First Quarter Highlights and Recent Developments
- GAAP Revenue of $65.7 million, increased 103% compared with same quarter in 2020
- Secured first sales of our new SunPath performance enhancement software product
- Awarded two international projects in Australia
- Added over $280 million to executed contracts and awarded orders YTD through June 1*
- Closed Initial Public Offering (IPO) on April 30, adding $181 million to our balance sheet
FTC Solar, Inc. (Nasdaq: FTCI), a fast-growing global provider of solar tracker systems, software and engineering services, today announced financial results for the first quarter ended March 31, 2021. This is the company’s first public announcement of quarterly financial results, as it initiated trading as a public company on April 28, 2021, on Nasdaq.
“Our first quarter results were largely in line with our expectations,” said Tony Etnyre, FTC Solar President and Chief Executive Officer. “While the marketplace has seen significant increases in steel prices and freight, their impact to our first quarter results was manageable relative to estimates.
“We are pleased that with our IPO complete, we are well-funded to pursue the many significant growth opportunities we see ahead, and to continue our growth trajectory,” Etnyre continued. “The solar industry continues to see significant growth as part of a multi-decade, fundamental change in energy markets. At the same time, the industry is transitioning to trackers because of the increased energy production benefit. FTC Solar is well positioned to benefit from these developments as we offer the global solar market a unique and differentiated offering.
“In addition to doubling our revenue year-over-year in the first quarter, we are seeing meaningful growth in our executed contracts and awarded orders, as well as our overall project pipeline. Our executed contracts and awarded orders have grown by 260% on a year-to-date basis through June 1, with another $55 million added since the last update at the time of the company’s IPO. Subtracting the amount included in reported first quarter revenue, that brings the new balance to $326 million, with $159 million remaining with expected delivery in 2021, and $167 million currently expected to be delivered in 2022. These metrics give us additional confidence in the long-term growth and positioning of our business.”
Summary Financial Performance: Q1 2021 and Q1 2020 (in thousands, except per share data and percentages)
|Q1 2021||Q1 2020||Q1 2021||Q1 2020|
|Operating income (loss)||$||(8,019||)||$||2,896||$||(6,664||)||$||3,390|
|Net income (loss)||$||(7,442||)||$||3,420||$||(6,676||)||$||3,430|
See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.
*Includes amounts included in first quarter reported revenue. We define executed contracts and awarded orders as orders that have been documented and signed through a contract or where we are in the process of documenting a contract but for which a contract has not yet been signed. See below for current balance of executed contracts and awarded orders.
Etnyre added, “We are both pleased and proud of FTC Solar’s growth and promising future. As we move forward, we fully intend to build a value-creating business focused on maximizing long-term shareholder returns.”
First Quarter 2021 Results
Total first quarter revenue was $65.7 million, generally in line with expectations. This represents growth of 103% versus the first quarter of 2020, primarily driven by increased product volumes.
GAAP Gross profit was $119 thousand, down from $7 million in the prior year period, with such year over year decline driven primarily by a strong ramp up in employee count and other overhead expenses to support the company’s growth trajectory. Other factors relevant to this decline included not having safe harbor related sales that we had in the prior year period, additional shipping and logistics costs that were not passed along to customers, as well as some product enhancement related expenses.
GAAP Operating expenses increased to $8.1 million, in line with expectations, compared to $4.1 million in the year-ago quarter, with such year over year decline driven primarily by necessary growth in personnel staffing and other public-company preparations.
GAAP Net Loss was $7.4 million, or ($0.11) per share compared to net income of $3.4 million, or $0.04 per share in the year-ago quarter. Non-GAAP net loss, which excludes a loss from an unconsolidated subsidiary, as well as the impact of stock-based compensation, IPO related expenses and consulting fees and other non-cash items, was $6.7 million, or $0.10 per share, compared to Non-GAAP net income of $3.4 million, or $0.04 per share in the year-ago quarter.
Initial Public Offering
Subsequent to the end of the first quarter, FTC Solar completed its initial public offering. Proceeds to the company, net of fees and expenses, and after the repurchase described in our S-1, were approximately $181 million, adding to the company’s net cash, debt-free position.
Second Quarter and Financial Outlook
We continue to believe that the second quarter will represent the revenue and profit low point for the year from which we’ll grow. Steel and solar modules input costs as well as shipping expenses have increased dramatically. Since the company’s IPO, steel pricing has increased 19%, standard freight indexes are up 18%, not including the premium freight surcharges that are prevalent in the market today, and solar modules, a large input cost to our customers, are also up 18%. These factors are causing solar developers to take a closer look at uncontracted projects to re-evaluate their construction timelines and project economics.
Our revenue outlook for the second quarter of 2021 reflects the delays we saw earlier this year by developers on uncontracted solar projects, as well as one large customer opting for delivery in the third quarter rather than the second. This decision to delay was to mitigate premium logistics fees and surcharges prevalent in the current market environment. We have seen the incurrence of these fees and surcharges on other deliveries in the quarter and are working with our customers to address these additional costs. Depending on the outcome of these discussions, this could have a negative impact on our second quarter profitability.
We have taken the following actions to address the current market conditions:
- We are increasing pricing to customers on new contracts to reflect the higher input costs.
- We fix our steel input prices for the entire projects prior to, concurrently with, or as soon as possible after signing a purchase order, and we don’t currently have any project contracts for which the steel is not also contracted. We have recently expanded our supply chain and have contracted for the majority of our anticipated second-half steel needs.
- We have implemented innovative ways to reduce project logistics costs through the use of alternative shipping methods. This is expected to have a positive impact on gross margin beginning in the second half of this year.
- We continue to make progress implementing our cost reduction roadmap that is expected to yield measurable results in the second half of this year.
- We see opportunity for revenue acceleration of our SunPath software product as increased site production is even more important to project economics in today’s environment. The software can significantly increase overall project profitability and mitigate upfront cost increases, helping us and our customers improve margin.
Based on our current backlog and forecasts, and accounting for direct cost uncertainty, for the second quarter we currently expect:
- Revenue between $41.0 and $46.0 million, reflecting project delays as customers evaluate the current market pricing dynamics;
- Non-GAAP Operating expenses between $9.5-10.5 million, up in the second quarter as a result of consulting fees supporting our cost roadmap initiatives and additional R&D spend on wind tunnel testing to expand our product offering; and
- Non-GAAP Net Loss between $17.3 and $10.4 million.
Second Half of 2021
As we look to the remainder of the year, we feel good about many factors under our control, including our cost-reduction roadmap. While the current environment with solar developers reviewing uncontracted projects warrants some caution in terms of revenue timing between quarters and between 2021 and 2022, based on what we see today, we believe:
- Third quarter revenue will grow meaningfully over the second quarter, and we will make progress toward profitability on a non-GAAP net income basis; and
- Fourth quarter revenue will continue to grow in a healthy manner, with an expectation that we will achieve profitability on a non-GAAP net income basis.
As you would expect, given our current size, the fast pace of our growth and the large size of several projects in our pipeline, potential revenue moving between periods can have a considerable impact on a given period. However, we continue to expect to grow faster than the market, remain excited about our positioning and remain encouraged by our continued progress expanding our pipeline and executed contracts and awarded orders.
First Quarter 2021 Earnings Conference Call
FTC Solar’s senior management will host a conference call for members of the investment community that will be held at 8:30 a.m. E.T. today, during which the company will discuss its first quarter results, its outlook and other business items. This call will be webcast and can be accessed within the Investor Relations section of the FTC Solar corporate website at investor.ftcsolar.com. A replay of the conference call will also be available on the website for 30 days following the webcast.