FTC Solar Announces Second Quarter 2021 Financial Results

August 11, 2021

Second Quarter Highlights and Recent Developments

  • Second quarter revenue of $50.1 million; total 1H’21 revenue up 39% y/y; 
  • Added to executed contracts and awarded orders, now totaling $419 million YTD through Aug. 1*;
  • Continuing to win new customers, including another top 5 construction firm/EPC;
  • Recognized first revenue for our SunPath software solution;
  • Sold stake in minority investment (Dimension Energy) for $22 million; and
  • Targeting significant 2H’21 revenue growth, with increased logistics cost impact in Q3 followed by significant progress toward profitability in Q4 

AUSTIN, Texas , Aug. 11, 2021 (GLOBE NEWSWIRE) -- FTC Solar, Inc. (Nasdaq: FTCI), a fast-growing global provider of solar tracker systems, software and engineering services, today announced financial results for the second quarter ended June 30, 2021.

“Revenue for the second quarter came in above the high-end of our guidance range for the period, with lower-than-expected non-GAAP operating expenses,” said Tony Etnyre, FTC Solar President and Chief Executive Officer. “Despite an additional $10 million of expense incurred in a continued challenging and tightening global logistics environment, our Non-GAAP net loss was within our guidance range.” 

“While the solar industry continues to contend with higher commodities and logistics pricing, FTC Solar has taken meaningful actions to mitigate the impact to our business, while providing compelling solutions for our customers. During this difficult time for the industry, we continue to work with our customers to limit the impact of these short-term cost disruptions, while at the same time developing innovative logistics solutions that provide price certainty for our customers and drive significant improvement towards profitability for Q4.

“This approach has helped support a continued growth in demand for our products. This demand is reflected in growth of our contracted and awarded orders, which have grown 385% on a year-to-date basis through August 1, with another $203 million added since our last update as of June 1. Excluding the amount included in reported first-half revenue, executed contracts and awarded orders as of August 1 were $478 million, with expected delivery dates in 2021 and 2022.” 

Summary Financial Performance: Q2 2021 and Q2 2020 (in thousands, except per share data and percentages)

 Three Months Ended June 30,  
 2021  2020  2021  2020 
Revenue$50,108  $51,157  $50,108  $51,157 
Gross margin -32.04%  -2.70%  -16.82%  -2.54%
Operating expense$59,906  $4,576  $8,325  $4,179 
Operating loss$(75,963) $(5,958) $(16,746) $(5,479)
Net loss$(55,841) $(6,776) $(16,971) $(5,623)
Diluted EPS$(0.70) $(0.09) $(0.21) $(0.08)

See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below. 

*Includes amounts included in first and second quarter reported revenue. We define executed contracts and awarded orders as orders that have been documented and signed through a contract or where we are in the process of documenting a contract but for which a contract has not yet been signed. See press release text for current balance of executed contracts and awarded orders. 

Second Quarter 2021 Results 
Total second quarter revenue was $50.1 million, ahead of the company’s target range. This represents a decline of approximately 2% compared with the second quarter of 2020, on slightly lower product volume.

GAAP Gross loss was $16.1 million, up from $1.4 million in the prior year period, driven primarily by $10 million in increased logistics expense that was not passed along to customers, a strong ramp up in employee count and other overhead expenses to support the company’s strong growth trajectory, and a $7.2 million increase in stock-based compensation associated with the transition to a public company.

GAAP operating expenses were $59.9 million, including $49.0 million in stock-based compensation as a result of the company’s IPO, relating to one-time or catch-up charges for prior-issued stock. On a non-GAAP basis, excluding stock-based compensation and certain other expenses, operating expenses were $8.3 million, better than the company’s original guidance range due to timing between quarters, which compares to $4.2 million in the year-ago quarter. The year-over-year increase was driven primarily by necessary growth in staffing and other public-company preparations.
GAAP net loss was $55.8 million, or $0.70 per share, compared to a net loss of $6.8 million, or $0.09 per share in the year-ago quarter. Non-GAAP net loss, which excludes a $20.6 million gain from the sale of a minority investment in Dimension Energy, and a $56.2 million impact of stock-based compensation, IPO related expenses and consulting fees and other non-cash items, was $17.0 million, or $0.21 per share. This was also within the company’s guidance range, despite absorbing an additional $10 million in logistics expense in the quarter as the global logistics environment worsened, and not all of these costs were able to be passed along to customers. This result compares to a non-GAAP net loss of $5.6 million, or $0.08 per share in the year-ago quarter.

Second Half 2021 Outlook 
Looking ahead, the company expects to see sequential revenue growth for the remainder of the year. The third quarter should see improved revenue; however, a continued worsening of logistics costs will delay improvement in profitability until the fourth quarter. In the fourth quarter, the company expects to see significant sequential revenue growth and a transition toward profitability, driven by the timing of deliveries on contracted projects, cost-saving initiatives and the implementation in the quarter of alternative shipping methods.

Several factors are included in FTC Solar’s outlook for the second half of 2021, including: 

  • Strong demand for the company’s solar solutions, which is expected to drive significant increase in 2H shipments, even in the face of elevated steel, logistics and other solar project input costs that are causing solar developers to re-evaluate construction timelines for uncontracted projects;
  • Innovative ways to reduce project logistics costs using alternative shipping methods, which will help to mitigate the margin impacts during the second half of the year, primarily in the fourth quarter. The anticipated logistics impact to Q3 is approximately $12-$15 million;
  • Continued implementation of a cost-reduction roadmap that is expected to yield measurable results in the second half of this year, further mitigating potentially unfavorable commodity and logistics impacts;
  • Customer decision and steel procurement timelines driving more volume to Q4 vs. Q3; and
  • The potential for revenue shifts between periods which, given FTC Solar’s size, fast pace of growth and the large size of several projects in the pipeline, can have a meaningful impact. 

Based on these and other factors, including our current backlog and forecasts, and accounting for direct cost uncertainty for the third quarter, the company expects:

($ in millions)2Q 2021 Actual3Q 2021
Non-GAAP Operating Expenses$8.3$8.7-$9.7
Adjusted EBITDA$(16.7)$(19.7)-$(14.7)

For the fourth quarter the company currently expects a significant increase in revenue relative to the third quarter. With the partial implementation of our new logistics methods beginning to take effect in the quarter, as well as our cost roadmap reduction initiatives, we are targeting significant progress toward profitability on an Adjusted EBITDA basis.

For the full year 2021, we expect revenue to exceed $310 million.

This outlook would result in full-year revenue growth in excess of 65% which is anticipated to be substantially faster than overall market growth expectations.

Second Quarter 2021 Earnings Conference Call 
FTC Solar’s senior management will host a conference call for members of the investment community that will be held at 8:30 a.m. E.T. today, during which the company will discuss its second quarter results, its outlook and other business items. This call will be webcast and can be accessed within the Investor Relations section of the FTC Solar website at investor.ftcsolar.com. A replay of the conference call will also be available on the website for 30 days following the webcast.

About FTC Solar Inc. 
Founded in 2017 by a group of renewable energy industry veterans, FTC Solar is a fast-growing, global provider of solar tracker systems, technology, software, and engineering services. Solar trackers significantly increase energy production at solar power installations by dynamically optimizing solar panel orientation to the sun. FTC Solar’s innovative tracker designs provide compelling performance and reliability, with an industry-leading installation cost-per-watt advantage. 

Forward-Looking Statements
This press release contains forward looking statements. These statements are not historical facts but rather are based on our current expectations and projections regarding our business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements are only predictions and as such are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. You should not rely on our forward-looking statements as predictions of future events, as actual results may differ materially from those in the forward-looking statements because of several factors, including those described in more detail in our filings with the U.S. Securities and Exchange Commission, including the section entitled “Risk Factors” contained therein. 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.

FTC Solar Investor Contact:
Bill Michalek 
Vice President, Investor Relations 
FTC Solar
T: (737) 241-8618
E: IR@FTCSolar.com

FTC Solar Media Contact:
Scott Deitz
On behalf of FTC Solar
T: (336) 908-7759

FTC Solar, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share data)

  Three Months Ended June 30,  Six Months Ended June 30, 
  2021  2020  2021  2020 
Product $35,755  $42,849  $92,217  $73,318 
Service  14,353   8,308   23,598   10,215 
Total revenue  50,108   51,157   115,815   83,533 
Cost of revenue:            
Product  43,885   44,623   98,881   68,370 
Service  22,280   7,916   32,872   9,565 
Total cost of revenue  66,165   52,539   131,753   77,935 
Gross profit (loss)  (16,057)  (1,382)  (15,938)  5,598 
Operating expenses            
Research and development  5,585   1,515   7,539   2,609 
Selling and marketing  3,258   818   4,358   1,333 
General and administrative (Note. 9)  51,063   2,243   56,147   4,718 
Total operating expenses  59,906   4,576   68,044   8,660 
Loss from operations  (75,963)  (5,958)  (83,982)  (3,062)
Interest expense  (200)  (121)  (214)  (233)
Gain from disposal in equity investment  20,619   -   20,619   - 
Gain (loss) on extinguishment of debt  -   (41)  790   (41)
Other expense  (46)  -   (46)  - 
Loss before income taxes  (55,590)  (6,120)  (62,833)  (3,336)
(Expense) benefit from income taxes  (115)  (19)  (96)  139 
Loss from unconsolidated subsidiary  (136)  (637)  (354)  (159)
Net loss $(55,841) $(6,776) $(63,283) $(3,356)
Other comprehensive income (loss):            
Foreign currency translation adjustments  7   (16)  6   (8)
Comprehensive loss $(55,834) $(6,792) $(63,277) $(3,364)
Net loss per share:            
Basic $(0.70) $(0.09) $(0.87) $(0.05)
Diluted $(0.70) $(0.09) $(0.87) $(0.05)
Weighted-average common shares outstanding:            
Basic  79,229,174   74,612,811   73,106,935   70,994,078 
Diluted  79,229,174   74,612,811   73,106,935   70,994,078 

FTC Solar, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)

  June 30,
  December 31,
Current assets      
Cash $149,672  $32,359 
Restricted cash     1,014 
Accounts receivable, net  46,981   23,734 
Inventories  7,810   1,686 
Prepaid and other current assets  30,950   6,924 
Total current assets  235,413   65,717 
Investments in unconsolidated subsidiary     1,857 
Other assets  5,252   3,819 
Total assets $240,665  $71,393 
Current liabilities      
Accounts payable $27,620  $17,127 
Line of credit     1,000 
Accrued expenses and other liabilities  19,525   18,495 
Accrued interest – related party     207 
Deferred revenue  8,201   22,980 
Total current liabilities  55,346   59,809 
Long-term debt and other borrowings     784 
Other non-current liabilities  4,547   3,349 
Total liabilities  59,893   63,942 
Commitments and contingencies (Note 8)      
Stockholders’ equity      
Preferred stock par value of $0.0001 per share, 10,000,000 shares
authorized; none issued as of December 31, 2020 and June 30, 2021
Common stock par value of $0.0001 per share, 850,000,000 shares
authorized; 66,155,340 and 84,301,595 shares issued and outstanding as of December 31, 2020 and June 30, 2021
  8   1 
Treasury stock, at cost; 9,896,666 and 10,762,566 shares as of December 31, 2020 and June 30, 2021      
Additional paid-in capital  286,687   50,096 
Accumulated other comprehensive income (loss)  3   (3)
Accumulated deficit  (105,926)  (42,643)
Total stockholders’ equity  180,772   7,451 
Total liabilities and stockholders’ equity $240,665  $71,393 

FTC Solar, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)

  Six Months Ended June 30, 
  2021  2020 
Cash flows from operating activities      
Net loss $(63,283) $(3,356)
Adjustments to reconcile net loss to cash used in operating activities:      
Stock-based compensation  56,641   933 
Depreciation and amortization  42   40 
Loss from unconsolidated subsidiary  354   160 
Gain from disposal of equity investment  (20,619)   
(Gain) loss on extinguishment of debt  (790)  41 
Warranty provision  1,627   4,091 
Warranty asset  (511)  (447)
Bad debt expense  23    
Deferred income taxes     (2)
Other non-cash items     32 
Changes in operating assets and liabilities:      
Accounts receivable, net  (23,270)  (29,067)
Inventories  (6,123)  4,121 
Prepaid and other current assets  (23,892)  (6,191)
Other assets  678   (137)
Accounts payable  9,719   149 
Accruals and other current liabilities  190   16,684 
Accrued interest – related party debt  (207)  (153)
Deferred revenue  (14,779)  (9,836)
Other non-current liabilities  224   424 
Other, net  (319)  (401)
Net cash used in operating activities  (84,295)  (22,915)
Cash flows from investing activities:      
Purchases of property and equipment  (293)   
Proceeds from disposal of equity method investment  22,122    
Net cash provided by investing activities:  21,829    
Cash flows from financing activities:      
Proceeds from borrowings     784 
Repayments of borrowings  (1,000)  (2,000)
Repurchase and retirement of common stock  (54,155)   
Offering costs paid  (5,334)   
Deferred financing costs for revolving credit facility  (1,959)   
Proceeds from stock issuance  241,207   30,000 
Net cash provided by financing activities  178,759   28,784 
Effect of exchange rate changes on cash and restricted cash  6   (8)
Net increase in cash and restricted cash  116,299   5,861 
Cash and restricted cash at beginning of period  33,373   8,235 
Cash and restricted cash at end of period  149,672   14,096 
Supplemental disclosures of cash flow information:      
Purchase of property and equipment included in accounts payable $154  $ 
Unpaid offering costs included in accounts payable $619  $ 
Non-cash gain on extinguishment of debt from PPP loan forgiveness $(790) $ 
Cash paid during the period for interest $247  $378 
Reconciliation of cash and restricted cash at period end June 30,2021  December 31, 2020 
Cash  149,672   32,359 
Restricted cash     1,014 
Total cash and restricted cash $149,672  $33,373 

Because of these limitations, Non-GAAP Gross Margin, Non-GAAP Operating Expense, Non-GAAP Net Loss and Adjusted Non-GAAP Net Loss Per Share (Adjusted EPS) should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP and you should not rely on any single financial measure to evaluate our business. These Non-GAAP financial measures, when presented, are reconciled to the most closely applicable GAAP measure as disclosed below. 

The following table reconciles Non-GAAP Gross Margin for the three and six months ended June 30, 2021 and 2020, respectively:

  Three Months Ended June 30,  Six Months Ended June 30, 
  2021  2020  2021  2020 
GAAP gross profit (loss) $(16,057) $(1,382)  (15,938) $5,598 
Stock-based compensation  7,170   82   7,236   164 
Other costs  460   -   460   - 
Non-GAAP gross profit (loss)  (8,427)  (1,300)  (8,242)  5,762 
Non-GAAP revenue $50,108  $51,157   115,815  $83,533 
Non-GAAP gross margin  -16.82%  -2.54%  -7.12%  6.90%

The following table reconciles GAAP Operating Expense to Non-GAAP Operating Expense for the three and six months ended June 30, 2021 and 2020, respectively:

  Three Months Ended June 30,  Six Months Ended June 30, 
  2021  2020  2021  2020 
GAAP Operating expense $59,906  $4,576  $68,044  $8,660 
Depreciation expense  (19)  (4)  (28)  (7)
Amortization of intangibles  -   -   -   (33)
Stock-based compensation  (49,022)  (393)  (49,405)  (769)
Other costs  (2,540) $-   (3,437) $- 
Non-GAAP Operating expense $8,325  $4,179  $15,174  $7,851 

The following table reconciles GAAP Operating Loss to Non-GAAP Operating Loss for the three and six months ended June 30, 2021 and 2020, respectively:

  Three Months Ended June 30,  Six Months Ended June 30, 
  2021  2020  2021  2020 
GAAP Operating loss $(75,963) $(5,958) $(83,982) $(3,062)
Depreciation expense  33   4   42   7 
Amortization of intangibles  -   -   -   33 
Stock-based compensation  56,192   475   56,641   933 
Other costs  2,992  $-   3,889  $- 
Non-GAAP Operating loss $(16,746) $(5,479) $(23,410) $(2,089)

The following table reconciles Net Loss to Adjusted Non-GAAP Net Loss and Adjusted EPS for the three and six months ended June 30, 2021 and 2020, respectively. All shares and per share amounts have been adjusted for a 8.25-for-1 share forward stock split which took effect on April 27, 2021:

  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2021   2020  2021  2020 
  (in thousands, except per share data) 
Net loss $(55,841) $(6,776) $(63,283) $(3,356)
Amortization of intangibles           33 
Amortization of debt issuance costs  115      115    
Stock-based compensation  56,192   475   56,641   933 
(Gain) loss on extinguishment of debt     41   (790)  41 
(Gain) from disposal of equity investment  (20,619)     (20,619)   
Non-routine legal fees  775      775    
Severance  295      295    
Other costs  1,968      2,865    
Loss from unconsolidated subsidiary  136   637   354   159 
Income tax expense of adjustments (a)  8         (3)
Adjusted Non-GAAP net loss $(16,971) $(5,623) $(23,647) $(2,193)
Adjusted Non-GAAP net loss per share (Adjusted EPS)            
Basic $(0.21) $(0.08) $(0.32) $(0.03)
Diluted $(0.21) $(0.08) $(0.32) $(0.03)
Weighted-average Non-GAAP common shares outstanding:            
Basic  79,229,174   74,612,811   73,106,935   70,994,078 
Diluted  79,229,174   74,612,811   73,106,935   70,994,078 

(a) Represents incremental tax expense of adjustments made to reconcile Net Loss to Adjusted Non-GAAP Net Loss driven from loss from unconsolidated subsidiary.

Notes to Reconciliations of Non-GAAP Financial Measures to Nearest Comparable GAAP Measures

We present Adjusted EBITDA, Adjusted Non-GAAP Net Loss and Adjusted EPS as supplemental measures of our performance. We define Adjusted EBITDA as net loss plus (i) income tax (benefit) or expense, (ii) interest expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) amortization of debt issuance costs, (vi) stock-based compensation (vii) gain on extinguishment of debt, (viii) gain from disposal in equity investment, (ix) non-routine legal fees, (x) severance, (xi) other costs and (xii) loss from unconsolidated subsidiary. We define Adjusted Net Loss as net loss plus (i) amortization of intangibles, (ii) amortization of debt issuance costs (iii) stock-based compensation, (iv) gain on extinguishment of debt, (v) gain from disposal in equity investment, (vi) non-routine legal fees, (vii) severance, (viii) other costs, (ix) loss from unconsolidated subsidiary and (x) income tax expense of adjustments. Adjusted EPS is defined as Adjusted Non-GAAP Net Loss Per Share using the weighted average basic and diluted shares outstanding.

Adjusted EBITDA, Adjusted Non-GAAP Net Loss and Adjusted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). We present Adjusted EBITDA, Adjusted Non-GAAP Net Loss and Adjusted EPS because we believe they assist investors and analysts in comparing our performance across reporting periods on an ongoing basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA, Adjusted Non-GAAP Net Loss and Adjusted EPS to evaluate the effectiveness of our business strategies.

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