Good day and thank you for standing by. Welcome to the FTC Solar Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference maybe recorded. I would like to turn the conference over now to your speaker for today, Bill Michalek, You may go ahead.

Thank you, and welcome, everyone, to FTC Solar’s fourth quarter 2022 earnings conference call. Before today's call, you’d likely had opportunity to review our earnings release, supplemental financial information and slide presentation, which were posted earlier today. If you’ve not yet reviewed these documents, they are available on the Investor Relations section of our website@ftcsolar.com. I’m joined today by Sean Hunkler, FTC Solar’s President and Chief Executive Officer; Phelps Morris, the Company’s Chief Financial Officer; and Patrick Cook, the Company’s Chief Commercial Officer. Before we begin, I remind everyone that today’s discussion contains forward-looking statements based on our assumptions and beliefs in the current environment and speak only as of the current date. As such, these forward-looking statements include risks and uncertainties and actual results and events could differ materially from our current expectations. Please refer to our press release and other SEC filings for more information on the specific risk factors. We assume no obligation to update such information, except as required by law. As you’d expect, we will be discussing both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes a full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure. In addition, we’ll discuss our executed contract and awarded orders collectively referred to as backlog, and our definition of this metric is also included in our press release. With that, I'll turn it over to Sean.

Thanks, Bill, and good morning everyone. As I reflect on my first full calendar year as CEO in 2022, I am proud of how the team navigated many external challenges. The year began with historically high logistics and steel costs followed by a rather challenging regulatory market in the U.S., which as you know has historically represented the primary source of our revenue. The team has responded well to the challenges, utilizing the downturn to focus on what we can control, improve our competitive positioning, and emerge as a stronger company. As we close out the year, I believe we're on a significantly improving trajectory. We delivered fourth quarter results, showed significant improvement and exceeded the midpoint of our guidance on all metrics. We also continued our operational improvements, which I'll discuss in more detail, one of which includes improving our international exposure, which will allow us to take advantage of near term opportunities, while we wait to unlock our full backlog when the Uyghur Force Labor Prevention Act or UFLPA constraint fully resolves. Today, I'll briefly walk through the market and operational improvement categories we've been discussing to summarize what we accomplished during the first nine months of the year and how we closed out the year on a solid trajectory in Q4. Starting at the market level and perhaps the one constant during the year, the long-term demand trends look great and continue to improve. They have likely never looked better. According to the IEA, renewable are set to become the primary energy source for electricity generation globally in 2027, accounting for about 40% of total electricity output and overtaking coal. Despite higher module pricing, utility scale solar is the lowest cost source of new electricity generation in most countries worldwide and accounts for more than 60% of…

Thanks Sean, and good morning to everyone. As a follow-up to Sean's comments, I'd like to provide some additional color on the fourth quarter performance and outlook. So let's begin with the discussion of the fourth quarter. Overall, I'm happy to share that we deliver results that were better than the mid-point of our guidance trends on all metrics for the quarter. First revenue is $26.2 million. While on a year-over-year basis revenue is down 74%. It did represent a 58% increase versus the prior quarter, as we begin to build some momentum moving up from a lower than Q3. We are starting to see new production tied to both international products as well as non-UFLPA projects moving forward. We believe this is a sign that the strategy we discussed last quarter of attacking non-UFLPA impacted projects is beginning to benefit the company. While we sold Knight's sequential growth in revenue, UFLPA's constrain our near-term ability convert backlog into revenue with a bulk of our backlog, roughly two-thirds remaining subject to UFLPA. Now on the plus side, non-UFLPA a backlog doubled quarter-over-quarter now represents a third of our total backlog. Next, our GAAP gross loss for the quarter was $1.9 million or 7.3% of revenue compared to $9.5 million or 57.4% of revenue in the prior quarter. On a non-GAAP basis, the gross loss was $0.9 million or 3.4% of revenue coming above the mid-point of the guidance range. Compared to our Q3 2022 non-GAAP loss of $8.2 million or 49.8% of revenue, we are able to deliver an impressive 46 point improvement quarter-over-quarter. We are able to accomplish this due to the following. First, the legacy low marketing products we discussed in prior quarters were completed during Q3. Second, the new products we now deliver benefit from our team's…

Thank you. One moment while we prepare ourselves for the Q&A session. [Operator Instructions]Our first question will be coming from Philip Shen of Roth. Your line is open.

Hey guys, thanks for taking the questions. Wanted to start with your recent bookings.; was wondering if you might be able to share how much of the 240 is 1P versus 2P and also can you talk through how much of the 240 you expect to be delivered in 2023 and then for the $1.2 billion overall, what percentage of that do you also expect in 2023 versus maybe 2024 or later? Thanks guys.

Yeah, Hey, Phil, this is Sean. Thanks for the question. So we are -- we are excited about the progress we're making on non-UFLPA and as, as you described in the most recent bookings. So let me -- let me turn it over to Patrick and, and let him provide a little bit of color on the mix. Yeah, in terms of kind of 1P and 2P, Phil, we, we didn't give us kind of specific numbers in terms of kind of the revenue split, but it will be a mix between kind of our one in portrait tracker and our two in portrait tracker. And in terms of just kind of overall revenue kind of mix on the non-UFLPA, we, we do expect to start recognizing revenue for, for those projects in the non-UFLPA impacted areas in the, in the near term. And it's not something that's kind of elongated out. So we do expect to start recognizing revenue on that 240 in, in the near term.

Great. And looking ahead can you talk about what you expect in terms of the bookings momentum? You've had a really nice run here in spite of the UFLPA module constraints. Would you expect as we get into Q2 and three that the bookings momentum sustained, given the inflation reduction act and your international success there? Thanks.

Yeah, we really, we are very excited about the bookings momentum and frankly speaking, I think, we've, we've done a lot of work internationally as, as we mentioned in the remarks, we've also put a lot of focus on our product portfolio and enhancing our product portfolio now having a first solar solution for our Voyager 2P and developing our 1P Pioneer product. And so for the, for the back half of the year we're, we're expecting continued momentum. In addition, we're hopeful that there'll be some form of relief on UFLPA though we're, we're certainly not counting on it, but we're hopeful that that would, that would also add to the momentum that we're seeing for the back half of the year. I, again, I'll -- Patrick Cook, our chief commercial officer is here, and I'll let him provide a little more color.

Yeah, Phil, the way I, think about that is you look kind of in the U.S right? Our, product portfolio set. We've got, the first solar solution. We've got our -- we've got our two p and we have our one in Portrait solutions. We feel like we have a pretty sound portfolio set to go attack not only new customers, but existing customers and grow kind of the share of wallet, but we talked about kind of the international expansion that we have. It's typically kind of two years to revenue, and if you kind of rewind the clock, we, we've been in a lot of these international locations for two plus years, and you're starting to see kind of the same trajectory and trend that we had in the U.S back in 2019 where you, start getting into 2, 3, 4, 5 different customers. You grow the share wallet, you grow the footprint, and now you've got a backlog and pipeline that's dependable for, for kind of upcoming revenue. So we're certainly excited about the momentum that we're seeing in the bookings. the customer excitement around IRA in the U.S is certainly extremely high and, we're looking forward to, to be able to kind of capture on that as well based on our customer relationships and the customer service that we bring to our customers both in the U.S and internationally.

Great. one last one if I may. In terms of the tour two subsidy, we put out there recently that, it seems like for this year the tour two manufacturers may secure between 30% and 40% of that subsidy. And then you guys should be able to get the balance of that and then over the coming, four or five years that decrements, maybe by, five to 10% a year until we get to about 10% a year, five; does that resonate with you guys in the IRA agreements that you guys are structuring here in the U.S? To what degree does that match and, and resonate with you guys? And, and if not, what, what kind of structures are you guys looking at? Thanks.

So we, we are, we are hearing similar things and so I, I would say that in indeed it does resonate with us and what we've heard so far and then, and then what our expectations are for our joint venture. So I'd say yeah, we're, we're somewhat aligned. I mean, we're, we're waiting to see what the, the final regs all say, but, but your view of things is similar to our own.

Great. Okay. Thanks very much. Keep up the bookings momentum and I'll pass it on.

Thank you. One moment while we prepare for the next question. Our next question will be coming from Donovan Schafer of Northland Capital. Your line is open.

Hey guys thanks for taking the questions. So I'm going to kind of follow-up on Phil's question here and try, and I, I know you guys probably don't want to get too specific on some of these dynamics that, that help working around the Uyghur, the UFLPA, but I'm curious, if we can talk maybe in terms of like, broader trends or kind of, minority majority of, of sort of mix. So if I, if I think about the, maybe call like three vectors that give you the flexibility to kind of work around the, the UFLPA. And so I think of those three, three vectors as first, having a better solution now that pairs us first solar panels is one, first solar, and then the second one would be the international sales. And then the third one that, maybe kind of, overlaps in some ways is, is having the, the 1P product now, cuz maybe that's part of what enables a certain amount of international sales. So, it's too much to answer in one question, but you can imagine we could make like a three by a two by three matrix or, or table or something and say, we're first solar panels, more than 50% or less than 50% of sales in the fourth quarter and or in the backlog or in the pipeline or international sales, above the 50% or below the 50% mark, fourth quarter backlog pipeline, whatever, you're kind of comfortable talking about it. Same thing, with, 1P, majority 1P, minority 1P. It sounds like the 1P won't be coming out or, or be deployed till second half of '23. So of course that's probably not a factor in Q4 sales, but just between those three vectors, first solar the comp, having a first solar optimized product, an international sales, and kind of 1P versus two p is, are, are, are you leaning more heavily on some of those and the other seems sounds like international, but, and kind of, greater than 50%, less than 50%, anything kind of high level there just to help us flesh out kind of trends and key drivers?

Sure, sure. Donovan, thanks for the question. I, think those three vectors that you identified, first Solar international growth and the 1P product, adding, adding that to our portfolio are all critical because as we've said before, we're we, we really have tried to pivot the company and, and not be focused on, hey, when will UFLPA end, but what are the things we can control? How can we improve the company and drive the company's success independent of UFLPA? So all, all three of these vectors are critical, so as you know we're shipping for revenue with a first solar Voyager 2P solution and, and as far as the 1P product goes, we're going to ship it in the back half of the year. And it's our intention after we, we ship the initial CRYSTALIN based product, that we will have a First Solar solution as well for the 1P vo -- or excuse me, pioneer product. And then international, like Patrick said, international takes some time, but if you, if you think about sort of a two year period, we're in really good shape in many countries and, and we talked about, some of the great growth we've seen in Australia where we've really invested over time. And Cameron and the team are doing a, a phenomenal job. We just announced our largest project ever in Australia. And so all three of those vectors are, are very critical to us. We're not, obviously we're not guiding for the year, and, and so it's hard for me to give you any specificity on the three vectors. Maybe, maybe I'll, I'll ask Patrick to, to provide a little bit more color, but those three vectors are all critical to our strategy to basically, grow the company and, and have the company drive success independent of UFLPA

Yeah, Donovan, I, I think the way I look at it, kind of, around Q4 and beyond, I mean, obviously we've had international wins. We talked about kind of the, the, the first solar solution. So you're seeing kind of the historical kind of growth off the Q3, we said low's in relation to us adding those kind of additional pro product portfolio and then as well as kind of ultimately expanding internationally. And we're seeing that kind of in the, in the back or in the kind of the front half of the year. you see kind of sequential growth from what we delivered in, in Q4 and our, our guide ultimately in, in Q1. So we're seeing, adoption of our different product portfolios and ultimately our expansion internationally. And that, and that is a, a, a portion of our overall -- overall growth in spite of what's going on in the, the, the overall market and UFLPA, which is why we talked about on our last earnings call that, Q3 we believe was our historical lows, and we're going to springboard from that. And I think you're seeing that with our revenue growth as well as kind of our, our gross margin expansion as well in in those products, in in geographies.

Okay, great. And then as a, a follow up I know you, you're at a -- you have a, with the Q3 trough and still kind of early in coming back from that, you're at a lower revenue number. And so, the, the guidance for Q1 2023 has a, a healthy range there. Maybe in percentage terms, maybe it's not as much in absolute terms but, but I'm curious what, explain if the range, I guess first would just be whether that range really just comes down to project timing that seems like it's probably quite likely the situation, but just confirmation there. And then kind of related to that, if it is just around project timing you, does that leave potential for sort of significant upside for 2023, like generally and maybe circling around to kind of UFLPA or, we're talking a lot about working around that, but there's always sort of the hypothetical possibility of some meaningful resolution there. Right. tensions are high between the US and China, but with everything going on with Ukraine, like we're not really some people are interested in picking a fight with China, some people aren't. And so, there may be parties that be, that try to come to the bargaining table and, and reach some kinds of agreements or accords or, or understandings or whatever. So, if the U.S given the range for, for the first quarter and if the UFLPA, were kind of, magically sort of resolved, would the whole, would the whole UFLPA, the, the actual exposed part of your portfolio, your backlog, would that exposed part sort of just come online quickly and you'd get a really big, like, pop or super positive performance? Or is that all would that continue at a normal trajectory anyway because of, for other reasons or if projects were canceled or postponed or have to, file for a permit extension, so on and so forth?

So Donovan, thanks, thanks for the question. So if you, if you look at our guide, the, the revenue guide is like, I believe $36 million to $40 million. So we tried to, provide a, a a, a reasonable range for, for what we think, we're going to achieve. And, and, and not a not a, a very, a wide range. So we feel, obviously, sitting here today, we feel good about the guidance we're providing for, for Q1. And as we've said before, we're, looking at UFLPA if something does happen and, we're hearing, what I would call some positive signals from UFLPA in terms of shipments, but if there's something big happens, like you described that UFLPA opens up and indeed modules are in the US and available for projects cuz those would, really have to be the modules that are being held today. But, but once the factories come back up and modules start flowing again, yeah, that's, that's certainly an opportunity for us because we have built into our plan that we, you know that UFLPA will persist at some level. And and frankly speaking yeah, there would be I would, I would believe there would be some upside depending on what level of modules that, UFLPA solution put into the U.S market. I, I don't know Phelps if you want Yeah, no?

Hey, Donovan, it Phelps. Yeah. So as, as Sean talked about when we talked about guidance in terms of q1, it is a relatively narrow range, we're feeling very good about the bookings we've had in q4, obviously to your point where a project based business we're supporting projects if there's a delay of time in any individual products that can delay for revenue recognition. The other thing, that we're really excited about for this quarter is, is the guide in terms of the gross margin range it's two to 8% in the positive territory. Which, what you're seeing here is really a lot of the work and the legacy products that we had last year have rolled off and we're starting to see the new products take advantage of the DTV initiatives, et cetera. And so that we think is a very important thing for us on the margin side. But you're exactly correct. I mean, the ramp of the revenue on a, for on a quarter-over-quarter basis will be continued upon projects. And really the, the people that we've had in our backlog, how quickly they can get modules, it's going to be the really the pivot point for us to recognize revenue as quickly as possible. And maybe Patrick, you want to add on to that?

Yeah, I think the one thing too Donovan to focus on is just the growth kind of sequentially, the last two earnings calls of the, the, our backlog, that's not subject to UFLPA review. we talked about what we were able to achieve in, in kind of the, in our Q3 earnings call. Obviously we, we grew backlog by another $240 million in, you know the vast majority of that is not subject to UFLPA review. And so what we've talked about is those have a shorter cycle time to, to revenue. So we've grown our backlog to, kind of historical highs or, record highs. But the vast, or we're getting a majority of the last two quarters of that have come from non UFLPA related zones. And so that time and cycle the revenue is ultimately faster cause you're not subject to when or the availability of modules, right?

So if you look at the, the total backlog and aggregate it, one third of it is now nons subject to UFLPA, right? And so that's, as Patrick alluded to, that's a very big pivot for us. And that's where the focus of the sales team is. And they've done a phenomenal job of, billing backlog with international projects for solar projects or, certain developers are getting crystal and modules and availability in the us and that's going to represent that as well.

Thank you. One moment while we prepare for the next question, and the next question will be coming from Jeff Osborne of Cowen and your line is open.

Hey, good morning. Just a couple questions, I had one clarification for a comment that Patrick made a, you made a, a reference to two years from a international presence to revenue. Was that from a sales perspective or were you trying to say once something's added to backlog, it takes two years to record revenue on that?

No, sorry, sorry, Jeff. So appreciate the, the clarifying question. That's when I say two years, really when you put the boots on the ground and enter a new geography from time to ultimately revenue because it takes time to, to build the relationships, get certified, build, everything around kind of the, the product portfolio and backlog. So we've been in these geographies for, for two plus years now, and we're seeing the benefits of that once we get the PO, it's really, pretty quick to, to, to revenue.So no, it's not …

Nine months from PO to revenue for these international…

In some of the international locations. It's going to be shorter than that.

Okay, good to hear

And then the ones where, ones where we've got a footprint already, right? So if you look at Australia, for example, where we've done 25 projects, you get a purchase order, you're recognizing revenue in accordance with kind of our, our lead times Here're talking about a, a period of, of, of, of weeks to, to a few months.

Got it. That's helpful. And then with the JV, how, how do we think about CapEx for, for 2023? Is there any capital that you're committing to that, or is that all through your third party in the Houston scenario?

So in the, in the partnership, we are making a what I've been characterized as a modest contribution as is the partner. And and then we expect to, to start and ramp up the facility beginning in the back half of this year.

Yeah, Jeff, in terms of context, I just think mid to low, millions of dollars. It's not a massive capital investment that will go into an existing facility. And, we're, we're going to take 45% of the JV as we disclosed previously.

Got it. And is that all for the Texas area? Would you need one in the Midwest as well?

No, we, we can, we can source out of the Texas facility for all of our needs at the current time, and then we'd have the ability in future phases if we wanted to, that we could add additional capacity at the existing location.

Got it. And then the last one I had is just if you could give us a context with the, the nice backlog growth, what, why you feel you're winning. Obviously you've had design to value, it's great to see the margin guidance, but is it, something around labor rates and, and install time, or is it price, is it availability? Just any context would be helpful?

Yeah, so we, we be, we continue to see very positive feedback on the constructability aspect. And we really do feel like we have the, the, the best 2P tracker product out there, and we continue to hear from our customers. And, and there's a lot of excitement as well, given the availability of First Solar modules that we now have a first solar solution. People also are excited about the expansion of our product portfolio to include now a, 1P product as well.

I'm sorry, Patrick, I didn't mean to interrupt. I think Sean's exactly right. I mean, I think if you could break it down, I think one is the constructability advantage, and especially in kind of inflationary environments, high labor cost rates and shortage of labor. that, value gets exacerbated. And customers really look at ways to shape cost and, shape labor. And certainly, the construction times with our, with our two piece solution ultimately does that, the other part that we hear a lot is customer service. If you look at kind of our, legacy team we, we do have the mindset of a developer and our ability to engage with our developers and EPCs and kind of bring that mindset to the, to the tracker. We're viewed as more than just kind of a rafting partner. We're really viewed as a strategic partner and someone who helps bring solutions to the table. And if I hear, more often than not why we win projects, it's really kind of centered around customer service. And obviously you gotota have a competitive, competitive price. And, and we're able to compete against all of our competitors. And obviously with our gross margin guide you can see that we're, we're able to do that profitably as well.

Thank you. One moment while we prepare for the next question. Our next question is coming from Pavel Molchanov of Raymond James. Your is open.

Thanks for taking the question on the Alpha Steel joint venture. Just to clarify, will this be contributing to revenue or is it purely going to reduce your cost of goods? Well, how, how does the accounting work on that?

Yeah, so, so thanks for your question. So from a countering perspective we were been working with the auditors. We do not anticipate what will be consolidating the results on, on our books. So we have a, a 45% interest in the joint venture. And so it won't be contributed to revenue on the top line.

Okay. So it will be minority interest, essentially?

That's correct.

Right. Okay. Okay. That's clear. And yep. Kind of zooming out for a moment, when, when you guys went public, two years ago one of the statistics that you were highlighting was 75% of utility scale projects in the United States were using trackers, but outside the US it was the mirror image only one quarter. How have those numbers changed in the past two years, given everything that's happened?

Yeah, I mean, I think we, we've seen the adoption of trackers and, and kind of continued progress, especially in the regions. that we operate typically when more sophisticated capital gets deployed in those, in those regions, you see ways for the developers to, to maximize their, their IRS. Australia's a good example. We've seen more and more trackers ultimately get, get picked up there places in, in, in Africa, for example, where we've won a a, a number of projects to date, that's traditionally been a fixed tilt market. And we've seen more and more growth and adoption growth and adoption there. I mean, I think, you've seen kind of, we talked about at the IPO, roughly 25%. I mean, I think the, the 2023 numbers are, somewhere in the, the low to mid thirties. So we are seeing ultimately kind of forecast and forecast kind of sequential growth and, and, and trackers. We expect that they continue to improve as, as the markets outside of the US become more and more sophisticated and they're focused on IRS and returns.

Thank you. One moment while we prepare for the next question. The next question will be coming from Kashy Harrison of Piper Sandler, your line is open.

Morning everybody, and thank you for taking the questions. So first one for me great to see gross margins with deposited in q1 and your cost reduction initiatives, manifest in those numbers. If you're able to generate 5% gross margins at just under 40 million, I was wondering if you could speak to where your gross margins would be at a hundred million quarterly run rate. And then maybe if you could give us a sensitivity on where gross margins go if you roll in the manufacturing credit?

So, th thanks, thanks for the question. I think, our, our our belief is still that we can achieve the the gross margins that were discussed back at the time of the IPO. So, that's our, that still remains our objective as a company to get to the 20 and, and ultimately 20 plus percent gross margins. Yeah, I mean, I think the other way to think about it, if you want to go at a theoretical, just go back to our, I think those, our Q2 deck [indiscernible]in terms of, we are showing kind of at different revenue ranges 12% to 18% at $150 million. That's a good, good area just to, at least to put a pin in and sort of thinking about that, obviously this is really good results at this low revenue base. again, we anticipate these would improve over time as the revenue base grows, as, as you're willing to get some, operating leverage on the, on the business and, and, amortize some of that overhead and, and, and cause overhead, et cetera.

Gotcha. And, and do you have any sort of comment on where gross margins could go with the manufacturing credits from the 45x?

Yeah, so I, we're not billing the baseline. We think it's going to be upside as as, as Sean alluded to, we're hearing different different sharing the pools right now. We think, it's, the manufacturing JB was really critical to provide and service our customers with the domestic content. We do think there'll be some benefit coming back to us. With that being said, until we finalize some of the, the IRA benefits, I think it's a little bit uncertain to this point.

Yeah. And the 12% to 18% that Phelps mentioned there, that does not, in mention there, that does not include any benefit from Yeah, that was pre the ira. That's pre ira. So, we, we expect some benefit not forecasting any benefit in, but any benefit would ultimately be accretive to the, to, to the bottom line, so that 12 18% does not include that.

Okay, fair enough. And then I, I was looking at the guidance section of the earnings release. in the release, you, you indicated that you expect to see continued operational improvements in the second quarter but you took out the commentary surrounding your expectation of sequential revenue improvement that you included in the last earnings release. And so I was wondering if you guys could just provide us with some qualitative direction on the revenue trajectory entering the the second quarter?

So, we're, we're we're not guiding beyond the first quarter, obviously. And, and so I would just say, the qualitative guidance we provided is that we, we, we feel good given the, the work that the team has done given the, the international success, the product portfolio that now includes the 1P the product portfolio that now includes first solar solution. So we feel good about the positive trajectory we're on, but we're really not, at this point, given the, the, overall market situation, we're not guiding beyond Q1.

Yeah. And I, I just, as, as I said when we talk about continued operational improvements, right, I think the way you want to think about that is, as Sean said, there's a lot of uncertainty as you go out in the future quarters. That's why we're not getting into the full year at this point. But we do think, Q3 last year was a lows and we'll continue to build revenue off the revenue base on a quarter, over a quarter basis would be our expectation.

Absolutely. That's yeah, I feel very optimistic about that given given where we are and the great work the team has done.

Gotcha. Fair, fair enough. And, and if I could just maybe sneak one more in apologies if you may have alluded to this a little bit earlier. But did you give us a sense of the commercial operational dates of the 400 million of non-UFLPA projects? I'm just trying to get a sense of, what the timeline is for that 400 million to be harvested since it's, not restricted by UFLPA restrictions and I'll leave it there?

Yeah, we didn't, we didn't specifically call out, kind of quarter by quarter when the UFLPA non-UFLPA items are going to be recognized. I mean, I think kind of the expectation as you look at non-UFLPA whether it's domestic or international, the, the cycle time to revenue is obviously much shorter because these projects have modules and they're, and they're moving forward in kind of accordance of what we would call a normal course business. So, these are projects that are, kind of nearing po and will be recognized over the, kind of coming, coming quarters sequentially and one little qualifier. I mean, some of those backlog wins would be over multi-year though, right? So they're 2023 as well as some 2024 deliveries.

Thank you. One moment while we prepare for the next question. The next question will be coming from Maheep Mandloi of Credit Suisse, your line is open.

Hey, morning Maheep Mandloi from Credit Suisse here. Just falling the previous question, how much of that 400 is in the beyond 23?

Yeah, we're not, we're not guiding kind of the, the breakdown of, of ‘23 versus ‘24. I guess the way I would look at it is, there's projects that are going to be delivered over multiple quarters. So purchase orders that you receive in in 2023, you're going to recognize in Q2, Q3, Q4, and, ultimately some could spill into to '24 as well just based on project size and, and, and ultimate delivery schedule. But, the way we're looking at these is they're going to be shorter times to, to revenue than what we've seen kind of historically on modules that are, or projects that are subject to UFLPA review.

Gotcha. The other part, go ahead. I..

Was say multi-project awards. What's nice is it gives you a good base and good kind of ability to forecast short and, and long-term revenue basis. So we're excited about these multi-project, multi customer award wins because it does build us a nice baseline for, for revenue and revenue growth for us to be able to, to feel comfortable about what we're, what we're talking about externally as well.

Yeah. And steel prices have gone up or almost six up 60% since the lows we saw in December, at least in the us. How does that impact the discussions you're having with customers either for future orders or existing bookings? Just trying to understand the impact on pricing and margin for you guys on that?

So we, we have quite a few lessons learned from, from the past year when we dealt with the historic highs in, in both steel and logistics. And, and while you're right that, that as of late some of the, the steel pricing has gone up, but we continue to provide quotes to our customers that have a, a limited window of time because we want to prevent any, any sort of surprises with our customer base, which, which they like about the approach we've taken. So we, we basically manage it the same way we manage to before, which is to give quotes that, that have a limited a limited shelf life.

And then how should we think about like, pricing later this year? Say steel prices remain low, do you expect pricing to come down over here, or price pricing relatively stable right now this year?

So we continue to, to watch the market very, very closely. And there are so many factors at play right now. If if for example, the, a positive outcome happens for UFLPA and suddenly there's a, there's a significant increase in demand for trackers driven by crystal and module supply with, with the resolution of UFLPA. I mean, there's so many geopolitical issues and things going on. It's, it's, it's hard to, to predict exactly what's going on, but we have we continue to have our DTV or design to value and our design to manufacturability initiatives to continue to have a a cost down roadmap so we can regardless of where the pricing goes, that we'll continue to be able to to have a good margin outcome for our shareholders.

Thanks. And then just one last one from me presume the like since there's a limited market for the non UFL P projects, does that increase competition in that, non ufl RFPs and how should we think about the margins for those projects versus owner, normalized margins for U F L P or regular projects?

So we, we never ever underestimate the competition, but, but frankly, we're really happy with the way the way that the sales team has been able to win projects going up against some, some pretty, pretty stiff competition. But frankly speaking, we, we feel really good about the, the manufacturability advantage that we offer our customers. There's more to it than the price. And many of our customers recognize that and, and give us value for that manufacturability when we when we go head to head against the competition. Yeah, the thing I'd add is I think that's informed by everything Sean said about the Q1 margin guide that we have of, positive two to positive eight 8%.

Thank you. One moment while we prepare for the next question. The next question is coming from one moment. Alex Figueroa of Bank of America; your line is open.

Hey guys thanks for squeezing me in here. Appreciate it. Just, just wanted to ask on the backlog, I mean, it, it's pretty wild, right? If we look at what you guys are guiding to in one queue, I mean, even on a sort of growing rate through the year or annualized the level of backlog or line of sight, however you want to think about it is, is really long versus what we would see from your peers. Just wanted to ask, because I, I know you guys include the sort of a combination there between contracted and awarded what portion of that is not contracted currently. And I guess if it's, sort of you're on a verbal or, or there's, negotiation of terms still to come, like what's to prevent somebody from, I guess adjusting or walking from those contracts as it sits currently? Thanks.

Well, I, I mean, I think the way, we look at kind of the contract and awarded, obviously these are projects that are, at times multi-project awards, kind of PO date for over multiple quarters in, in, in multiple years. And so as we look at kind of the, the UFLPA, non-UFLPA, the the 400, as, as as Phelps, as, as, as Phelps talked about and as well as myself, there's a portion of that that's going to be recognized in, in, in 2023, and there's a portion of that that's going to be recognized ultimately in 2024 as well based on project delivery schedules. But if you think about from the customer's perspective, they're looking to simplify their overall supply chain. And so going out and having these kind of onesie and twosie type negotiations, they're really looking at, I've got three to five to seven projects that I want to go out and and, and kind of lump together in a portfolio more a approach. And certainly we've been approached by those customers that want to look at kind of these multi-project awards and there's certain benefits for in, in, in doing that.

Got it. That's, that's super helpful. And then just one more I I wanted to ask just on the cash piece. congrats to gross margins trending back into positive or territory is a very welcome sign, but, but realize, you're still going to be negative cash it looks like on an EBITDA base at least in the first quarter. When do you think about cash on balance sheet? and I know you have, I guess the, the debt covenant terms extended the first quarter. What, what do we think about there just as far as like your liquidity base anything that has to happen there? I know working capital looks like it's relatively drawn. Just anything we should be watching on the debt covenant versus cash in one queue specifically, that would be double Thanks.

No, I mean, so cash it had at 44.4 million. If you think about the cash usage for the year, most of that was actually in q1, right? We are pretty neutral in the last three quarters of the year. You are correct, the revolver covenant, we'll go back to 1 25 at the end of q1. But overall, we're, we're thinking that cash should be relatively neutral for the quarter. There will, there will be some potential timing that we could pull some, pull some cash in that you have every quarter or push cash out. But overall we, we feel good from that perspective. And again, getting the, the turn in terms of getting an improved margin profile, et cetera we think that's going to help alleviate some of the potential cash uses going forward.

Well, thanks. And that concludes the Q&A session for today. I would like to turn the call back over to management for any closing remarks.

Thanks everyone for joining today. We believe we ended 2022 on an improving trajectory in that we're well positioned for the future. We have a lowered cost structure, innovative product line or record pipeline, and very strong backlog at 1.2 billion. And we're looking for good revenue growth in q1, along with continued margin improvement. Thanks again, and we look forward to speaking with you next quarter.

This concludes today's conference call. Thank you all for joining. Enjoy the rest of your day.