FTC Solar(FTCI) - 2024 Q3 - Quarterly Report

Supply Chain and Supplier Diversification - FTC Solar reported a significant reduction in reliance on Chinese suppliers, decreasing from 90% in 2019 to less than 20% as of the date of the report[131]. - As of September 30, 2024, the company has qualified suppliers outside of China for certain commodities to mitigate tariff impacts[131]. - The company has invested in Alpha Steel to enhance its U.S.-based supply chain and reduce reliance on international suppliers[131]. - The company is focused on diversifying its manufacturing partnerships and optimizing transportation costs to address supply chain disruptions[134]. Product and Technology Development - The company introduced the SUNOPS cloud-based solar asset monitoring solution in August 2023 and plans to launch the Automated Hail Stow Solution in May 2024[137]. - The introduction of new products and technology is part of the company's strategy to attract and retain customers and enhance user experience[137]. Financial Performance - Total revenue for the three months ended September 30, 2024, was $10,136,000, a decrease of 66.8% compared to$ 30,548,000 for the same period in 2023[151]. - Product revenue decreased by 72.8% to $7,411,000, down from$ 27,274,000, primarily due to an 82% decrease in MW produced[153][154]. - Service revenue decreased by 16.8% to $2,725,000, down from$ 3,274,000, attributed to a 29% decrease in ASP and lower engineering consulting revenues[153][155]. - Total revenue for the nine months ended September 30, 2024, was $34,153,000, a decrease of 67.1% compared to$ 103,801,000 for the same period in 2023[168]. - Product revenue decreased by 66.5% to $27,092,000 in 2024 from$ 80,927,000 in 2023, primarily due to a 73% decrease in the amount of MW produced[169][170]. - Service revenue fell by 69.1% to $7,061,000 in 2024 from$ 22,874,000 in 2023, attributed to a 63% decrease in MW delivered and a 16% decrease in ASP[171]. - Total cost of revenue increased to $42,910,000 in 2024, a 55.4% decrease from$ 96,186,000 in 2023, leading to a gross loss of $8,757,000[172]. - Gross margin percentage for the nine months ended September 30, 2024, was negative 25.6%, compared to a positive 7.3% in 2023[173]. Expenses and Losses - Gross profit for the three months ended September 30, 2024, was a loss of$ 4,306,000, compared to a profit of $3,379,000 in 2023, resulting in a gross margin of -42.5%[151][158]. - Research and development expenses were$ 1,467,000, a decrease of 23.6% from $1,921,000, with R&D expenses as a percentage of revenue increasing to 14.5%[161]. - Selling and marketing expenses decreased by 62.0% to$ 2,406,000 from $6,324,000, with selling and marketing costs as a percentage of revenue at 23.7%[163]. - General and administrative expenses were$ 6,797,000, down 40.4% from $11,411,000, with G&A expenses as a percentage of revenue at 67.1%[165]. - The net loss for the three months ended September 30, 2024, was$ 15,359,000, compared to a net loss of $16,937,000 in 2023[151]. - The company reported a net loss of$ 36.371 million for the nine months ended September 30, 2024, compared to a net loss of $39.113 million for the same period in 2023, representing a 7% improvement[227]. - Adjusted EBITDA for the nine months ended September 30, 2024, was$ (33.280) million, compared to $(24.097) million for the same period in 2023, indicating a decline in performance[227]. Cash Flow and Liquidity - The company incurred net cash used in operations of$ 18.0 million for the nine months ended September 30, 2024, compared to $46.4 million for the same period in 2023[191]. - Working capital decreased by approximately$ 35.0 million from $53.8 million at December 31, 2023 to$ 18.9 million at September 30, 2024[194]. - The company plans to issue $15 million in long-term senior secured promissory notes to address liquidity needs[185]. - The company had$ 8.3 million in cash and cash equivalents as of September 30, 2024, with no debt outstanding[231]. - Cash equivalents included $1.8 million in money market fund deposits as of September 30, 2024, down from$ 13.9 million at December 31, 2023[232]. Market Risks and Customer Concentration - The company is exposed to market risks due to customer concentrations and fluctuations in steel and aluminum prices, which could impact financial performance[229]. - The company relies on a small number of customers that account for a significant portion of revenue, increasing credit risk exposure[235]. - The company regularly evaluates reserves for potential credit losses based on expected lifetime credit losses[235]. Stock and Equity - The company’s common stock was transferred to the Nasdaq Capital Market due to non-compliance with the minimum bid price requirement[184]. - The company has not issued any dividends in its history and does not expect to issue dividends over the life of option grants[212]. - The company utilized Monte Carlo simulations for certain awards granted with market conditions, estimating the average present value based on up to 250,000 simulation paths[213]. Other Financial Metrics - The diluted adjusted net loss per share for the nine months ended September 30, 2024, was $(0.27), compared to$ (0.22) for the same period in 2023[227]. - Stock-based compensation for the three months ended September 30, 2024, was $1,319 thousand, up from$ 1,192 thousand in the same period of 2023[224]. - The company did not identify any impairments of long-lived assets, intangible assets, or goodwill during the nine months ended September 30, 2024, and 2023[218]. - The weighted-average common shares outstanding for diluted shares was 127,380,292 for the three months ended September 30, 2024, compared to 119,793,821 for the same period in 2023[225].