- Revenue: $99.2 million, declined 16.7% year-over-year, increased 9.3% sequentially.
- Gross Margin: 40.3%, declined by 210 basis points year-over-year, expanded 10 basis points sequentially.
- Adjusted EBITDA: $27.7 million, down from $48.2 million in the prior year period.
- Net Income: $11.8 million, compared to $18.9 million in the prior year period.
- Adjusted Net Income: $17.8 million, compared to $31.2 million in the prior year period.
- Cash Flow from Operations: $37.8 million.
- Capital Expenditures: $2.0 million.
- Backlog and Awarded Orders: $642.3 million, increased 18% year-over-year.
- General and Administrative Expenses: $19.2 million, up from $16.7 million in the prior year period.
- Share Repurchase Program: $150 million authorized, $25 million accelerated share repurchase completed.
- Net Debt to Adjusted EBITDA: 1.1 times, down from 1.5 times a year ago.
- Third-Quarter Revenue Guidance: $95 million to $105 million.
- Third-Quarter Adjusted EBITDA Guidance: $25 million to $30 million.
- Fourth-Quarter Revenue Guidance: $85 million to $105 million.
- Fourth-Quarter Adjusted EBITDA Guidance: $22 million to $31 million.
- Full-Year 2024 Revenue Guidance: $370 million to $400 million.
- Full-Year 2024 Adjusted EBITDA Guidance: $96 million to $110 million.
- Full-Year 2024 Adjusted Net Income Guidance: $62 million to $76 million.
- Full-Year 2024 Cash Flow from Operations Guidance: $62 million to $82 million.
- Full-Year 2024 Capital Expenditures Guidance: $15 million to $20 million.
- Full-Year 2024 Interest Expense Guidance: $15 million to $20 million.
Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second-quarter results exceeded expectations both on revenue and adjusted EBITDA.
- Gross margins expanded 10 basis points sequentially.
- Record backlog and awarded orders of $642.3 million, with $126 million added in Q2.
- Positive long-term outlook driven by AI growth, US manufacturing renaissance, and transportation electrification.
- Strong customer relationships, including an expanded master supply agreement with Blattner.
Negative Points
- Q2 revenue declined 16.7% year-over-year due to broader market disruptions.
- Gross margins declined by 210 basis points year-over-year due to lower sales volumes and higher labor costs.
- Adjusted EBITDA was down $20.5 million from the prior year period.
- Significant project delays, with 56% of planned installations experiencing delays of six months or more.
- Reduced full-year 2024 outlook due to continued project delays and minimal book-and-bill business expected for the remainder of the year.
Q & A Highlights
Q: What has been the biggest incremental change over the past three months that led to the revised outlook?
A: The main issue is continued project pushouts, with $40 million of projects moving to 2025 this quarter. The competitive landscape remains strong, evidenced by record backlog and awarded orders of $642 million and a strong book-to-bill ratio of 1.3. (Brandon Moss, CEO)
Q: Do you have indications from your customers that the pushed-out projects will progress in 2025?
A: Yes, we have visibility into these projects and their construction schedules, but the challenges like site permitting and interconnection delays persist. We will continue to monitor these projects on a case-by-case basis. (Brandon Moss, CEO)
Q: Can you discuss the ASP trends for new orders and whether gross margins will remain in the low to mid-40s range?
A: There are no changes to our guided margin of 40% to 45%. We feel good about maintaining these margins moving forward. (Brandon Moss, CEO)
Q: Did the 2Q bookings include anything from the new Blattner agreement?
A: No, the new 12 gigawatts from the Blattner agreement are not included in our backlog and awarded orders as these projects are still in the future. The original agreement is about halfway through. (Brandon Moss, CEO)
Q: How are you thinking about activity levels for 2025 based on current commercial activity?
A: We are pleased with our commercial execution, quoting remains at an all-time high, and backlog and awarded orders have reached record levels. However, given the volatility, it is too early to provide specific guidance for 2025. (Brandon Moss, CEO)
Q: What dynamics are you seeing in international markets compared to the US in terms of project slowdowns?
A: International projects tend to have longer sales cycles due to construction complexities. We are excited about the international market opportunity, with 63 gigawatts of opportunities and positive feedback from customers on our new product launches. (Brandon Moss, CEO)
Q: Can you help bridge the gap between the $40 million pushed out of 2024 to 2025 and the total revenue cut of $70 million to $90 million?
A: The $40 million pushed out are good projects that are delayed, not canceled. The remaining gap is due to the challenging and volatile market impacting our typical book-and-turn business. (Brandon Moss, CEO)
Q: What initiatives are underway internally to improve forecast accuracy and avoid future guidance revisions?
A: We are closely monitoring projects and collecting data from EPCs on a weekly basis. Despite the market volatility, we feel good about our revised guidance for the back half of the year. (Brandon Moss, CEO)
Q: How do you explain the gap between quotes being up year over year but orders being down year over year?
A: The elongation of project cycles is the main reason. While quote volumes are up, the conversion from awarded orders to revenue is taking longer due to the current market environment. (Brandon Moss, CEO)
Q: Can you clarify the nature of the international backlog and whether it tends towards combiner boxes or BLA type?
A: The international backlog is more of a solution sale, including BLA, and involves custom-engineered sites rather than component sales. (Brandon Moss, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
