- FTC Solar’s Q3/2022 financials were negatively impacted by the module supply delays for its customers due to UFLPA
- Lower demand pulled down its revenues and led to gross loss and net loss during the period
- It sees module supply start to get better in Q1/2023, but will wait for incremental clarity on module availability
US solar tracker supplier FTC Solar has reported its executed contracts and awarded orders backlog as having grown to $961 million at the end of Q3/2022 with $203 million added within the quarter, however its annual revenues declined 69% due to lower demand environment in the US.
According to the management, customers struggled to navigate the regulatory environment and get line of sight to solar modules, hence Q3/2022 revenues dropped 46.1% from the previous quarter to $16.6 million, partially offset by a higher ASP.
In Q2/2022 also, the company saw its revenues slip 38% down QoQ due to lower demand and module supply challenges (see FTC Solar Announces Q2/2022 Financial Results).
FTC Solar’s Q3/2022 GAAP gross loss was $-9.5 million or 57.4% of the revenue, while net loss grew to $-25.6 million, up from $-22.9 million a year back.
Solar module supply was limited due to delays related to the Uyghur Forced Labor Prevention Act (UFLPA) which impacted its supply of trackers. FTC President and CEO Sean Hunkler said, “While we can’t control the pace of recovery from UFLPA-related module delays, we believe the actions we have taken through this downturn have made the company significantly stronger. In addition, we believe that many of our recent achievements should also help mitigate future impacts from UFLPA.”
Solar analyst Philip Shen of Roth Capital Partners agrees with Hunkler. Referring to the FTC’s September 2022 contract with Primoris Renewable Energy for 1P tracking system, Shen said it won the deal ‘in large part due to its differentiated customer service’.
“Despite the delayed ramp to positive margin, the company continues to drive bookings and backlog, highlighting the success it is having despite the near- term UFLPA challenges. These bookings are also supporting the balance sheet with the healthy 20% deposits,” added Shen.
FTC management confirmed that it has not had any project cancellations so far due to UFLPA, but there are delays in tracker deliveries.
While the management sees some improvement in module supply in Q4/2022, the pace of recovery will be slower than expected. Customers will largely continue to hold orders pending module availability, it added. Due to these reasons, it has lowered Q4/2022 revenue forecast to $23 million to $27 million, down from $75 million to $90 million shared previously.
It has guided for non-GAAP gross profit and non-GAAP gross margin to be in the negative with $-3.5 million to $0.0 million and -15% to -0%, respectively.
As for beyond 2022, the tracker supplier said it anticipates continued sequential revenue and margin improvement in Q1/2023, it will still wait for incremental clarity on the amount of module supply available to customers.
“We believe FTC Solar is well-positioned to quickly respond to pent-up customer demand, benefit from continued cost reduction efforts and resume our strong growth trajectory – with our growth rate moderated only by our customers’ ability to obtain solar modules,” stated the management.
Additionally, FTC also announced the launch of a new clamping solution as part of its Voyager mounting solution, to enable faster implementation of First Solar’s Series 6 and Series 6 Plus models.