. for value solution for the having is And the the customers best best the in is

So We it's be we high natural. would a what love but it to going haven't forward. guided up is mix to to the keep in specifically going XXs,

the comes Vikram with question next line of Bagri Citi. from Our

] was I to nodes trying think talked impact that the about. about of [ you guys longer-term

backlog You sounds 'XX. in longer to term. slowed had million growth It activity like of The project hasn't $XXX down. industry quoting continues about added

to share, delays. market year as this indicated gain while a to revenue by you continue comments, due your You flat have year

step up year the significantly at likely year? potential higher change next end see with So a in is this it backlog of we you and end revenue

preparing is being generation like of schedule XX step revenue reason activity. this, it you of million you see an the you're the why significant, Is I the when continued on for front delivery topic, And gigawatts capacity look annual $XXX on the to change progressing expansion? sort of with appears staying catch allows for that's towards capacity of capacity, perhaps up busy which And basis. deliveries planned, quoting same at the $XXX you you're when million expansions in

Yes.

have and awarded backlog times. and to of do the we're have But color. add you've and Brandon there me year jump projects some let this more, longer So in then in that and I'll things orders, his the lead starting one noticed first, terms of disclose more is of

the have is the and domestic and international projects longer. that longer some of Some of we visibility

that growth this some the sit of bit be in going So going awarded a status year may order the longer. that jobs just see you're to are to

and Some an is may a laid your market that of the increase, to out. would itself, first it pent-up hypothesis from we be that there see you demand

facility, in a a we our up keep We little mind. in have and with set regards mind like business our employees short our But of are million our to all we -- we look, and be of million keep And from it's communities grew to hodgepodge. years, a a in few stakeholders. to that $XXX bit $XX

We that to facilities. improve to does purpose-built us ]. have [ really building to safety, all have a of an going state-of-the-art it mean that help the keep facility have not And our opportunity we're

need We We have X that won't in fourth. area. we've as a Portland the signed now

I our in facilities we're maximum efficiency and if choice They're that market. the the owned. towards react facility QX. of the particular made to do will we think but decision of outfit, being It an a some it's of will And shutter. it. board, we dime are opens So for can't know to have across owned, employer geared the all But benefits not need not will the any on looking we've ahead event. some up We necessarily time that in take demand just and get

this set to thing right. time the take to up have We

any add? you Brandon, would other color So

start backlog question, future. look, Maybe is And your we your excited remain I think correct. comment around with just to about or first growth our inclination very

to order. seeing We quote purchase are longer time from

up year-end million, as million While fourth $XXX XXX% our $XXX we in backlog saying orders. that, quarter new and awarded again, orders, added in

been; XXX% our up seeing are as and ever last volume, year. We large quote as funnel it's over again,

could have as think of out slower is natural orders. revenue an So pushed a It's delivery and projects I and get awarded backlog natural recognition and projects, you it occurrence. see we in just increase

end of the now the reached turn closing question-and-answer the session. back have management to over for remarks. I'll we call the And

coming everybody care. I over have to conversations. Take look us thank we weeks and joining today, the for would forward connecting with just further to to all you like

and at participation. this for may And disconnect this you concludes time. Thank conference, lines your your today's you