Shoals Technologies Group, Inc. (NASDAQ:SHLS) Q1 2024 Earnings Call Transcript

Shoals Technologies Group, Inc. (NASDAQ:SHLS) Q1 2024 Earnings Call Transcript May 8, 2024

Shoals Technologies Group, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, and welcome to the Shoals Technologies Group First Quarter 2024 Earnings Conference Call. Today’s call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Mehgan Peetz, Chief Legal Officer for Shoals Technology Group. Thank you. You may begin.

Mehgan Peetz: Thank you, operator, and thank you everyone for joining us today. Hosting the call with me are CEO, Brandon Moss; CFO, Dominic Bardos; and our new Vice President of Finance and Investor Relations, Matt Tractenberg. On this call, management will be making projections or other forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. As you listen and consider these comments, you should understand that these statements, including the guidance for the second quarter and full year 2024, are not guarantees of performance or results. Actual results could differ materially from our forward-looking statements, if any of our assumptions are incorrect or because of other factors.

These factors include, among other things, the risk factors described in our filings with the Securities and Exchange Commission, including economic, market and industry conditions, defects or performance problems in our products or their parts, including those related wire inflation shrinkback matter, failure to accurately estimate the potential losses related to such matter and failure to recover those losses from the manufacturer, decrease demand for our products, policy and regulatory changes, supply chain disruptions and availability and price of our components and materials. Although we may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.

We caution that any forward-looking statement included in this discussion is made as of the date of this discussion and we do not undertake any duty to update any forward-looking statements. Today’s presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company’s first quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures. With that, let me turn the call over to Shoals CEO, Brandon Moss.

Brandon Moss: Thank you, Mehgan and good afternoon, everyone. I want to start by welcoming Matt Tractenberg, our new Vice President of Finance and Investor Relations. Matt will be leading our IR efforts and is looking forward to meeting all of you. Turning to our agenda, I’ll begin with a discussion of some key macro trends regarding energy demand and solar power markets, both domestically and internationally. I’ll then shift focus to discuss some specific Shoals business updates including backlog and awarded orders, shrinkback warranty remediation and our ongoing ITC, intellectual property litigation. I’ll also provide additional insight into our Shoals fit into the time line of a solar plant construction project, particularly our revenue recognition as it related to our solar plants commercial operation date.

Finally, I’ll discuss revenue contributions from our adjacent product areas of battery, energy storage systems and e-mobility before handing the call over to Dominic, who will review our financial results for the quarter and our outlook for the remainder 2024. Before I talk about what we see going forward in the solar industry, I’d like to take a moment to reflect on what our industry has achieved and shows Roland. According to the Energy Information Administration or EIAC, solar power represented the single greatest source of new generation capacity in 2023. Solar energy accounted for 4% of power production in the United States last year and is expected to account for 6% and 7% in 2024 and 2025, respectively. It is extraordinary when you consider the size and the power market in the US.

Solar power generation is also leading all forms of renewable energy in terms of new capacity being added to Power Grids globally. In the US, Shoals has represented more than 50% of all utility scales renewable generation capacity added to the grid from 2020 through 2023. We are very proud of the role Shoals has played in enabling the industry’s growth. Our products make it possible to build faster with less labor at lower cost and higher reliability in competing solutions. As significant as growth has been in solar over the past five years, we see the potential for continued attractive growth in the future. Our optimism is underpinned by two tailwinds the industry did not have in past years: accelerating low growth and rising power prices.

Over the past five years, total electricity demand in the US grew by only 0.1%. Over the next five years utility filings of work, show low growing at 4.7%. That significant growth is driven by a combination of data centers, reshoring of manufacturing, electric vehicles and increased weather volatility requiring more heating and cooling meeting. All the new demand will require more generation capacity and we expect solar to get more than its fair share of that. At the same time, as demand is increasing solar power prices, the average price paid by commercial and industrial customers for electricity increased by 20% from 2022, 2023 and has continued increased despite very low gas prices. The primary driver of higher transmission and distribution charges, which is why we don’t think power prices are likely to come down in the future.

Higher power prices benefits solar, because solar can not only reduce cost, but also give Commercial and Industrial users more certainty they need to accurately forecast their costs. We believe that the long-term fundamentals underpinning solar growth remain in place and are arguably better today, than they have been historically. However, our industry is currently impacted by two key issues in the near-term. The speed at which utilities and regulators connect new projects to the grid and the availability of key equipment, over 1.5 of all solar projects in development have been delayed six months or more, according to the EIA. Within our business, we are experiencing reduced revenue in the near-to-mid-term due to solar project delays that have pushed projects out from the first half of 2024 permitting issues, higher financing costs, extended equipment lead times particularly for transformers and switchgears and long interconnection queues, continue to stifle industry growth.

These construction delays will impact our results in the near-term, but we expect this trend to reverse overtime. Our experience nears the projections of the major industry analysts and consultants, pace the installations of new solar capacity in 2025 is flat, when compared to 2024 with potentially approximately 28 gigawatts of new solar generation added for the grid in the base case. The capacity expected to come online in 2025 will drive our 2024 revenue, given we typically produce and begin recognizing revenue approximately 13 months before a solar project achieves commercial operation date and is counted in the installed capacity figures, fracked by regulators and industry analysts. I’ll share more information about this relationship later.

One area we do not see major project delays is the Community, Commercial and Industrial market. The CC&I market is roughly 10% of the size of the utility scale market, but is expected to grow at a faster rate than utility scale solar, in part because these projects get interconnected faster and use more widely available equipment. We are increasing our focus on the CC&I market and we believe the addressable market for our products is 1.5 to two gigawatts of community solar projects and approximately two gigawatts for Commercial and Industrial projects. See CC&I market represents another growth opportunity for Shoals and we will move quickly to bring the best product set to market for our customers. With that said, initial customer response has been very positive.

And we expect to show progress in these areas in late 2024, with potentially more significant revenue coming in 2025. Turning to the International market $77.9 million of our backlog and awarded orders at the end of the quarter is for projects outside of the US, with the most significant portion coming from projects in Africa. Our project wins and Africa represent the largest order books that we have ever had outside of the U.S. We will continue to focus on select international markets for growth Latin America, Australia, certain Southern European countries Africa and the Middle East are all desirable for a number of reasons. Collectively, these regions have an estimated addressable market of 63 gigawatts in 2025. To summarize our perspectives on the market, first, we believe the fundamentals underlying continued long-term growth in solar remain in place, driven by accelerating low growth and persistently higher power prices.

Second, we believe the near-term headwinds creating project delays will give way to longer term sustainable growth as utilities, regulators and equipment suppliers adjust to greater demand for generation capacity. Third, we believe that because our products make it possible to build faster with less labor at lower cost and higher reliability than competing solutions. They are extraordinarily valuable to our customers, particularly in the current environment. Of course, we see the CC&I market is less exposed to the issues that have delayed many utility scale projects. And it will be a key focus area for us going forward. Yes, we see strong growth outside of the US particularly in the MENA region and are positioning ourselves to take advantage of that growth.

Turning now to Shoals specific business updates. I would like to start by reminding everyone where Shoals products fit into the construction timeline of U.S. Utility-Scale Solar Power Plants. To provide more color, we’ve included additional charts in our quarterly slide presentation available on our website. One important point, I want to expand on is the timing of the sale of our products as it relates to a project being completed and energized. Because Shoals manufacturers the EBOS Solution that installed after the structural balance of systems is in place we typically deliver our products in the middle of a solar field construction timeline. As a result, we are recognizing revenue for projects well in advance of it being connected to the grid, energize and counted towards market fast calculations.

EPCs on the other hand are recognizing revenues throughout the build cycle. To further illustrate that timing, we have included a chart in our quarterly materials that shows the revenue recognition of our top 20 projects in 2023 only one which went live that year. The remainder, are scheduled to go live in 2024 or 2025. Therefore our 2023 revenue was predominantly tied to the 2024 market figures. Revenue this year will be driven by projects that are expected to be energized in 2025. This information is provided to assist you in modeling our growth against future market expectations. At the end of the first quarter, backlog and awarded orders were $615.2 million, driven by the addition of $75 million of awarded orders. This may be further broken down to backlog, where purchase orders have been received of $196.2 million and awarded orders of $419 million.

Of the total $615.2 million of BL, AO, $484.2 million have projected shipment dates in the next four quarters. It is important to note that, we achieve record quote volumes during the quarter. Further, our pipeline is at record levels and continues to grow. While the near-term landscape is challenging, we remain optimistic about the opportunity ahead. Shifting our attention to our remediation efforts related to shrinkback on wire purchase from Prysmian, a former vendor, our potential range of exposure has not changed this quarter. Since our last update, we have become aware of only one additional site displaying shrinkback. We continue to work with our customers to remediate known issues and further address challenges and opportunities. In terms of the legal proceedings against Prysmian, we are working the process and expect written discovery and depositions to be completed by early next year.

We are pursuing legal action against Prysmian as we seek compensatory and punitive damages, recovery of all costs and expenses incurred by us in connection with the identification, repair and replacement of the defective wire and other legal and equitable relief. With regards to our ITC intellectual property litigation, we completed the ITC trial in Washington, D.C. in March. We expect to hear the court’s initial ruling in July, full ITC Commission review in November and final resolution following a potential presidential review in January of 2025 We feel strongly about accomplishing our goal of preventing the importation of products that infringe on our BLA solution and look forward to the initial ruling in July. Additionally, we intend to pursue remedies for damages in District Court following the final resolution.

Now, that I have completed three quarters in my role with Shoals, I want to provide you with an update on priorities I laid out from my first year. And Shoals continued its evolution from a small founder-led company to a rapidly growing public company last year are needed to assess the talent, organizational structure and operating cadence. Positive changes have been made. Over the last nine months, we have refined and redeployed our corporate strategy. We’ve hired and onboarded key talent and critical functions. In addition, we implemented an enhanced operating model with a regular cadence and more robust analytics as Shoals continues to build a more data-driven culture. While it’s hard to immediately see the impact of those changes from the outside, they have made our organization significantly stronger in ways that I am confident will drive better results for our shareholders.

Additionally, I have assessed the status of Shoals’ product portfolio, go-to-market strategy, business development capabilities and sales team in conjunction with our strategic growth plans. I will now provide some of my initial takeaways. Consistent with our comments over the last several quarters, the predominance of our growth has been driven by the domestic utility scale solar industry. This quarter is no different as less than 1% of our revenue was derived from the international solar, domestic eMobility and energy storage solutions. International Solar is beginning to show signs of more consistent growth, and I fully intend to maintain a strong focus on capturing market share in our targeted regions. I described the target regions earlier, and we will continue to implement our international strategy.

Our eMobility product offering, which utilizes our Big Lead Assembly trunk bus system provides value to fleet operators that need multiple charging stations in close proximity to each other. Some of our initial customers were impacted by higher interest rates, reduced consumer spending and availability of battery energy delivery vehicles last year. As a result, revenues in 2023 declined significantly from our launch in 2022, and they remain at low levels. We will continue to review the entire platform and prioritize investment in businesses that we believe will create value for our shareholders, while battery energy storage system revenue was also de minimis this quarter. While the solar industry is experiencing higher attach rates of storage solutions, we do not currently have a complete plug-and-play product offering that is desired by most customers.

We remain very interested in this market, but we’ll likely have to modify our product offering, go-to-market strategy to maximize our growth potential in this area. So for now, we continue to expect the majority of our revenue to be directly linked to solar EBOS solutions. Our core offering is for the domestic utility scale solar market, where we are the market leader and will provide the vast majority of our revenue this year. Importantly, we believe that there is still significant opportunity to grow with the market as well as benefit from further increases to our market share. As part of my broader business review, we have realigned our sales force to go after what we would describe as low-hanging fruit, but we expect to benefit the company in coming quarters.

In addition to domestic utility scale solar, we are seeing tangible opportunity in international and CC&O markets near to medium term. And over the longer term, we do expect to leverage BLA into other applications as we’ve previously discussed. With that I’ll now turn it over to Dominic who will discuss our first quarter financial results and outlook for the year. Dominic?

Dominic Bardos: Thanks, Brandon and good afternoon to everyone on the call. Turning to our results. First quarter net revenue declined 14% to $90.8 million versus the same period in 2023. The decline in sales was driven by project pushouts which resulted in lower demand for our products in domestic utility scale solar projects and by fewer days of production resulting in lower sales volumes. Gross profit decreased to $36.5 million compared to $48.3 million in the prior year period. Gross profit as a percentage of net revenue was 40.2% compared to 45.9% in the prior year period, primarily due to higher labor costs and lower fixed cost absorption. During the quarter, similar to the fourth quarter of 2023 we did not incur wire installation stream pack warranty liability expenses in our cost of goods sold.

So there was no adjustment to GAAP gross profit necessary during the period. Further, as Brandon mentioned, based on our current knowledge and assumptions the remediation range remains at $59.7 million at the low end and $184.9 million at the high end. During the quarter, we spent $3.7 million in cash as we ramped up remediation efforts and had a remaining warranty liability on our balance sheet of $51.2 million related to the shrink back matter as of March 31. The current portion of the remaining liability is now $31.1 million. As a reminder, this represents the amount of cash we estimate we will consume during the next four quarters, as we continue our remediation efforts. It does not reflect any potential recovery from Prysmian. Shifting to general and administrative expenses for the first quarter, we incurred $22.8 million of G&A expense compared to $20 million during the same period in the prior year.

The year over year increase in general and administrative expenses was primarily related to legal fees for the patent infringement and wire insulation shrink backed matters and planned increases in payroll expenses due to higher headcount supporting growth all of which was partially offset by lower stock-based compensation. Approximately $850000 of G&A expense was specifically related for the wire insulation street back litigation. Net income was $4.8 million in the first quarter compared to $17.0 million during the same period in the prior year. Adjusted EBITDA in the first quarter was $20.5 million compared to $38.1 million in the prior year period. Adjusted EBITDA margin was 22.5% compared to 36.3% a year ago, largely a result of lower gross margin.

Adjusted net income was $12.6 million in the first quarter compared to $25.3 million in the prior year period. Cash flow from operations was $12.9 million, while capital expenditures were $2.5 million. Our balance sheet remains very strong and we ended the quarter with net debt to adjusted EBITDA of one times which is down from two times a year ago and a significant improvement from the 4.4 times as of Q1 2022. During the quarter, we amended and extended our revolving credit facility for five years and retired our term loan. The new revolving credit facility has been upsized from $150 million to $200 million and carries a lower interest rate compared to the old term loan. We appreciate the support of our new and existing bank partners. Equally important to our strong cash flow generation as how that capital is allocated.

As I’ve shared with you on past calls, our focus will remain on driving sustainable long-term organic growth. However, other opportunities that create shareholder value may present themselves and we are in regular discussion with our Board. Those may include inorganic opportunities that expand our presence in underrepresented markets or broaden our offering to existing customers. Another might be repurchasing our own shares given what we believe may be a disconnect between our current valuation and the long-term value we are creating. Our commitment is that we will deploy our capital to the activities that generate the highest return for shareholders. Turning to backlog. As of March 31, 2024, we had $615.2 million in backlog and awarded orders an increase of 17% year over year as the Company added $75 million in orders during the period.

As we discussed last quarter, some of our international orders have longer lead times than domestic orders and we are also winning domestic jobs that extend beyond our historical revenue cycle of nine to 13 months to realize revenue from those awarded orders. As of March 31, approximately $204.4 million of our backlog and awarded orders had delivery dates beyond 2024. Turning now to the outlook. Given the current headwinds in the utility-scale solar market, some of our customers have experienced project delays, as a result of the current macro uncertainty we will continue to provide quarterly guidance for the remainder of the year. Based on current business conditions, business trends and other factors, for the quarter ending June 30 2024, the Company expects revenue to be in the range of $85 million to $95 million and adjusted EBITDA to be in the range of $20 million to $25 million.

Based on current business conditions, business trends and other factors for the full year 2024, the Company now expects revenue to be in the range of $440 million to $490 million. This change is reflective of the industry delays we are experiencing and sharing with you today. Our goal is to provide you with a reasonable and achievable range, given the uncertainty we believe exists. I want to stress that we believe these changes reflect the timing of our revenues not lost projects. We expect most projects that have been delayed from 2024 to be completed in 2025. Adjusted EBITDA is now expected to be in the range of $130 million to $150 million. Adjusted net income to be in the range of $85 million to $100 million. Cash flow from operations to be in the range of $100 million to $115 million.

Capital expenditures to be in the range of $15 million to $20 million. Interest expense to be in the range of $15 million to $20 million. And with that I’ll turn it back over to Brandon for closing remarks.

Brandon Moss: Thanks, Dominic. I would like to close by thanking all of our customers for their confidence in Shoals, our employees for enabling us to effectively serve our customers and our shareholders for their continuous support. I’m excited about the long-term macro trends that will drive the solar market for years to come. And I am even more excited about Shell’s competitive position in the marketplace. We are an innovation leader with strong product development capability and an outstanding customer list. As we move past this period of volatility, we expect to continue our industry-leading growth, driven by further market share gains in the domestic utility scale market, expand our presence in the CC&O market and extend our leading position into key international markets.

Over the last nine months, I’ve heard a consistent message from our customers that they want to expand their relationship with Shoals. They provided candid feedback on how we can be more flexible and responsive, and that’s extremely encouraging because it’s entirely within our control and influence. As a result, we’ve made meaningful changes to our sales structure and operations, which we believe will improve our flexibility and increase touch points with each customer, ensuring that doing business with Shoals is as simple and efficient as possible as top of mind for all of us, and we believe you’ll begin to see the benefits over time. And finally, as conditions improve, we expect Shoals will be well positioned to produce strong profitability and test work driven by our capital-light model.

To that end, we will continue to make investments in talent and our operational footprint that will position us for many years to come. Thoughtful and disciplined capital allocation is a key strategic imperative going forward. And as Dominic mentioned, may include types of activities you haven’t seen from us before, remaining flexible, yet opportunistic while operating within a framework that prioritizes shareholder returns will allow us to create value and reward investors. And with that, we thank you for your time today. Operator, we can now open the line for questions.

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Q&A Session

Operator: Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Mark Strouse with JPMorgan Chase. Please proceed with your question.

Mark Strouse: Yes. Good afternoon. Thank you very much for taking our questions. I wanted to start with just a general question on the visibility you have into the second half ramp. And then more specifically, if you’ve sensitized that guidance at all for a potential AD/CVD case. I mean are there projects that you’re baking into the second half of this year guidance that are using panels that may be subject to tariffs, if commerce determines to take that case up? And I have a quick follow-up. Thank you.

Brandon Moss: Mark, hope you’re well? Good question. I think, look, on the second half guidance, absolutely, we’ve got visibility to every project and we’ve taken into account the potential delays. So the information that we’ve got now, I think we feel good about our guidance. And the areas where we can control and really influence, I think we’re executing quite well. Our goal is really to put something out there that’s reasonable and achievable. And I think we’ve done that with this guide. As it relates specifically to panels, look we hear the same information that you hear, I’m sure. There is maybe upwards of 12 to 18 months worth of panel inventory on the ground in the US. I do realize that some of those may be subject to tariffs. But we are not anticipating a significant amount of disruption from the ruling at this point in the back half.

Mark Strouse: Okay. Okay. Thanks, Brandon. And then quick follow-up. I fully appreciate projects are getting delayed generally. But when you look at the orders that are occurring within the industry, over the last quarter, over the last two quarters, can you just kind of talk about what you’re seeing with your market share of those orders?

Brandon Moss: Yeah. Maybe to touch a lot to unpack there. I’ll touch on market share first. Look, just to remind you and everybody really, we grew 50% last year. Our 2023 numbers relate to 2024 CODs. So we’re doing a 50% growth rate on a year that is expected to grow at 26% if that happens. Since IPO, look we’ve outpaced the market by 2X. And our goal is to always outpace the market. I think we’ll continue to do that. We’ve got opportunity, as I’ve noted in the past to grow wallet share. So where I feel very strong about growing market share, there is opportunities to continue to grow wallet share with existing large EPC customers. And I mentioned in the prepared remarks that, hey, we’ve reorganized the sales team to go after what we believe is some low-hanging fruit and we’ll do just that.

So I feel very strongly about our market share, and I feel very strongly about our ability to continue to grow and take wallet share with larger EPCs. As it relates to the delays, I think most importantly to remind everybody, these projects are delayed. They’re not lost. We follow the Form 860 data from the EIA very closely, both for new projects and historic projects. And about half of the projects in that data set are delayed six months or more. If you look specifically at Shoals projects, 37% of our projects have been pushed out by at least one month. And maybe the most important number is that 20% of the projects that were in our awarded order bucket at the end of the year last year have been pushed out of 2024 into 2025. And that number equates to about $50 million worth of projects that have pushed to the right.

So a significant number, obviously. But again, we track these projects. We’re tight with our customers, the EPCs. And again, we feel like these projects are not lost. They’re just delayed and pushed into 2025.

Operator: Our next question comes from Philip Shen with ROTH. Please proceed with your question.

Philip Shen: Hey, guys. Thanks for taking my questions. Brandon, you just talked about how the ADCVD case could impact your 2024 guide and how conservative it is, and how you have a good line of sight there. I was wondering if you could talk about how that case could impact bookings in Q2 and Q3. So while the 2024 is conservative, to what degree do you think this could slow down bookings? What do you think the trend of bookings could be in Q2 and Q3 overall as well? Thanks.

Brandon Moss: Phil, just to clarify, you’re talking — Q2 bookings 2024 related to the module inventory.

Philip Shen: Yeah. And I know you talked about the quoting activity is high. But are you seeing — we saw for the modules, the buyers and sellers basically come to a pause because of this case. And so, are you seeing that pause maybe impact in your conversations with customers as well?

Brandon Moss: We’re not. Module pricing, module availability is not something that is bubbling up from our customers at this point. So not a significant concern at this point. It’s possible, Phil, that folks have procured modules for these projects already, for projects that we have not received yet in a backlog or awarded order. So look of all the things that we hear in terms of delays via interconnections, site permitting, equipment availability, modules have not bubbled up to a concern at this point.

Philip Shen: Great. Thanks for the caller. Shifting to a few housekeeping questions here. I was wondering if you might be able to give us a little bit of the cadence of Q3 versus Q4 revenue after you factor in Q1 and Q2? You know, it’s roughly $140-ish million per quarter, or do you think it kind of ramps up from Q2 to Q3 and then we have a larger Q4? And then finally, Brandon, you talked about the progress you’re making in the C&I segment, and you could see — we could see some developments and impact by year-end of this year. Is there any way you can quantify that? Thanks.

Dominic Bardos: So, Phil, this is Dominic. Let me take the pacing first. Yes, we’ve adjusted the annual, and we’re going to provide quarterly guidance. We have not given specifics yet to Q3 and Q4. At this point in time, I think the expectation would be that it’s relatively even, but we have not given anything very specific yet. So, I appreciate your patience on that one. And I’ll let Brandon answer things about the CC&I space.

Brandon Moss: So, great question about CC&I. We’re excited about this space. I think it is fantastic timing for us to not only have the ability to capture more share, but the changes that are happening really via load growth, particularly in the U.S., the substantial growth that’s going on with data center builds, primarily due to AI. I think that’s going to drive a lot of distributed generation in the future, which fits well with this CC&I product portfolio. Look, I would think for 2024, we are moving very fast. We’re very excited about the opportunity in front of us to get the product set right. We have developed a specific team to begin cultivating the market in the CC&I space, and the team is out in the market, again, working on the right product set and creating relationships with potential new EPCs that Shoals has not been business with in the past, and I’ve been engaged in some of those conversations personally.

I think you’re going to see some traction in the back end of 2024, but the meaningful progress will be made in the 2025 timeline, because, again, we’ve got to put together a new product set and have a new team focused on it. The product set, specifically, just to be clear, not a huge departure from what we do today. We’re just — it’s the same basic core products, just looking for our optimal product set to bring to market. So, we, again, are very excited about it. Thanks Phil.

Operator: Our next question comes from Andrew Percoco with Morgan Stanley. Please proceed with your question.

Andrew Percoco: Great. Thanks so much for taking the question. I do have another follow-up question here on the bookings number and backlog. I mean, totally understand that there’s a lot of strong tailwinds here related to renewable energy demand, whether it be data centers or on-touring of manufacturing. But if I just look at the first quarter bookings number, it looked relatively light compared to kind of the first quarter of last year or even the fourth quarter of last year. Can you just discuss what’s driving that? Is it mostly customers just hitting pause while they wait to get most of the projects that they’re currently in their pipeline online? Or is it — is there anything else underlying that softness this quarter? And I have one follow-up. Thank you.

Brandon Moss: Yes. Thanks. Great question. Yes, love to talk through this a bit. So, total backlog in awarded orders is matching $615 million, which is a nice increase over the first quarter of last year. What I do want to point out is that our project awards were consistent with past quarters. What was unusual for us is we have had some projects that, in at least one case, were canceled, and a handful of projects that pushed back into our sales funnel. So, you can think of that number being around $60 million. So, I think if you take that $60 million and you add it to our net new bookings, which we’re at $75 million, you’d see that we’ve got kind of a normalized quarter of project inflow into our BLA or pipeline. So, not abnormal.

What was abnormal was having some things shift back up in the funnel, and then in one at least one instance project canceled. The good news is the things that the project that moved back up into the funnel, we feel very good about our opportunity to go after that business again, whether it’s with the same EPC or a different EPC. Also, would love to point out from a quote standpoint, again, we are seeing record quote volume, and that is both on the number of quotes and the total dollars of quotes. So, the inbound demand is certainly very strong. And I think, again, we’re in a volatile time. I look at this as being a transitory period of volatility and excited about the growth ahead.

Andrew Percoco: Understood. That’s really helpful. And my one follow-up, really helpful disclosures in the deck as it relates to kind of shipments and RevRec versus COD. I know you’re not providing 2025 guidance, but I’m just going to take a crack at a question here anyway. If you look at this Wood Mackenzie SEIA forecast for 2026 growth, it’s implying relatively soft growth. Is that a proper way to think about your 2025 top line growth? I know there’s potentially some market share opportunities at play as well. But if there’s any additional context you can provide in terms of how we should be thinking about a normalized growth rate beyond 2024? That’d be super helpful. Thank you.

Dominic Bardos: Sure, Andrew. Yes, you’re right. You said at the beginning, we haven’t discussed 2025 or 2026 guidance yet. We’re very excited to be sharing more information at our Analyst Day in early September. But there’s a couple things I want to point out. Some of the projects that we’ve talked about in 2024 are pushing into 2025 — assuming those projects are still going forward that would be a natural growth of year-over-year that you’d expect to see on top of something that we’re going to get organically. And the other thing is the growth that we see in the C&I space in international is not reflected in the domestic utility scale solar pieces so we have other growth pillars to go on. We look forward to sharing more with you in our September analyst day.

Operator: Our next question comes from Brian Lee with Goldman Sachs. Please proceed with your question.

Brian Lee: Hey, guys. Good afternoon. Thanks for taking the questions. Real quickly just on Andrew’s question Brandon but I was a I wasn’t following totally the $60 million that you referenced which was inflow. It sounded like that was an order which you had but then went back into the sales funnel and then it was an order you had but then the project got canceled. All that happened within the quarter. So you would have had $135 million of net orders. I just wanted to understand what that $60 million is referencing?

Brandon Moss: Yes, Brian. I would be happy to clarify. Yes. So we’re talking about a handful of projects here not just one project so yes I mean in the quarter we had a project cancel and we had a handful of projects that would have been included in our backlog and awarded orders number. But we move back into the sales funnel which is very unusual for us because of questions about the project. So that equated to about $60 million. If you think of our or our net new backlog and awarded orders that we talked about was $75 million. So yes, so you’re right with the math that 60%-plus in the past.

Brian Lee: Okay. That’s helpful. I just wanted to clarify that. And then maybe just one more last question and I’ll pass it on. I think you said on $204 million of your backlog and awarded orders is for beyond 2024 deliveries. So if my math is right that means there’s about $400 million plus which presumably is for 2024 delivery and you just did $90 million of revenue in Q1 and the midpoint of guidance is for 65. So are you assuming more of that $410 million or so that’s remaining for 2024 deliveries doesn’t actually play out in 2024. And I guess the secondary question to that would also be our you know not assuming any go-get revenue which I know you get pretty much some tens of millions of dollars of go-get revenue every year, but just be curious if you could reconcile that a little bit. Thank you.

Dominic Bardos: So Brian, this is Dominic. Let me handle that one. You’re absolutely right about the math. And at the end of the quarter hat was the math that would indicate that hey you should have about $500 million right of net revenue in the year in April there was additional project pushes so we referenced $50 million worth the projects and pushed from the year did not happen in Q1. Some of that has happened through April as well. So the numbers a little bit south of that for tenants left in the [indiscernible] orders and backlog status. And as we go through the year the amount of time to book and bill in these projects starts to decrease. And so we’re now looking at things that we can really add towards the tail end of Q3 and into Q4.

But we believe that there’s some projects will still likely move. We’ll continue to backfill and replace those projects as we did. We added $135 million worth of new projects because $60 million of them actually pushed out. It makes the numbers look lower in Q1. So we’re just trying to give you a very realistic guidance range that we believe is comfortable and achievable. And we intend to deliver on those numbers.

Operator: Our next question comes from Maheep Mandloi Mizuho Securities. Please proceed with your question.

Maheep Mandloi: Hey, good evening. Thanks for taking the questions. Just a question on the pushouts. Could you talk about the nature of them? Are these looking for months or quarters of pushouts into the next year? And as we kind of think about 2025-2026 growth versus some of the forecasts out there. Could you talk about any other levers which you have either international sales or increasing the wallet share for water project trading levels we face? Thanks.

Brandon Moss: May thanks. Yes as mentioned look of 37% of our projects has shifted at least by month. And as mentioned we pushed $50 million worth of projects out of the year into 2025. So some substantial projects pushes and that is obviously impacting our number more than anything this year. You know, as it relates to 2025 and 2026, again we’re not going to comment or guide on that but I’m certainly we’re driving an international strategy. As we mentioned there’s 63 gigawatts of development market opportunity out into 2025 for us we’re really pleased with our approach and progress really in the international space. As we’ve mentioned in prior calls, we’ve got about $78 million of orders on the books to ship internationally.