FTC Solar is witnessing US project decisions and schedules being pushed out in time as a result of the AD/CVD investigation initiated by the US Department of Commerce (DOC) adding to current challenges in module procurement because of which it has now withdrawn annual guidance for 2022.
Challenges
"As we look at the current market environment, conditions are increasingly uncertain in the wake of the AD/CVD investigation announcement in the U.S," said FTC Solar President and CEO Sean Hunkler. "While customers increasingly value our solutions and service and want us to be ready to execute on projects quickly, the investigation has added to existing withhold release orders (WRO) and module pricing concerns to compound customers' difficulties in procuring solar modules."
According to Hunkler, module makers have been known to have idled or reduced production as they have been taking time to arrange for documentation due to the withhold release orders (WRO). They are now unlikely to restart production and ship modules unless the buyers agree to absorb any potential tariff.
This situation is showing its impact on construction timelines and decisions on new projects. "So while we have a lot of business in contracted and awarded, much of the construction has been delayed," he added.
It had previously guided for its 2022 revenues within the range of $415 million to $460 million with a 62% annual growth, assuming an improvement in regulatory pressures on module availability and no significant supply chain disruptions due to COVID-19 (see FTC Solar's Q4/2021 Financial Results).
Guidance
Now FTC Solar has guided for Q2/2022 revenues as between $30 million to $35 million with a non-GAAP gross margin of -29% to -19% along with non-GAAP adjusted EBITDA of $-19.7 million to $-16.7 million. The outlook reflects the 'current US uncertainty' due to its customers delaying projects in the absence of unavailability of modules.
The tracker supplier believes regulatory factors remain the largest wildcard for the remaining part of 2022, but the legacy, lower margin projects will largely roll off in Q3 which should lead to significant improvement. "As volume normalizes and continues to grow, it will have an even greater positive impact on our financials. We also expect to see incremental benefit from our expense reduction initiatives," stated FTC Solar.
Q1/2022
During Q1/2022, the company missed its revenue guidance of $55 million to $65 million, reporting $49.55 million, compared to $65.7 million it locked in during Q1/2021. It attributes the decline on lower volume and lower ASP. Net loss on GAAP basis was $-27.79 million, having widened from $-7.44 million a year back (see FTC Solar Q1/2021 Profit Down, Revenues Up).
Order book
FTC Solar was able to land project orders in 3 new markets as it expands its footprint. The new countries are Kenya, South Africa and Malaysia. At the end of April 2022, its international project pipeline grew to exceed 32 GW, up from 23.82 GW in July 2021, thanks to international growth.
This pipeline excludes the acquisition of Chinese company HX Tracker. The acquisition process remains on track to complete in Q2/2022.