AUSTIN, Texas, May 06, 2024 (GLOBE NEWSWIRE) -- FTC Solar, Inc. (Nasdaq: FTCI), a leading provider of solar tracker systems, software, and engineering services, today announced it will report its first quarter financial results before market open on Friday, May 10, 2024. A conference call for members of the investment community will be held at 8:30 a.m. E.T. that same day, during which the Company will discuss its first quarter 2024 results, its outlook and other business items. This call will be webcast an ...

AUSTIN, Texas, May 06, 2024 (GLOBE NEWSWIRE) -- FTC Solar, Inc. (NASDAQ:FTCI), a leading provider of solar tracker systems, software, and engineering services, today announced it will report its first quarter financial results before market open on Friday, May 10, 2024. A conference call for members of the investment community will be held at 8:30 a.m. E.T. that same day, during which the Company will discuss its first quarter 2024 results, its outlook and other business items. This call will be webcast and ...

Financial Performance - The company reported a net loss of $50.3 million for the year ended December 31, 2023, with an accumulated deficit of $299.1 million[79]. - During the three-year period ended December 31, 2023, the company used $240.0 million of cash to fund its operating activities, leaving $25.2 million in cash and cash equivalents at year-end[79]. - A $7.1 million credit loss provision was recognized in 2023 due to expectations of a specific customer being unable to fully satisfy payment obligations[93]. - The company recognized a loss of approximately $0.7 million for its equity share of the net operating loss of Alpha Steel during 2023[102]. - The company had $25.2 million in cash and cash equivalents as of December 31, 2023, with no outstanding debt[361]. Market Competition - The company faces significant competition in the solar tracker market, with competitors like Array Technologies, Inc. and Nextracker Inc. posing challenges due to their larger resources and market presence[82]. - The market for solar energy products is highly competitive, with low barriers to entry, leading to potential pricing pressures and revenue declines[82]. - The solar industry is rapidly evolving, and the company may not achieve profitability if demand for solar energy does not continue to grow[76]. Regulatory Risks - The company has encountered risks related to government regulations, including changes in incentives and tariffs that could adversely affect demand for its products[74]. - Changes in government incentives and regulations could adversely affect demand for solar energy systems, impacting the company's financial performance[108]. - The U.S. trade environment, including tariffs on solar products from China, may adversely affect revenue and operational results[123]. - The expiration of the moratorium on solar module imports from certain Southeast Asian countries on June 6, 2024, introduces uncertainty regarding supply and pricing[131]. Customer Concentration - Four customers accounted for approximately 23%, 19%, 17%, and 13% of total revenue for the year ended December 31, 2023, indicating a high customer concentration risk[92]. - Four customers accounted for approximately 42%, 20%, 13%, and 11% of total accounts receivable as of December 31, 2023[362]. Supply Chain and Manufacturing - The company relies on a limited number of contract manufacturers, with 42% of spending in the U.S., 23% in Hong Kong, 19% in China, and 12% in India, making it vulnerable to supply chain disruptions[134]. - The company is currently disputing tariff assessments from CBP related to imports from Thailand, which could materially affect financial results[129][130]. - The company has entered partnerships with manufacturers in the U.S., Hong Kong, India, Mexico, Canada, Spain, Brazil, Turkey, Saudi Arabia, Thailand, Vietnam, and Korea to optimize costs and reduce reliance on China[131]. Intellectual Property - The company has 61 patents granted and 4 pending as of December 31, 2023, with U.S. patents expected to expire between 2024 and 2043[147]. - The company’s ability to protect its intellectual property is crucial for maintaining a competitive advantage in the market[149]. - The company reached a settlement in December 2022, agreeing to pay $1.5 million and issue 797,396 shares valued at $2.0 million to resolve a patent infringement claim[151]. Operational Challenges - The company has experienced delays in project timelines, negatively impacting revenue and cash flows in 2022 and 2023, with potential continued effects into 2024[93]. - The commercial contracting and bidding process for solar project development is lengthy and uncertain, affecting the conversion of project leads into binding purchase orders[94]. - The company has experienced delays and price increases in international transportation and logistics markets, impacting product delivery timelines[146]. Workforce and Management - The company has made workforce reductions in December 2022 and August 2023, impacting key personnel and potentially hindering future growth[107]. - The company’s ability to attract and retain key personnel is critical for growth, with intense competition for skilled individuals in the industry[107]. Compliance and Legal Risks - The company is subject to various risks related to compliance with federal, state, local, and foreign laws regarding privacy and data protection, which could lead to regulatory sanctions[161]. - The company may face significant costs related to cybersecurity incidents, including potential litigation and regulatory penalties[158]. - The company may incur additional costs due to evolving regulatory requirements related to data protection and privacy[160]. Stock Performance - The company's common stock was notified by Nasdaq on December 22, 2023, for not maintaining a minimum closing bid price of $1.00 per share for 30 consecutive business days[166]. - The trading price of the company's common stock fluctuated between a high of $3.870 and a low of $0.282 per share from January 3, 2023, to December 28, 2023, closing at $0.693 per share[169]. - The company is classified as an "emerging growth company," allowing it to take advantage of reduced disclosure requirements, which may make its common stock less attractive to investors[182].

AUSTIN, Texas, March 15, 2024 (GLOBE NEWSWIRE) -- FTC Solar, Inc. (NASDAQ:FTCI), a leading provider of solar tracker systems, software and engineering services, today announced that it is scheduled to present at the 36th Annual Roth Conference on March 18, 2024 at 9:00 a.m. Pacific Time. A live webcast and replay of this event will be accessible from the Events section of FTC Solar's website at www.ftcsolar.com. The company will also participate in meetings with investors that day. About FTC Solar Inc.Found ...

FTC Solar (FTCI) came out with a quarterly loss of $0.08 per share versus the Zacks Consensus Estimate of a loss of $0.07. This compares to loss of $0.11 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -14.29%. A quarter ago, it was expected that this solar tracking systems maker would post a loss of $0.06 per share when it actually produced a loss of $0.08, delivering a surprise of -33.33%.Over the last four quarters, the com ...

Fourth quarter revenue of $23.2 millionContinue to improve cost structure to lower break-even revenue levelAdded approximately $213 million to backlog1 since Nov. 8; acceleration in contracted projectsAnthony Carroll appointed Chairman of Customer Advisory Board AUSTIN, Texas, March 13, 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 fourth quarter ended December 31, 2023. Fourth ...

[Executive Summary & Recent Developments](index=1&type=section&id=Executive%20Summary%20%26%20Recent%20Developments) FTC Solar's Q4 2023 results align with targets, marked by substantial backlog growth, key strategic initiatives, and a CEO search [Fourth Quarter Highlights and Recent Developments](index=1&type=section&id=Fourth%20Quarter%20Highlights%20and%20Recent%20Developments) FTC Solar announced Q4 2023 results in line with targets, highlighted by significant additions to its backlog and ongoing progress in key strategic initiatives, including the search for a new CEO - Approximately **$213 million** has been added to backlog since November 8, bringing the total backlog to approximately **$1.7 billion**[3](index=3&type=chunk)[5](index=5&type=chunk) - The Board has initiated a search for a new CEO, focusing on highly qualified candidates from within and adjacent industries, with a shortlist already identified[3](index=3&type=chunk) - Anthony Carroll has been appointed Chairman of the Customer Advisory Board[5](index=5&type=chunk) [Summary Financial Performance: Q4 2023 vs Q4 2022](index=1&type=section&id=Summary%20Financial%20Performance%3A%20Q4%202023%20vs%20Q4%202022) FTC Solar's Q4 2023 revenue decreased by 11.5% year-over-year to $23.2 million, while gross margin significantly improved from a prior-year loss to positive figures Q4 2023 vs Q4 2022 Summary Financial Performance | Metric | Q4 2023 (GAAP) | Q4 2022 (GAAP) | Q4 2023 (Non-GAAP) | Q4 2022 (Non-GAAP) | | :---------------------- | :------------- | :------------- | :----------------- | :----------------- | | Revenue (in thousands) | $23,201 | $26,220 | $23,201 | $26,220 | | Gross margin percentage | 3.0% | (7.3%) | 4.8% | (3.4%) | | Total operating expenses (in thousands)| $12,428 | $17,947 | $10,848 | $9,971 | | Loss from operations (in thousands)| $(11,736) | $(19,861) | $(10,050) | $(10,976) | | Net loss (in thousands)| $(11,177) | $(20,501) | $(9,657) | $(11,499) | | Diluted loss per share | $(0.09) | $(0.20) | $(0.08) | $(0.11) | [Key Initiatives and Strategic Focus](index=1&type=section&id=Key%20Initiatives%20and%20Strategic%20Focus) The company is actively pursuing several strategic initiatives to drive future growth and profitability, including accelerating project execution, enhancing product margins, and improving operational efficiency and customer satisfaction - Accelerating contracted projects through improved customer engagement and an enhanced product portfolio[6](index=6&type=chunk) - Improving gross margin potential by reducing product cost[6](index=6&type=chunk) - Further lowering the breakeven revenue level through continued operating efficiencies[6](index=6&type=chunk) - Improving business processes across the business with particular emphasis on customer engagement, customer satisfaction, and purchase orders[6](index=6&type=chunk) [Financial Results - Fourth Quarter 2023 Detailed Analysis](index=2&type=section&id=Financial%20Results%20-%20Fourth%20Quarter%202023%20Detailed%20Analysis) This section provides a detailed analysis of FTC Solar's Q4 2023 financial performance, covering revenue, gross profit, operating expenses, and net loss [Revenue Performance](index=4&type=section&id=Revenue%20Performance) For Q4 2023, total revenue was $23.2 million, with product revenue showing a slight increase year-over-year, while service revenue experienced a significant decline Q4 2023 Revenue Breakdown | Revenue Type | Q4 2023 (in thousands) | Q4 2022 (in thousands) | YoY Change | | :----------- | :--------------------- | :--------------------- | :--------- | | Product | $20,945 | $20,083 | +4.3% | | Service | $2,256 | $6,137 | -63.2% | | Total Revenue| $23,201 | $26,220 | -11.5% | [Gross Profit and Margin](index=2&type=section&id=Gross%20Profit%20and%20Margin) GAAP gross profit for Q4 2023 was $0.7 million (3.0% of revenue), a substantial improvement from a gross loss in the prior-year period. Non-GAAP gross profit also turned positive at $1.1 million (4.8% of revenue), driven by better product direct margins and reduced indirect costs - GAAP gross profit was **$0.7 million (3.0% of revenue)** in Q4 2023, compared to a gross loss of **$1.9 million** in Q4 2022[7](index=7&type=chunk)[18](index=18&type=chunk) - Non-GAAP gross profit was **$1.1 million (4.8% of revenue)** in Q4 2023, a significant improvement from a non-GAAP gross loss of **$0.9 million** in the prior-year period[7](index=7&type=chunk) - The improvement was primarily driven by significantly improved product direct margins and lower warranty, retrofit, and other indirect costs[7](index=7&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) GAAP operating expenses decreased to $12.4 million in Q4 2023 from $17.9 million in Q4 2022, mainly due to a significant reduction in general and administrative expenses. Non-GAAP operating expenses were $10.8 million Q4 2023 Operating Expenses (GAAP) | Expense Type | Q4 2023 (in thousands) | Q4 2022 (in thousands) | YoY Change | | :----------- | :--------------------- | :--------------------- | :--------- | | R&D | $1,450 | $2,411 | -39.8% | | Selling & Marketing | $4,924 | $1,766 | +178.8% | | G&A | $6,054 | $13,770 | -56.0% | | Total Operating Expenses | $12,428 | $17,947 | -30.7% | - Non-GAAP operating expenses were **$10.8 million** in Q4 2023, compared to **$10.0 million** in the year-ago quarter[8](index=8&type=chunk) [Net Loss and Adjusted EBITDA](index=2&type=section&id=Net%20Loss%20and%20Adjusted%20EBITDA) GAAP net loss improved significantly to $11.2 million ($0.09 per share) in Q4 2023 from $20.5 million ($0.20 per share) in Q4 2022. Adjusted EBITDA loss also narrowed to $10.1 million from $11.0 million in the prior-year quarter - GAAP net loss was **$(11.2) million** or **$(0.09) per share** in Q4 2023, an improvement from **$(20.5) million** or **$(0.20) per share** in Q4 2022[9](index=9&type=chunk)[18](index=18&type=chunk) - Adjusted EBITDA loss was **$(10.1) million** in Q4 2023, compared to **$(11.0) million** in the year-ago quarter[9](index=9&type=chunk) - Adjusted diluted loss per share was **$(0.08)** in Q4 2023, compared to **$(0.11)** in Q4 2022[4](index=4&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) This section outlines FTC Solar's financial projections for Q1 and full year 2024, including revenue expectations and targets for Adjusted EBITDA breakeven and profitability [Q1 2024 and Full Year Guidance](index=2&type=section&id=Q1%202024%20and%20Full%20Year%20Guidance) FTC Solar anticipates Q1 2024 revenue to be the lowest point for the year, with expectations of sequential revenue growth thereafter, heavily weighted towards the second half. The company targets Adjusted EBITDA breakeven in Q3 and profitability in Q4 2024 - First quarter 2024 revenue is expected to be between **$10.0 million and $15.0 million**, representing the trough for the year[10](index=10&type=chunk)[11](index=11&type=chunk) - Beyond Q1, the company expects continued sequential revenue growth for the remainder of the year, with revenue weighted toward the second half[10](index=10&type=chunk) - FTC Solar expects to approximate breakeven on an Adjusted EBITDA basis in the third quarter and achieve profitability in the fourth quarter of 2024[10](index=10&type=chunk) Q1 2024 Guidance vs Q4 2023 Actual | Metric (in millions) | Q4 2023 Actual | Q1 2024 Guidance | | :------------------- | :------------- | :--------------- | | Revenue | $23.2 | $10.0 – $15.0 | | Non-GAAP Gross Profit| $1.1 | $(3.8) – $(1.8) | | Non-GAAP Gross Margin| 4.8% | (38%) – (12%) | | Non-GAAP operating expenses | $10.8 | $8.0 – $8.9 | | Non-GAAP adjusted EBITDA | $(10.1) | $(12.6) – $(9.8) | [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of FTC Solar Inc., details investor relations, and includes important disclaimers regarding forward-looking statements [About FTC Solar Inc.](index=2&type=section&id=About%20FTC%20Solar%20Inc.) FTC Solar, founded in 2017 by renewable energy veterans, is a leading provider of solar tracker systems, technology, software, and engineering services. Their innovative tracker designs significantly boost energy production and offer a competitive installation cost-per-watt advantage - FTC Solar is a leading provider of solar tracker systems, technology, software, and engineering services[13](index=13&type=chunk) - Solar trackers increase energy production by dynamically optimizing solar panel orientation to the sun[13](index=13&type=chunk) - The company's innovative tracker designs provide compelling performance, reliability, and an industry-leading installation cost-per-watt advantage[13](index=13&type=chunk) [Investor Relations](index=2&type=section&id=Investor%20Relations) Information regarding the Q4 2023 earnings conference call and investor contact details are provided for stakeholders - A webcast of the Q4 2023 earnings conference call is available on FTC Solar's Investor Relations website, with a replay available for 30 days[12](index=12&type=chunk) - Investor contact is Bill Michalek, Vice President, Investor Relations[16](index=16&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section clarifies that the press release contains forward-looking statements based on current expectations, which are subject to risks, uncertainties, and assumptions. Actual results may differ materially, and the company disclaims any obligation to update these statements unless legally required - Statements are predictions, not guarantees of future performance, and involve risks, uncertainties, and assumptions that are difficult to predict[15](index=15&type=chunk) - Actual results may differ materially from those in forward-looking statements due to factors described in SEC filings, including the 'Risk Factors' section[15](index=15&type=chunk) - 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[15](index=15&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) This section presents FTC Solar's unaudited condensed consolidated financial statements, including statements of comprehensive loss, balance sheets, and cash flows [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This unaudited statement provides a detailed breakdown of FTC Solar's revenue, cost of revenue, gross profit/loss, operating expenses, and net loss for the three months and full year ended December 31, 2023 and 2022 Condensed Consolidated Statements of Comprehensive Loss (Selected Data) | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Total revenue | $23,201 | $26,220 | $127,002| $123,066| | Gross profit (loss) | $692 | $(1,914)| $8,307 | $(27,228)| | Total operating expenses | $12,428 | $17,947 | $59,084 | $72,344 | | Loss from operations | $(11,736)| $(19,861)| $(50,777)| $(99,572)| | Net loss | $(11,177)| $(20,501)| $(50,290)| $(99,613)| | Diluted loss per share| $(0.09) | $(0.20) | $(0.44) | $(0.98) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets as of December 31, 2023, and 2022, show a decrease in total assets to $123.1 million in 2023 from $134.4 million in 2022, reflecting changes in cash, receivables, and inventories Condensed Consolidated Balance Sheets (Selected Data) | Metric (in thousands) | Dec 31, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $25,235 | $44,385 | | Total current assets | $108,508 | $118,690 | | Total assets | $123,070 | $134,398 | | Total current liabilities | $54,665 | $60,340 | | Total liabilities | $60,599 | $67,948 | | Total stockholders' equity | $62,471 | $66,450 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This unaudited statement details the cash flows from operating, investing, and financing activities for the years ended December 31, 2023, and 2022. Net cash used in operations remained substantial, while financing activities provided a significant cash inflow in 2023 Condensed Consolidated Statements of Cash Flows (Selected Data) | Metric (in thousands) | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | | Net cash used in operations | $(52,656)| $(54,510)| | Net cash provided by (used in) investing activities | $(397) | $(4,247)| | Net cash provided by financing activities | $33,950 | $903 | | Decrease in cash and cash equivalents | $(19,150)| $(57,800)| | Cash and cash equivalents at end of period | $25,235 | $44,385 | [Non-GAAP Financial Measures Reconciliation](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides definitions and reconciliations of FTC Solar's Non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS, to their most directly comparable GAAP measures [Non-GAAP Definitions and Purpose](index=7&type=section&id=Non-GAAP%20Definitions%20and%20Purpose) This section defines FTC Solar's Non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS, explaining their role as supplemental performance indicators. These measures aim to provide investors and analysts with a clearer view of core operating performance by excluding certain non-recurring or non-cash items - Adjusted EBITDA is defined 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), less contingent gains from the disposal of investment[23](index=23&type=chunk) - These non-GAAP measures are presented to assist investors and analysts in comparing performance across reporting periods on an ongoing basis by excluding items not indicative of core operating performance[24](index=24&type=chunk) - Non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP[25](index=25&type=chunk) [Non-GAAP Gross Profit (Loss) Reconciliation](index=7&type=section&id=Non-GAAP%20Gross%20Profit%20%28Loss%29%20Reconciliation) This table reconciles GAAP gross profit (loss) to Non-GAAP gross profit (loss) for the three and twelve months ended December 31, 2023 and 2022, detailing adjustments for depreciation expense, stock-based compensation, severance, and other costs Non-GAAP Gross Profit (Loss) Reconciliation | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | U.S. GAAP gross profit (loss) | $692 | $(1,914)| $8,307 | $(27,228)| | Depreciation expense | 139 | 117 | 478 | 389 | | Stock-based compensation | 283 | 771 | 1,596 | 3,292 | | Severance | — | 145 | 252 | 145 | | Other costs | — | — | — | 102 | | Non-GAAP gross profit (loss) | $1,114 | $(881) | $10,633 | $(23,300)| | Non-GAAP gross margin percentage | 4.8% | (3.4%) | 8.4% | (18.9%) | [Non-GAAP Operating Expenses Reconciliation](index=7&type=section&id=Non-GAAP%20Operating%20Expenses%20Reconciliation) This table provides a reconciliation of GAAP operating expenses to Non-GAAP operating expenses for the three and twelve months ended December 31, 2023 and 2022, highlighting adjustments for non-cash and non-routine items such as stock-based compensation and severance Non-GAAP Operating Expenses Reconciliation | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | U.S. GAAP operating expenses | $12,428 | $17,947 | $59,084 | $72,344 | | Depreciation expense | (99) | (67) | (355) | (242) | | Amortization expense | (133) | (134) | (542) | (269) | | Stock-based compensation | 1,032 | (4,277) | (6,699) | (17,011)| | Non-routine legal fees | (33) | (2,753) | (214) | (8,495) | | Severance | (2,347) | (296) | (4,170) | (1,333) | | Other (costs) credits | — | (449) | (3,241) | (2,251) | | Non-GAAP operating expenses | $10,848 | $9,971 | $43,863 | $42,743 | [Non-GAAP Adjusted EBITDA and Adjusted Net Loss Reconciliation](index=8&type=section&id=Non-GAAP%20Adjusted%20EBITDA%20and%20Adjusted%20Net%20Loss%20Reconciliation) This section provides comprehensive reconciliations of GAAP loss from operations to Adjusted EBITDA, and GAAP net loss to Adjusted EBITDA and Adjusted Net Loss for the three and twelve months ended December 31, 2023 and 2022, detailing all specific adjustments and their impact on per-share figures Adjusted EBITDA Reconciliation to GAAP Loss from Operations | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | U.S. GAAP loss from operations | $(11,736)| $(19,861)| $(50,777)| $(99,572)| | Depreciation expense | 238 | 184 | 833 | 631 | | Amortization expense | 133 | 134 | 542 | 269 | | Stock-based compensation | (749) | 5,048 | 8,295 | 20,303 | | Non-routine legal fees | 33 | 2,753 | 214 | 8,495 | | Severance | 2,347 | 441 | 4,422 | 1,478 | | Other costs | — | 449 | 3,241 | 2,353 | | Other income (expense), net | 8 | (124) | (257) | (373) | | Loss from unconsolidated subsidiary | (324) | — | (660) | — | | Adjusted EBITDA | $(10,050)| $(10,976)| $(34,147)| $(66,416)| Adjusted Net Loss Reconciliation to GAAP Net Loss | Metric (in thousands) | Q4 2023 (Adj. Net Loss) | Q4 2022 (Adj. Net Loss) | | :-------------------- | :---------------------- | :---------------------- | | Net loss per U.S. GAAP | $(11,177) | $(20,501) | | Amortization of debt issue costs in interest expense | 177 | 177 | | Amortization of intangibles | 133 | 134 | | Stock-based compensation | (749) | 5,048 | | Gain from disposal of investment in unconsolidated subsidiary | (421) | — | | Non-routine legal fees | 33 | 2,753 | | Severance | 2,347 | 441 | | Other costs | — | 449 | | Adjusted Non-GAAP net loss | $(9,657) | $(11,499) | | Adjusted Non-GAAP net loss per share (Adjusted EPS) | $(0.08) | $(0.11) | - Severance costs in 2023 and 2022 were incurred due to restructuring changes, including executive turnover and headcount reductions[29](index=29&type=chunk)

Financial Data and Key Metrics Changes - The company reported Q3 revenue of $30.5 million, a decline of 5.6% sequentially but an increase of 84.3% year-over-year [98] - GAAP gross profit was $3.4 million (11.1% of revenue), compared to $2.2 million (6.8% of revenue) in the prior quarter, indicating a significant improvement in gross margin [82] - The net loss for the quarter was $16.9 million ($0.14 per share), compared to a net loss of $10.4 million ($0.09 per share) in the previous quarter [84] Business Line Data and Key Metrics Changes - The company has seen growth in its 1P solution, Pioneer, which is expected to enhance international prospects [78] - The backlog has grown to approximately $1.6 billion, with $60 million added since August 9 [79] - The company expects a substantial revenue recovery in Q1 2024 as delayed projects ramp up [85] Market Data and Key Metrics Changes - The U.S. remains the largest market for the company, with challenges in interconnection and financing impacting project timelines [14] - Internationally, the company is expanding its presence, with recent awards in Spain, Italy, and South Africa [57][95] - The company is experiencing project delays due to financing costs and interconnection issues, particularly in the U.S. market [129] Company Strategy and Development Direction - The company is focused on repositioning for growth, emphasizing improved cost structure and competitive positioning [50] - The leadership transition aims to accelerate progress and achieve profitable growth [49][50] - The strategy includes expanding both in the U.S. and internationally, targeting top-tier EPCs and developers [149] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth prospects in 2024, anticipating revenue growth and margin improvement [16][86] - The leadership team is confident in achieving profitability in 2024, supported by a strong backlog and improved operational efficiency [138] - Management acknowledged challenges in the current operating environment, including project delays and increased financing costs [129] Other Important Information - The company has no debt on its balance sheet and maintains a healthy cash position of $31.5 million [63][101] - A $4 million credit loss was recorded related to a specific customer account, but there is no dispute regarding the receivable [62][39] - The company plans to provide more transparency regarding its backlog in future communications [20] Q&A Session Summary Question: Why replace the CEO and CFO during a time of transition? - Management indicated that the board identified opportunities for improvement in execution and decision-making, leading to the leadership change [5] Question: Update on the manufacturing joint venture? - All equipment is installed, and qualification runs are ongoing, with revenue expected to increase in 2024 [8] Question: Concerns about the $1.6 billion backlog? - Management acknowledged the skepticism and indicated plans to provide more transparency regarding specific projects in the backlog [19][20] Question: Status of CEO and CFO permanent replacements? - The board is taking a deliberate approach to find suitable candidates for CEO and CFO roles, with no rush to make a decision [18] Question: Are there any project cancellations impacting results? - Management confirmed that there have been no project cancellations, only delays [31] Question: Expectations for revenue growth in 2024? - Management expects a strong revenue recovery in 2024, with potential year-over-year improvements throughout the year [36][86]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission File Number 001-40350 FTC SOLAR, INC. (Exact name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorp ...

PART I – FINANCIAL INFORMATION [Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements based on current expectations, which are subject to risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on current expectations and projections, but actual results may differ due to known and unknown risks, uncertainties, and important factors[8](index=8&type=chunk)[9](index=9&type=chunk) - Key risk factors include **costs and integration challenges from acquisitions**, inability to achieve anticipated benefits, failure to scale tracker systems internationally, and changes in applicable laws or regulations[9](index=9&type=chunk) - Investors should not unduly rely on these statements as predictions of future events, and the company does not plan to publicly update or revise them unless required by law[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=ITEM%201%2E%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of loss, equity, and cash flows for the relevant periods [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets | (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $33,817 | $44,385 | | Accounts receivable, net | $69,728 | $49,052 | | Inventories | $6,045 | $14,949 | | Total current assets | $119,866 | $118,690 | | Total assets | $137,435 | $134,398 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $27,049 | $15,801 | | Accrued expenses | $12,248 | $23,896 | | Deferred revenue | $2,512 | $11,316 | | Total current liabilities | $50,921 | $60,340 | | Total liabilities | $58,041 | $67,948 | | Total stockholders' equity | $79,394 | $66,450 | | Total liabilities and stockholders' equity | $137,435 | $134,398 | - Total assets increased by **$3.0 million** from December 31, 2022, to June 30, 2023, driven by a significant increase in accounts receivable, net, partially offset by a decrease in cash and cash equivalents and inventories[14](index=14&type=chunk) - Total liabilities decreased by **$9.9 million**, primarily due to reductions in accrued expenses and deferred revenue, while total stockholders' equity increased by **$12.9 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss | (in thousands, except per share data) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $32,359 | $30,721 | $73,253 | $80,274 | | Total cost of revenue | $30,158 | $37,233 | $69,017 | $96,073 | | Gross profit (loss) | $2,201 | $(6,512) | $4,236 | $(15,799) | | Loss from operations | $(10,367) | $(25,239) | $(22,764) | $(53,017) | | Net loss | $(10,414) | $(25,683) | $(22,176) | $(53,476) | | Basic and diluted net loss per share | $(0.09) | $(0.26) | $(0.20) | $(0.54) | - For the three months ended June 30, 2023, total revenue increased by **5.3% YoY**, while gross profit turned positive at **$2.2 million** compared to a loss of $6.5 million in the prior year[16](index=16&type=chunk) - For the six months ended June 30, 2023, total revenue decreased by **8.7% YoY**, but gross profit improved significantly to **$4.2 million** from a loss of $15.8 million in the prior year[16](index=16&type=chunk) - Net loss per share improved for both the three-month period (from **$(0.26) to $(0.09)**) and the six-month period (from **$(0.54) to $(0.20)**) year-over-year[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Changes in Stockholders' Equity | (in thousands, except shares) | Balance as of Dec 31, 2022 | Shares issued for vested restricted stock awards | Issuance of common stock upon exercise of stock options | Shares issued for legal settlement | Sale of shares | Stock offering costs | Stock-based compensation | Net loss | Other comprehensive loss | Balance as of Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common stock (shares) | 105,032,588 | 2,712,024 | 304,212 | 797,396 | 9,272,000 | — | — | — | — | 118,118,220 | | Common stock (amount) | $11 | $0 | $0 | $0 | $1 | $0 | $0 | $0 | $0 | $12 | | Additional paid-in capital | $315,345 | $4,860 | $51 | $2,000 | $23,639 | $(159) | $5,141 | — | — | $350,877 | | Accumulated deficit | $(248,845) | — | — | — | — | — | — | $(22,176) | — | $(271,021) | | Total stockholders' equity | $66,450 | $4,860 | $51 | $2,000 | $23,639 | $(159) | $5,141 | $(22,176) | $(413) | $79,394 | - Total stockholders' equity increased from **$66.45 million** at December 31, 2022, to **$79.39 million** at June 30, 2023, primarily driven by the sale of common stock under the ATM program and stock-based compensation[19](index=19&type=chunk) - The company issued **9,272,000 shares** of common stock through sales, contributing **$23.6 million** to additional paid-in capital during the six months ended June 30, 2023[19](index=19&type=chunk) - Accumulated deficit increased by **$22.18 million** due to net loss during the six months ended June 30, 2023[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows | (in thousands) | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operations | $(30,809) | $(36,398) | | Net cash used in investing activities | $(197) | $(275) | | Net cash provided by financing activities | $20,577 | $514 | | Net decrease in cash and cash equivalents | $(10,568) | $(36,160) | | Cash and cash equivalents at end of period | $33,817 | $66,025 | - Net cash used in operating activities decreased by **$5.59 million**, from $(36.40) million in H1 2022 to $(30.81) million in H1 2023, indicating improved operational cash management[25](index=25&type=chunk) - Net cash provided by financing activities significantly increased to **$20.58 million** in H1 2023, primarily due to the sale of common stock, compared to $0.51 million in H1 2022[25](index=25&type=chunk) - Overall, the net decrease in cash and cash equivalents was substantially lower in H1 2023 at **$(10.57) million**, compared to $(36.16) million in H1 2022[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of Business](index=9&type=section&id=1%2E%20Description%20of%20business) - FTC Solar, Inc is a global provider of solar tracker systems, proprietary software, and value-added engineering services, headquartered in Austin, Texas, with international subsidiaries[28](index=28&type=chunk) - The company's primary tracker system is Voyager (2P single-axis), and it introduced Pioneer (1P solar tracker) and a new mounting solution for U.S.-manufactured thin-film modules in September 2022[28](index=28&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2%2E%20Summary%20of%20significant%20accounting%20policies) - The company operates in one business segment: **manufacturing and servicing solar tracker systems**[32](index=32&type=chunk) - FTC Solar has incurred cumulative losses and cash outflows from operations, with an accumulated deficit of **$271.0 million** as of June 30, 2023[33](index=33&type=chunk) - The company maintains **$33.8 million cash** on hand, **$68.9 million working capital**, **$75.6 million** remaining ATM program capacity, and **$98.0 million** unused borrowing capacity under its Credit Facility[33](index=33&type=chunk)[34](index=34&type=chunk) - Regulatory issues like **UFLPA and the Solar Circumvention Investigation**, along with supply chain disruptions and inflation, have negatively impacted revenues and cash flows[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) - The **Inflation Reduction Act of 2022** is expected to bolster demand for solar products, extending ITCs through at least 2032[39](index=39&type=chunk) - Management believes existing cash, cost-saving initiatives (e.g., equity compensation, workforce reduction, supply chain diversification, Alpha Steel investment, ATM program), and improved market conditions will ensure **sufficient liquidity for at least one year**[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - The company adopted ASU No 2016-13 (Credit Losses) effective January 1, 2023, which did not have a material impact on its financial statements[82](index=82&type=chunk) [3. Equity Method Investment](index=16&type=section&id=3%2E%20Equity%20method%20investment) - FTC Solar entered into an LLC Agreement with Taihua New Energy (Thailand) Co, LTD and DAYV LLC on February 9, 2023, to create **Alpha Steel LLC**[83](index=83&type=chunk) - Alpha Steel, located in Sealy, Texas, will produce steel components for utility-scale solar projects, enhancing the domestic supply chain and **reducing exposure to import duties**[83](index=83&type=chunk)[84](index=84&type=chunk) - FTC Solar holds a **45% interest** in Alpha Steel and made an initial capital contribution of **$0.9 million**, with potential for up to $2.6 million in additional contributions[84](index=84&type=chunk)[85](index=85&type=chunk) [4. ATM Program](index=16&type=section&id=4%2E%20ATM%20program) - On September 14, 2022, FTC Solar filed a prospectus supplement for an 'at the money' (ATM) offering to sell up to **$100 million** of common stock[87](index=87&type=chunk) - During the six months ended June 30, 2023, the company sold **9,272,000 shares**, generating **$23.6 million** in net proceeds[89](index=89&type=chunk) - As of June 30, 2023, approximately **$75.6 million** of capacity remained for future sales under the ATM program[89](index=89&type=chunk) [5. Accounts Receivable, Net](index=17&type=section&id=5%2E%20Accounts%20receivable%2C%20net) Accounts Receivable Composition | (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Trade receivables | $41,898 | $35,367 | | Revenue recognized in excess of billings | $26,103 | $14,844 | | Other receivables | $3,114 | $25 | | Total | $71,115 | $50,236 | | Allowance for credit losses | $(1,387) | $(1,184) | | Accounts receivable, net | $69,728 | $49,052 | - Accounts receivable, net, increased by **$20.68 million** from December 31, 2022, to June 30, 2023, primarily due to a rise in revenue recognized in excess of billings[90](index=90&type=chunk) [6. Inventories, Net](index=17&type=section&id=6%2E%20Inventories%2C%20net) Inventory Composition | (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Finished goods | $6,833 | $16,269 | | Allowance for slow-moving and obsolete inventory | $(788) | $(1,320) | | Total | $6,045 | $14,949 | - Inventories, net, decreased by **$8.9 million** from December 31, 2022, to June 30, 2023, mainly due to a reduction in finished goods[91](index=91&type=chunk) [7. Prepaid and Other Current Assets](index=17&type=section&id=7%2E%20Prepaid%20and%20other%20current%20assets) Prepaid and Other Current Assets Composition | (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Vendor deposits | $4,630 | $5,085 | | Prepaid expenses | $3,836 | $3,544 | | Deferred cost of revenue | $404 | $0 | | Total | $10,276 | $10,304 | - Prepaid and other current assets remained relatively stable, with a slight decrease from **$10.30 million** at December 31, 2022, to **$10.28 million** at June 30, 2023[92](index=92&type=chunk) [8. Leases](index=17&type=section&id=8%2E%20Leases) - The company leases office and warehouse space, including its corporate headquarters, an applications laboratory, and new facilities in Sequin, India, South Africa, and Australia[93](index=93&type=chunk)[94](index=94&type=chunk) Total Lease Cost | (in thousands) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total lease cost | $378 | $281 | $699 | $594 | - Total lease cost increased by **34.5% YoY** for the three months ended June 30, 2023, and by **17.7% YoY** for the six months ended June 30, 2023[95](index=95&type=chunk) [9. Property and Equipment, Net](index=18&type=section&id=9%2E%20Property%20and%20equipment%2C%20net) Property and Equipment, Net | (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total | $2,724 | $2,529 | | Accumulated depreciation | $(1,216) | $(827) | | Property and equipment, net | $1,508 | $1,702 | - Property and equipment, net, decreased by **$0.19 million** from December 31, 2022, to June 30, 2023, primarily due to accumulated depreciation[96](index=96&type=chunk) [10. Intangible Assets, Net and Goodwill](index=19&type=section&id=10%2E%20Intangible%20assets%2C%20net%20and%20goodwill) Intangible Assets and Goodwill | (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Intangible assets, net | $792 | $1,113 | | Goodwill | $7,173 | $7,538 | - Intangible assets, net, decreased by **$0.32 million**, and goodwill decreased by **$0.37 million**, primarily due to translation adjustments, from December 31, 2022, to June 30, 2023[97](index=97&type=chunk)[98](index=98&type=chunk) [11. Debt](index=19&type=section&id=11%2E%20Debt) - FTC Solar has a Senior Secured Revolving Credit Facility with aggregate commitments of up to **$100.0 million**, terminating on April 30, 2024[99](index=99&type=chunk) - As of June 30, 2023, the company had **no draws** on the Credit Facility but had **$2.0 million** in outstanding letters of credit, reducing available borrowing capacity to **$98.0 million**[99](index=99&type=chunk) - The Credit Facility Agreement was amended on June 7, 2023, to replace USD LIBOR with **Term SOFR** as the benchmark rate for future term loans[100](index=100&type=chunk) - The company was in full compliance with its financial condition covenant, maintaining a liquidity level above the required **$125.0 million minimum** as of June 30, 2023[101](index=101&type=chunk) [12. Accrued Expenses and Other Current Liabilities](index=19&type=section&id=12%2E%20Accrued%20expenses%20and%20other%20current%20liabilities) Accrued Expenses and Other Current Liabilities | (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Accrued cost of revenue | $8,617 | $13,198 | | Accrued compensation | $214 | $4,688 | | Other accrued expenses | $3,417 | $6,010 | | Total accrued expenses | $12,248 | $23,896 | | Warranty reserves | $7,791 | $8,004 | | Total other current liabilities | $8,775 | $8,884 | - Total accrued expenses decreased by **$11.65 million** from December 31, 2022, to June 30, 2023, primarily due to lower accrued cost of revenue and compensation[102](index=102&type=chunk) Warranty Accrual Activity | (in thousands) | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Balance at beginning of period | $12,426 | $9,346 | | Warranties issued during the period | $2,852 | $4,184 | | Settlements made during the period | $(2,337) | $(1,380) | | Changes in liability for pre-existing warranties | $(860) | $(706) | | Balance at end of period | $12,081 | $11,444 | - Warranty accruals increased from **$11.44 million** at June 30, 2022, to **$12.08 million** at June 30, 2023[104](index=104&type=chunk) [13. Income Taxes](index=20&type=section&id=13%2E%20Income%20taxes) Income Tax (Benefit) Expense | (in thousands) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Income tax (benefit) expense | $122 | $(90) | $(9) | $(166) | - The company recorded an income tax benefit of **$0.12 million** for the three months ended June 30, 2023, compared to an expense of $0.09 million in the prior year[105](index=105&type=chunk) - For the six months ended June 30, 2023, income tax expense was **$0.01 million**, significantly lower than $0.17 million in the prior year, primarily due to a valuation allowance against U.S. deferred tax assets[105](index=105&type=chunk) [14. Commitments and Contingencies](index=20&type=section&id=14%2E%20Commitments%20and%20contingencies) - CBP issued tariff assessments in March 2023 for approximately **$9.67 million** related to torque beams imported from Thailand, asserting Section 301 China tariffs, Section 232 steel & aluminum tariffs, and AD/CVD[108](index=108&type=chunk) - The company disputes these assessments, believing the goods are products of Thailand due to substantial transformation and proper classification, and has made **no accrual** as of June 30, 2023[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - While the company is working to resolve the matters, unfavorable rulings could **materially affect its financial position**[111](index=111&type=chunk) [15. Stock-Based Compensation](index=21&type=section&id=15%2E%20Stock-based%20compensation) Stock Compensation Expense | (in thousands) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total stock compensation expense | $2,962 | $3,138 | $7,852 | $7,748 | - Total stock compensation expense decreased slightly by **5.6% YoY** for the three months ended June 30, 2023, but increased by **1.3% YoY** for the six months ended June 30, 2023[112](index=112&type=chunk) [16. Related Party Transactions](index=21&type=section&id=16%2E%20Related%20party%20transactions) - FTC Solar engaged **Ayna.AI LLC**, a related-party consulting firm, for process and performance improvements in areas like design, sourcing, and logistics[113](index=113&type=chunk) - General and administrative expense related to Ayna was **$0.5 million for Q2 2023** and **$1.4 million for H1 2023**, with cash payments of $0.8 million and $1.7 million, respectively[113](index=113&type=chunk) [17. Net Loss Per Share](index=21&type=section&id=17%2E%20Net%20loss%20per%20share) Net Loss Per Share Calculation | | Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net loss (in thousands) | $(10,414) | $(25,683) | $(22,176) | $(53,476) | | Weighted average shares outstanding (Basic and diluted) | 112,669,296 | 100,321,943 | 109,632,336 | 99,752,707 | | Basic and diluted loss per share | $(0.09) | $(0.26) | $(0.20) | $(0.54) | - Basic and diluted loss per share improved significantly from **$(0.26) to $(0.09)** for the three months ended June 30, 2023, and from **$(0.54) to $(0.20)** for the six months ended June 30, 2023[114](index=114&type=chunk) - Potentially dilutive securities, totaling **15.6 million shares** as of June 30, 2023, were excluded from diluted EPS calculation as they were anti-dilutive due to the net loss[115](index=115&type=chunk)[116](index=116&type=chunk) [18. Subsequent Events](index=22&type=section&id=18%2E%20Subsequent%20events) - Effective July 5, 2023, FTC Solar acquired and retired **312,500 shares** of its common stock from ARC Family Trust for no monetary consideration[117](index=117&type=chunk) - Concurrent with the share retirement, the company issued **250,000 RSUs** to Mr Tony Alvarez (Board Observer) and **62,500 RSUs** to Mr William Aldeen 'Dean' Priddy, Jr (Board Director), with one-year vesting, resulting in **zero dilution**[118](index=118&type=chunk) - An amendment to the Alpha Steel LLC Agreement on July 28, 2023, allows members to make Credit Support Payments for contractual obligations, treated as capital contributions[119](index=119&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=ITEM%202%2E%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial condition and operational results, highlighting impacts from regulations, supply chain issues, strategic investments, and liquidity [Overview](index=23&type=section&id=Overview) - FTC Solar, Inc, founded in 2017 and incorporated in Delaware, completed its IPO in April 2021 and trades on Nasdaq under **'FTCI'**[123](index=123&type=chunk) - The company is a global provider of solar tracker systems (Voyager 2P, Pioneer 1P), proprietary software, and engineering services, with headquarters in Austin, Texas, and international subsidiaries[124](index=124&type=chunk) - As an emerging growth company, FTC Solar elected to use the extended transition period for adopting new accounting standards[125](index=125&type=chunk) [Key Factors Affecting Our Performance](index=23&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) - Government regulations, including **UFLPA, AD/CVD investigations, and tariffs**, create market uncertainty and impact project timing and costs, leading to developer deferrals[126](index=126&type=chunk)[127](index=127&type=chunk) - The **Inflation Reduction Act of 2022** is expected to boost U.S. solar demand through extended ITCs (30-50% depending on labor/domestic content), though implementing regulations are still pending[128](index=128&type=chunk) - Supply chain disruptions, raw material costs (steel, motors, micro-chips), and transportation expenses significantly affect **operating margins**[129](index=129&type=chunk) - The company is diversifying its supply chain, optimizing logistics, and investing in domestic manufacturing (**Alpha Steel**) to mitigate these impacts[126](index=126&type=chunk)[129](index=129&type=chunk)[133](index=133&type=chunk) - Performance metrics include **MW produced/shipped and Average Selling Price (ASP)**, which are influenced by supply/demand, product mix, tariffs, and government incentives[130](index=130&type=chunk) - Investments in technology (patent portfolio, product enhancements) and personnel (sales, engineers, software developers) are crucial for attracting customers and driving efficiencies[131](index=131&type=chunk) - Climate change increases demand for solar, and the company mitigates related risks by diversifying suppliers and designing equipment for high-slope tolerance and wind mitigation[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [Non-GAAP Financial Measures](index=25&type=section&id=Non-GAAP%20Financial%20Measures) - FTC Solar uses **Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS** as supplemental non-GAAP measures to provide additional insight into operational performance[136](index=136&type=chunk)[137](index=137&type=chunk) - Adjusted EBITDA excludes taxes, interest, depreciation, amortization, stock-based compensation, non-routine legal fees, severance, and other costs, while deducting contingent gains from unconsolidated subsidiary disposal[136](index=136&type=chunk) - Adjusted Net Loss further adjusts for amortization of debt issue costs and intangibles, and the income tax impact of these adjustments[136](index=136&type=chunk) Reconciliation of Non-GAAP Financial Measures | (in thousands, except per share data) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net loss per U.S. GAAP | $(10,414) | $(25,683) | $(22,176) | $(53,476) | | Adjusted EBITDA | $(7,239) | $(17,741) | $(14,391) | $(37,706) | | Adjusted Net Loss | $(7,163) | $(18,226) | $(14,521) | $(38,510) | | Adjusted EPS (Diluted) | $(0.06) | $(0.18) | $(0.13) | $(0.39) | - **Adjusted EBITDA and Adjusted Net Loss** showed significant improvements year-over-year for both the three and six-month periods ended June 30, 2023[140](index=140&type=chunk)[143](index=143&type=chunk) [Key Components of Our Results of Operations](index=27&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations) - Revenue streams include **Product** (solar tracker systems, components, software licenses) and **Service** (shipping, engineering, subscription, maintenance)[147](index=147&type=chunk)[158](index=158&type=chunk) - Product revenue is recognized over time based on cost-to-cost progress, while service revenue is recognized over time or at a point in time depending on the service[147](index=147&type=chunk) - Revenue is influenced by sales volume, Average Selling Price (ASP), product/geographic mix, competition, tariffs, supply chain issues, government incentives, and seasonality[150](index=150&type=chunk)[151](index=151&type=chunk) - Cost of revenue includes raw materials, freight, warranty, and personnel costs, and is affected by material prices, manufacturing innovation, economies of scale, and headcount changes[152](index=152&type=chunk)[153](index=153&type=chunk)[162](index=162&type=chunk) - Operating expenses comprise R&D, selling & marketing, and G&A, with **personnel-related costs** being the most significant component[154](index=154&type=chunk) - Operating costs are impacted by R&D activities, sales expansion, legal/professional fees, and strategic changes, with recent workforce reductions and hiring freezes[155](index=155&type=chunk) [Results of Operations - Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022](index=29&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202022) Quarterly Results of Operations | (in thousands, except percentages) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $21,074 | $9,166 | $11,908 | 129.9% | | Service revenue | $11,285 | $21,555 | $(10,270) | (47.6)% | | Total revenue | $32,359 | $30,721 | $1,638 | 5.3% | | Total cost of revenue | $30,158 | $37,233 | $(7,075) | (19.0)% | | Gross profit (loss) | $2,201 | $(6,512) | $8,713 | (133.8)% | | Loss from operations | $(10,367) | $(25,239) | $14,872 | (58.9)% | | Net loss | $(10,414) | $(25,683) | $15,269 | (59.4)% | - Total revenue increased by **5.3% to $32.36 million**, driven by a **129.9% surge in product revenue** due to increased MW produced, partially offset by a 47.6% decrease in service revenue[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - Gross profit turned positive at **$2.20 million (6.8% margin)** from a $(6.51) million loss (negative 21.2% margin) in the prior year, attributed to lower direct/warranty costs and reduced overhead[164](index=164&type=chunk)[165](index=165&type=chunk) - Operating expenses decreased by **32.9% to $12.57 million**, with significant reductions in R&D (30.9%), selling & marketing (36.7%), and G&A (32.4%), leading to a substantial improvement in loss from operations[157](index=157&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk)[173](index=173&type=chunk) - Net loss improved by **59.4% to $(10.41) million**, reflecting improved gross profit and reduced operating expenses[157](index=157&type=chunk) [Results of Operations - Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022](index=32&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202022) Semi-Annual Results of Operations | (in thousands, except percentages) | Six months ended June 30, 2023 | Six months ended June 30, 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $53,653 | $40,134 | $13,519 | 33.7% | | Service revenue | $19,600 | $40,140 | $(20,540) | (51.2)% | | Total revenue | $73,253 | $80,274 | $(7,021) | (8.7)% | | Total cost of revenue | $69,017 | $96,073 | $(27,056) | (28.2)% | | Gross profit (loss) | $4,236 | $(15,799) | $20,035 | (126.8)% | | Loss from operations | $(22,764) | $(53,017) | $30,253 | (57.1)% | | Net loss | $(22,176) | $(53,476) | $31,300 | (58.5)% | - Total revenue decreased by **8.7% to $73.25 million**, primarily due to a **51.2% drop in service revenue**, partially offset by a 33.7% increase in product revenue[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) - Gross profit turned positive at **$4.24 million (5.8% margin)** from a $(15.80) million loss (negative 19.7% margin) in the prior year, driven by improved product ASP and lower direct/indirect costs[180](index=180&type=chunk)[181](index=181&type=chunk) - Operating expenses decreased by **27.5% to $27.00 million**, with reductions across R&D (29.9%), selling & marketing (27.3%), and G&A (27.0%), contributing to a 57.1% improvement in loss from operations[175](index=175&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - Net loss improved by **58.5% to $(22.18) million**, reflecting the positive gross margin and reduced operating expenses[175](index=175&type=chunk) - Gain from disposal of investment in unconsolidated subsidiary increased by **166.5% to $0.90 million**, due to contingent payments from escrow related to Dimension Energy LLC[188](index=188&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) - FTC Solar has a history of cumulative losses (**$271.0 million accumulated deficit** as of June 30, 2023) and cash outflows from operations[190](index=190&type=chunk) - As of June 30, 2023, the company had **$33.8 million cash**, **$68.9 million working capital**, **$75.6 million ATM program capacity**, and **$98.0 million unused Credit Facility capacity**[190](index=190&type=chunk) - Regulatory uncertainties (UFLPA, Solar Circumvention Investigation) and supply chain issues continue to impact revenues and cash flows, but the **Inflation Reduction Act is expected to boost demand**[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Management believes current cash and strategic actions (e.g., cost controls, supply chain diversification, Alpha Steel investment, ATM program) will provide **sufficient liquidity for at least one year**[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) Cash Flow Summary | (in thousands) | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operations | $(30,809) | $(36,398) | | Net cash used in investing activities | $(197) | $(275) | | Net cash provided by financing activities | $20,577 | $514 | | Net decrease in cash and cash equivalents | $(10,568) | $(36,160) | - Cash used in operations decreased by **$5.59 million YoY**, while cash provided by financing activities significantly increased by **$20.06 million YoY**, primarily from common stock sales under the ATM program[205](index=205&type=chunk)[209](index=209&type=chunk) - Investing activities included a **$0.9 million equity investment in Alpha Steel** and **$0.9 million in contingent payments received** from the Dimension Energy LLC disposal[207](index=207&type=chunk) - The Credit Facility was amended to replace LIBOR with **Term SOFR**, and the company remains in compliance with its **$125.0 million minimum liquidity covenant**[211](index=211&type=chunk)[214](index=214&type=chunk) [Critical Accounting Policies and Significant Management Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Management%20Estimates) - Preparation of financial statements requires significant management estimates and assumptions, particularly for revenue recognition, credit losses, inventory, asset impairment, stock compensation, and taxes[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Revenue recognition involves a five-step process, with key judgments in identifying performance obligations, determining transaction price, and allocating it, especially for solar tracker systems recognized over time[218](index=218&type=chunk)[219](index=219&type=chunk)[222](index=222&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) - The allowance for credit losses is based on **lifetime expected credit loss**, considering historical experience, credit quality, and economic conditions, with potential for variability under the new ASU 2016-13 model[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) - Warranty obligations are estimated based on historical experience and forward-looking factors, with potential material adjustments if actual costs differ from estimates[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - Stock-based compensation fair value is estimated using **Black-Scholes or Monte Carlo simulations**, relying on assumptions like expected term, volatility, and risk-free interest rates, which can impact reported expense[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) - Impairment assessments for long-lived assets, intangible assets, and goodwill involve evaluating indicators, estimating future cash flows, and determining fair value, with **no impairments identified** as of June 30, 2023[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - As an emerging growth company, FTC Solar elected to delay adopting new accounting standards until they apply to private companies[253](index=253&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=ITEM%203%2E%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the company's exposure to market risks, primarily from customer concentrations, commodity price fluctuations, and logistics costs - FTC Solar is exposed to market risk from **customer concentrations** and fluctuating prices of steel, aluminum, and logistics/transportation[254](index=254&type=chunk)[260](index=260&type=chunk) - Financial instruments (cash, accounts receivable, accounts payable) are stated at carrying value, approximating fair value due to short maturities[255](index=255&type=chunk) - The company had **$33.8 million in cash and cash equivalents** as of June 30, 2023, with no debt outstanding, and reallocated cash balances based on financial institution health[256](index=256&type=chunk) - Reliance on a small number of customers for a large portion of revenue and receivables exposes the company to **credit risk** within the solar industry[258](index=258&type=chunk)[259](index=259&type=chunk) - Indirect commodity price risk from contract manufacturers could reduce operating margins if cost increases are not recoverable from customers[260](index=260&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=ITEM%204%2E%20CONTROLS%20AND%20PROCEDURES) Management evaluated and concluded that the company's disclosure controls and procedures were effective as of the period end, with no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were **effective as of June 30, 2023**, providing reasonable assurance for timely and accurate reporting[261](index=261&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended June 30, 2023[263](index=263&type=chunk) - The company acknowledges that no control system can prevent all error and fraud, providing only **reasonable assurance**[262](index=262&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=45&type=section&id=ITEM%201%2E%20LEGAL%20PROCEEDINGS) The company is disputing tariff assessments from U.S. Customs and Border Protection totaling approximately $9.67 million and has made no accrual for this amount - CBP issued tariff assessments in March 2023 for approximately **$9.67 million** related to imported torque beams, asserting Section 301 China tariffs, Section 232 steel & aluminum tariffs, and AD/CVD[267](index=267&type=chunk) - FTC Solar disputes the assessments, arguing the goods are products of Thailand due to substantial transformation and proper classification, and has made **no accrual** for these amounts[268](index=268&type=chunk)[269](index=269&type=chunk) - The company is in communication with CBP to resolve the matters, but acknowledges that unfavorable rulings could **materially impact its financial position**[269](index=269&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=ITEM%201A%2E%20RISK%20FACTORS) The company faces significant risks related to its history of losses, intense competition, dependence on government incentives, trade regulations, and supply chain disruptions - Risks include being a relatively new public company with a **history of losses**, intense competition in the rapidly changing solar industry, and dependence on government incentives and tax credits[271](index=271&type=chunk) - The company faces risks from changes in trade environments, **import tariffs**, and other regulations impacting product importability, as well as reliance on contract manufacturers for timely and cost-effective raw material procurement[271](index=271&type=chunk)[276](index=276&type=chunk) - Other risks include the inability to protect intellectual property, cybersecurity incidents, stock price fluctuations, and the adverse impacts of health epidemics like COVID-19 on supply chains and operations[276](index=276&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=ITEM%202%2E%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section confirms no unregistered sales of equity securities occurred and details the use of proceeds from the April 2021 Initial Public Offering - **No unregistered sales** of equity securities occurred during the period[273](index=273&type=chunk) - Proceeds from the April 2021 IPO (**$241.2 million net**) were used to purchase $54.2 million of common stock and for general corporate purposes, including working capital and operating expenses[274](index=274&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=ITEM%203%2E%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there are no defaults upon senior securities to report - Not applicable; **no defaults** upon senior securities[277](index=277&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=ITEM%204%2E%20MINE%20SAFETY%20DISCLOSURES) This section states that there are no mine safety disclosures to report - Not applicable; **no mine safety disclosures**[278](index=278&type=chunk) [Item 5. Other Information](index=47&type=section&id=ITEM%205%2E%20OTHER%20INFORMATION) This section discloses that seven executive officers terminated their 10b5-1 trading plans in May 2023 - **Seven executive officers**, including the CEO, CFO, and COO, terminated their 10b5-1 Plans in May 2023[279](index=279&type=chunk)[280](index=280&type=chunk) - These plans were primarily established for selling common stock to satisfy tax obligations arising from the vesting and settlement of restricted stock units[280](index=280&type=chunk) [Item 6. Exhibits](index=48&type=section&id=ITEM%206%2E%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, agreements, certifications, and XBRL-related files - The exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), employment agreements, and amendments to the Senior Secured Revolving Facility[281](index=281&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (Sarbanes-Oxley Act Sections 302 and 906) are also filed[281](index=281&type=chunk) - Inline XBRL documents for the instance, schema, calculation, definition, label, and presentation linkbase are included[281](index=281&type=chunk) [SIGNATURES](index=49&type=section&id=SIGNATURES) - The report is signed by Sean Hunkler, President and Chief Executive Officer, and Phelps Morris, Chief Financial Officer, on August 9, 2023[285](index=285&type=chunk)