Good day. 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 speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would like to turn the conference over now to your speaker for today, Bill Michalek. You may go ahead. Thank you. Welcome everyone to FTC Solar's Fourth Quarter 2022 Earnings Conference Call. Before today's call, you've 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're available on the investor relations section of our website at 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 speaks only as of the current date. These forward-looking statements include risks and uncertainties. Actual results and events could differ materially from our current expectations. Please refer to our press release and other FTC 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'll discuss 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 contracts and awarded orders, and our definition of this metric is also included in our press release. With that, I'll turn it over to Sean. Thanks, Bill. 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 that 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 Forced 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, 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, renewables 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 all renewable capacity expansion. The low cost to install, coupled with additional long-term demand drivers for solar that include existing government policies, including renewable portfolio standards and the current ITC, corporate awareness and technological improvements, is only further enhanced by current high fossil fuel pricing, discussions of energy security in many countries and the recent passage of IRA in the U.S. We have an incredibly positive market backdrop and tailwinds for long-term global growth. The one gating item required to unlock the potential within the U.S. market, which represents much of our backlog, remains solar module availability. Looking at the U.S. regulatory landscape during the first nine months of 2022, we saw AD/CVD and WRO concerns transition to one remaining issue in UFLPA. In the fourth quarter and more recently, we have seen some early signs and reports of improvement. These include positive trends in trade import data, market reports of small module shipments being released from customs, some module supply agreements being inked, and optimism from some that we are getting closer to a more substantial improvement in the back half of the year. There have also been several announcements about new module capacity outside of China, which is an excellent sign for module availability in 2024 and beyond. Overall, we're hopeful that we'll see more substantial improvement in module flow later this year. As we'll discuss, we don't need to wait for UFLPA resolution to achieve improving financial performance. From a supply chain and procurement standpoint, we started 2022 at historically high prices for steel and logistics, but have since seen improvement in both. Steel is now well off its highs, and logistics is essentially back to historical norms. Given the improvement in logistics, we have fully transitioned back to containerized shipping from the break bulk solution we had implemented to weather the high and uncertain market conditions. That market regulatory and supply chain backdrop, I'll turn now to our operational improvements. As I have mentioned on recent calls, we have not stood idle through the market uncertainty and have used the time to focus on what we can control to best position ourselves for the coming recovery. One area of significant focus has been on improving our cost and gross margin profile. In the first nine months of the year, we maximized our design-to-value initiative, allowing us to take more than 20% of the steel content out of our tracker systems. This helped us create a product cost structure that will enable double-digit gross margins on future projects. We also launched a distributed generation business, which has a high margin profile and will be a positive addition to the business. We have received great interest with initial orders and a robust pipeline. In the fourth quarter, we continued our cost reduction focus and launched our design to manufacturing efforts, which aim to ensure that our products are not only designed for constructability, efficiency and effectiveness, but are also cost-effective to manufacture. As it relates to our product portfolio, in the first part of the year, we were quite busy with the development of innovative new products that resulted in new product announcements during the back half of the year. In the third quarter, we announced a differentiated new 1P tracker solution called Pioneer, which significantly expands our ability to serve new markets both in the U.S. and worldwide. This gives us more opportunities to win projects, whether it's a preference or benefit for 1P. Customer enthusiasm for our new product has been strong, and as you know, we launched Pioneer along with a 500 MW agreement from a top EPC. Our pipeline for Pioneer is growing nicely, and we continue to anticipate first deliveries in the second half of the year. In the fourth quarter, we announced the introduction of a new cost-effective First Solar module solution for our 2P product, which filled a gap in our offering. We have already received orders for this solution and are recognizing revenue. Combined, these new product introductions expand our addressable market while also serving to bolster the non-UFLPA portion of our backlog as we continue to grow revenue. In terms of geography, we entered 2022 as very much a U.S.-focused company in terms of revenue. The investments we've been making to expand our international footprint started to bear fruit early in the year. We have since received awards in four new countries, bringing the total to 10 countries with projects outside of the U.S. We also recorded our largest project in Australia to date at 128 MW. Just today, we announced that we added $240 million of backlog since early November. Of that amount, more than 80% is from international locations, including two more projects in Australia, putting us at more than 25 in that country so far. We believe our new 1P tracker will significantly enhance our ability to further grow internationally. International growth is a key focus for us, particularly with the current regulatory challenges in the U.S. I'm quite pleased to see our continued growth in pipeline and conversion to backlog. We also recently announced a U.S. manufacturing joint venture utilizing domestic steel to strengthen and bolster our domestic supply chain. With the passage of the Inflation Reduction Act, customers are now asking for quotes with U.S. local content, including projects for delivery in the latter half of this year. While we still await additional details from the government on the mechanics of the IRA, we believe this JV will be instrumental in helping us support our customers' needs in the future. For this JV, we partnered with a known existing supplier. The facility located near Houston, Texas, will initially be focused on torque tubes and is expected to begin operation around midyear. Turning to pipeline, in 2022, we saw robust growth and several new record levels, including the international portion of the pipeline, which more than doubled in the first nine months of the year. Today, we have again achieved new record levels in total pipeline, with the international portion now up 150% relative to the start of 2022. International now represents an increasing majority of our pipeline. As you can see from our near-term project awards, is expected to make up a growing portion of our revenue base going forward, further diversifying our revenue and reducing exposure to projects subject to UFLPA review. Finally, with our continued focus on expanding current customer relationships and forming new ones, our backlog has continued to grow nicely despite the constraints in the module market in the U.S. As I mentioned, since our last earnings call in November, we have added $240 million in backlog, bringing the total above the billion-dollar mark for the first time at $1.2 billion. The collective results of these initiatives have led to improved financial performance as we close the year. As we progress through the year working on these initiatives, we completed shipments of our legacy lower margin products in Q3 and reached what we believe was a revenue and margin low point in that quarter, from which we expect to see improvement going forward. In Q4, our performance did improve as expected, and we came in ahead of the midpoint of our guidance on all metrics. This includes revenue that grew 58% sequentially off the low Q3 base and non-GAAP gross margin that improved from close to -50% to approaching break even at -3.4%. Non-GAAP operating expenses in the quarter were at the low or better end of our guidance range, resulting in adjusted EBITDA also coming in better than the midpoint. We are excited to see the results of our DTV and other initiatives begin to show through in a meaningful way in our results, and we see that continuing. Closing out on 2022, we have utilized the downturn to significantly improve our competitive positioning across nearly all aspects of our business. We now have a strong product cost structure on current and future projects, which puts us on track for double-digit gross margins as our revenue run rate recovers. We have a more comprehensive product line that expands our addressable market in the U.S. and internationally. We are growing and diversifying in new markets and are positioned with a strengthened supply chain. We have a record backlog in pipeline that shows that customer adoption globally is increasing as we look ahead to a market that is not only poised to recover, but is poised with powerful long-term tailwinds. As we look ahead to 2023, our focus is solidly on execution, supporting our customers worldwide, continuing to build on our progress, and demonstrating the capabilities of our improved business. We believe we can continue to show margin improvement even in a depressed volume environment, followed by much more significant improvement as module availability and volumes improve in the U.S. With that, I will turn the call over to Phelps. Thanks, Sean. Good morning, everyone. As a follow-up to Sean's comments, I'd like to provide some additional color on the fourth quarter performance and outlook. Let's begin with a discussion of the fourth quarter. Overall, I'm happy to share that we delivered results that were better than the midpoint of our guidance trends on all metrics for the quarter. First, revenue was $26.2 million. While on a year-over-year basis, revenue was down 74%, it did represent a 58% increase versus the prior quarter as we begin to build some momentum moving out from the lows in 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 saw nice sequential growth in revenue, UFLPA has constrained our near-term ability to convert backlog into revenue with the bulk of our backlog, roughly two-thirds, remaining subject to UFLPA. On the plus side, our non-UFLPA backlog doubled quarter-over-quarter, now represents a third of our total backlog. 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 midpoint 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 were able to accomplish this due to the following. First, the legacy low-margin products we discussed in prior quarters were completed during Q3. Second, the new products we now deliver benefit from our team's efforts on the DTV front, coupled with a more normalized supply chain cost in both steel and shipping. The team is excited to see the early fruits of our labor starting to show in our results. On a year-over-year basis, we delivered improvement to non-GAAP gross loss by $6.5 million, even in the face of significantly lower revenue in Q4 of 2022 versus the prior period in 2021. $26.2 million this year versus $101.7 million last year. The improvements were driven primarily by improved tracker and logistics direct margins. Our GAAP operating expenses were $17.9 million. On a non-GAAP basis, including the stock-based compensation, charges associated with the FCX legal settlement, and certain other expenses, our operating expenses was $10 million compared to $9 million in the year-ago quarter. This was at the lower end of our guidance range. The slight year-over-year increase was driven by an increase in the R&D expenses as well as the absence of credits that we had in the year-ago quarter. We continue to keep a keen eye on expenses as we manage through this period. To that end, we've executed a targeted headcount reduction during the quarter, representing approximately 8% of our labor force. In addition, we continue to keep a close eye on our non-labor spend. GAAP net loss is $20.5 million or $0.20 per share compared to the loss of $25.6 million or $0.25 per share in the prior quarter and compared to a net loss of $23.9 million in the year-ago quarter. Collectively, results from our improved margins and careful management of operating expense and overhead slowed down to our adjusted EBITDA results. For the quarter, the adjusted EBITDA loss, which excludes approximately $9.1 million, including stock-based compensation expense, certain consulting and legal fees, severance, and other non-cash items, was $11 million, better than the midpoint of our guidance range of $12.3 million. The results represent an improvement of $6.7 million compared to an adjusted EBITDA loss of $17.7 million in the prior quarter and compares to $16.4 million in the year-ago quarter. Finally, regarding liquidity, we ended the quarter with a modest usage of cash and ended with $44.4 million. In addition, we continue to hold no debt on the balance sheet, have an undrawn credit revolver, as well as a $100 million ATM program which we have not accessed to date. With that, let's turn our focus to the outlook. Based upon our current view, we continue to expect sequential revenue growth in the first quarter. We also expect gross margin to continue to show improvement quarter-over-quarter and cross into the positive territory. Specifically, our targets for the first quarter call for the following: revenue between $36 million and $40 million, representing 37%-53% growth off of the Q4 2022 results. Non-GAAP gross margin between $0.7 million and $3.2 million, or between 2% and 8% of revenue. Non-GAAP operating expenses between $10 million and $11 million, finally, adjusted EBITDA loss between $10.3 million and $6.8 million. For the second quarter, we expect to see further operational improvements. Overall, we continue to believe the ingredients are in place for a very strong industrial recovery and long-term growth. The rate of recovery in our largest market, the U.S., will largely be determined by the pace of improvement for the importation of modules. Once improvements do occur at scale, we believe FTC Solar is increasingly well-positioned competitively to capitalize on that growth with a lower cost structure, an innovative product line, a record pipeline, and more than $1 billion in backlog. With that, we conclude our prepared remarks, and I will turn it over to the operator for any questions. Operator? Thank you. One moment while we prepare ourselves for the Q&A session. If you would like to ask a question, please press star one one on your telephones. 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 million is 1P versus 2P? Also can you talk through how much of the $240 million you expect to be delivered in 2023? 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. We're excited about the progress we're making on non-UFLPA, and as you described in the most recent bookings. Let me turn it over to Patrick and let him provide a little bit of color on the mix. In terms of kind of 1P and 2P, Phil, you know, we didn't give 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. In terms of just kind of overall revenue kind of mix on the non-UFLPA, you know, we do expect to start recognizing revenue for those projects in the non-UFLPA impacted areas in the near term. It's not something that's kind of elongated out. We do expect to start recognizing revenue on that 240 in the near term. Great. Looking ahead, can you talk about, what you expect in terms of the bookings momentum? You know, you've had a really nice run here in spite of the UFLPA module constraints. Would you expect, you know, as we get into Q2 and 3, that the bookings momentum sustains, given the Inflation Reduction Act and your international success there? Thanks. We are very excited about the bookings momentum. You know, frankly speaking, I think, you know, we've done a lot of work internationally, 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. For the back half of the year, we're expecting continued momentum. In addition, you know, we're hopeful that there'll be some form of relief on UFLPA, though we're certainly not counting on it, but we're hopeful that that would also add to the momentum that we're seeing for the back half of the year. 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, you know, the First Solar solution. We've got our 2P, 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. We talked about kind of the international expansion that we have. It's typically kind of two years to revenue. If you kind of rewind the clock, we've been in a lot of these international locations for two+ years, you're starting to see kind of the same trajectory and trend that we had in the U.S. back in 2019, where you know, start getting into two, three, four, five different customers. You grow the share of wallet, you grow the footprint, now you've got a backlog and pipeline that's dependable for kind of upcoming revenue. We're certainly excited about the momentum that we're seeing in the bookings. You know, the customer excitement around IRA in the U.S. is certainly extremely high. You know, we're looking forward 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 torque tubes subsidy, you know, we put out there recently that, you know, it seems like for this year, the torque tube manufacturers may secure between 30%-40% of that subsidy. You guys should be able to get the balance of that, over the coming, you know, four or five years, that decrements, you know, maybe by, you know, 5%-10% a year until we get to about 10% in 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 resonate with you guys? If not, you know, what kind of structures are you guys looking at? Thanks. We are hearing similar things. I would say that indeed, it does resonate with us in what we've heard so far, and then what our expectations are for our joint venture. I'd say, yeah, we're somewhat aligned. I mean, we're waiting to see what the final regs all say, 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. Thanks, Phil. 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. I'm gonna kind of follow-up on Phil's question here, and try and. I know you guys probably don't wanna get too specific on some of these dynamics that help working around the weaker, you know, the UFLPA. I'm curious, you know, if we can talk maybe in terms of like, you know, broader trends or kind of, you know, minority and majority of sort of mix. If I, if I think about the maybe call, like, three vectors that give you the flexibility to kind of work around the UFLPA. I think of those three vectors as, you know, first, you know, having a better solution now that pairs with First Solar panels is one, First Solar, and then the second one would be the international sales. The third one that, you know, maybe kind of, you know, overlaps in some ways is having the 1P product now because, you know, maybe that's part of what enables a certain amount of international sales. You know, it's too much to answer in one question, but, you know, you can imagine we could make like a two by three matrix or table or something and say, you know, were First Solar panels, you know, more than 50% or less than 50%, you know, of sales in the fourth quarter and, or in the backlog or in the pipeline? Are international sales, you know, above the 50% or below the 50% mark, you know, fourth quarter backlog, pipeline, whatever you're kind of comfortable talking about? Same thing with, you know, 1P, you know, majority 1P, minority 1P. It sounds like the 1P won't be coming out or be deployed till second half of 2023. Of course, that's probably not a factor in Q4 sales. Just between those three vectors, you know, First Solar, having a First Solar optimized product and international sales and kind of 1P versus 2P, are you leaning more heavily on some of those than the others? It seems like international, and kind of, you know, 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 that to our portfolio are all critical because as we've said before, we really have tried to pivot the company and not be focused on, you know, 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? All three of these vectors are critical. As you know, we're shipping for revenue with a First Solar, Voyager 2P solution. As far as the 1P product goes, we're gonna ship it in the back half of the year. It's our intention, after we ship the initial crystalline-based product, that we will have a First Solar solution as well for the 1 P Voya- or should be Pioneer product. International, like Patrick said, you know, international takes some time. If you think about sort of a two-year period, you know, we're in really good shape in many countries. We talked about, you know, 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 phenomenal job. We just announced our largest project ever in Australia. All three of those vectors are very critical to us. We're not, you know, obviously we're not guiding for the year and so it's hard for me to give you any specificity on the three vectors. Maybe I'll ask Patrick to provide a little bit more color. Those three vectors are all critical to our strategy to basically, you know, grow the company and have the company drive success, independent of UFLPA. Yeah, Donovan, I think the way I'd look at it, you know, kind of, you know, around Q4 and beyond, I mean, obviously we've had international wins. We talked about kind of the First Solar solution. You're seeing kind of the historical kind of growth off the Q3, you know, we said lows, in relation to us adding those kind of additional product portfolio and then as well as kind of ultimately expanding internationally. We're seeing that kind of in the back or in the kind of the front half of the year. You know, you see kind of sequential growth from what we, you know, delivered in Q4 and our guide ultimately in Q1. We're seeing, you know, adoption of our, you know, different product portfolios and ultimately our expansion internationally. That, and that is a portion of our, of our overall growth in spite of what's going on in the, the overall market in UFLPA, which is why we talked about on our last earnings call that, you know, Q3, we believe was our historical lows, and we're gonna springboard from that. I think you're seeing that with our revenue growth as well as kind of our gross margin expansion as well in those products and geographies. Okay, great. As a follow-up, you know, I know you're with the Q3 trough. You know, still kinda early in coming back from that, you know, you're at a lower revenue number. You know, the guidance for Q1 2023 has a healthy range there, maybe in percentage terms, maybe it's not as much in absolute terms. You know, I'm curious 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, just confirmation there. Kind of related to that, if it is just around project timing, you know, does that leave potential for sort of significant upside for 2023, like, generally? Maybe circling around to kinda UFLPA, we're talking a lot about working around that. you know, there's always sort of the hypothetical possibility of some meaningful resolution there, right? You know, tensions are high between the U.S. and China, but with everything going on with Ukraine, like we're not really, you know, some people are interested in picking a fight with China, some people aren't. you know, there may be parties that be that try to come to the bargaining table and reach some kinds of agreements or accords or understandings or whatever. you know, if the U.S., given the range for the first quarter, and if the UFLPA, you know, were kind of poof, magically sort of resolved, would the whole UFLPA be the actual exposed part of your backlog? Would that exposed part sort of just come online quickly and you'd get a really big, like, you know, pop or super positive performance? 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, you know, file for a permit extension, so on and so forth? Donovan, thanks for the question. If you look at our guide, the revenue guide is like, I believe, $36 million-$40 million. We tried to, you know, provide a reasonable range for, you know, for what we think, you know, we're going to achieve and not a very, you know, wide range. We feel, you know, obviously, you know, sitting here today, we feel good about the guidance we're providing for Q1. As we said before, you know, we're, you know, looking at UFLPA, if something does happen, and, you know, we're hearing, you know, what I would call some positive signals from UFLPA in terms of shipments. If there's something big happens, like you described, that UFLPA opens up, and indeed modules are in the U.S. and available for projects, cause those would, you know, really have to be the modules that are being held today. Once the factories come back up and modules start flowing again, yeah, 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. You know, frankly speaking, yeah, there would be, I would, you know, I would believe there would be some upside, depending on what level of modules that, you know, a UFLPA solution put into the U.S. market. I don't know if, Phelps, if you wanna? Hey, Donovan. It's Phelps. 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, we're a project-based business. We're supporting projects. If there's a delay of time in any individual projects, that can delay the revenue recognition. The other thing, you know, that we're really excited about for this quarter is the guide in terms of the gross margin range. You know, it's 2%-8%, it's in the positive territory, which, you know, what you're seeing here is really a lot of the work in 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. So that, we think, is a very important thing for us on the margin side. You're exactly correct. I mean, the ramp of the revenue on a quarter-over-quarter basis will be contingent upon projects. Really, the people that we've had in our backlog, how quickly they can get modules is gonna be really the pivot point for us to recognize revenue as quickly as possible. Maybe, Patrick, you wanna add on to that? I think the one thing too, Donovan, to focus on is just the growth kind of sequentially, you know, in the last two earnings calls of our backlog that's not subject to UFLPA review. You know, we talked about what we were able to achieve in our Q3 earnings call. Obviously, we grew backlog by another $240 million and, you know, the vast majority of that is not subject to UFLPA review. What we've talked about is those have a shorter cycle time to revenue. We've grown our backlog to, you know, kind of historical highs, or, you know, record highs. You know, the vast majority of the last two quarters of that have come from non-UFLPA related zones. That time and cycle to revenue is ultimately faster 'cause you're not subject to when or the availability of modules. Right. If you look at the total backlog in aggregate, one-third of it is now non-subject to UFLPA, right? That's, as Patrick alluded to, that's a very big pivot for us. That's where the focus of the sales team is. They've done a phenomenal job of, you know, building backlog with international projects, for solar projects, or, you know, certain developers are getting crystalline modules and availability in the U.S., and that's gonna represent that as well. Fantastic. Well, thank you guys. I'll take the rest of my questions offline. Thanks, Donovan. Thanks, Donovan. Thank you. One moment while we prepare for the next question. The next question will be coming from Jeff Osborne of Cowen. Your line is open. Good morning. Just a couple questions. I had one clarification for a comment that Patrick made. You made 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, Jeff. Appreciate 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 build the relationships, get certified, build, you know, everything around kind of the product portfolio and backlog. We've been in these geographies for two+ years now, and we're seeing the benefits of that. Once we get the PO, it's really, you know, pretty quick to revenue. No, it's not- Like six to nine months from PO to revenue for these international locations? In some of the international locations, it's gonna be shorter than that. Okay, good to hear. The ones where we've got a footprint already, right? If you look at Australia, for example, where we've done 25 projects, you know, you get a purchase order, you're recognizing revenue, in accordance with kind of our lead times. You're talking about a, you know, a period of weeks to a few months. Got it. That's helpful. With the JV, how do we think about CapEx for 2023? Is there any capital that you're committing to that, or is that all through your third party in the Houston area? In the, in the partnership, we are making what I would characterize as a modest contribution, as is the partner. We expect 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. It will go into an existing facility and, you know, we're gonna take 45% of the JV as we disclosed previously. Got it. Is that all for the Texas area? Would you need one in the Midwest as well? No. We can source out of the Texas facility for all of our needs at the current time. 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. Then the last one I had is just if you could give us a context with the nice backlog growth, you know, why you feel you're winning. Obviously, you've had design-to-value. It's great to see the margin guidance. Is it, you know, something around labor rates and install time, or is it price? Is it availability? Just any context would be helpful. Yeah. Sure. We continue to see very positive feedback on the constructability aspect, and we really do feel like we have the best 2P tracker product out there. We continue to hear from our customers 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, especially in kind of inflationary environments, high labor cost rates and shortage of labor, you know, that value gets exacerbated. Customers really look at ways to shape cost and shape labor. Certainly, you know, the construction times with our 2P solution ultimately does that. You know, the other part that we hear a lot is customer service. If you look at kind of our, you know, legacy team, you know, we do have the mindset of a developer and our ability to engage, you know, with our developers and EPCs and kind of bring that mindset to the tracker. We're viewed as more than just kind of a racking partner. We're really viewed as a strategic partner and someone who helps bring solutions to the table. If I hear, you know, more often than not, why we win projects, it's really kind of centered around customer service. Obviously, you've got to have a competitive price, and we're able to compete against, you know, all of our competitors. Obviously, with our gross margin guide, you can see that we're, you know, we're able to do that profitably as well. Perfect. That's all I had. Thank you. Thanks, Jeff. Thank you. One moment while we prepare for the next question. Our next question is coming from Pavel Molchanov of Raymond James. Your line 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? Like, how does the accounting work on that? Yeah. Thanks for the question. From accounting perspective, you know, we've been working with the auditors. We do not anticipate we'll be consolidating the results on our books. We have a 45% interest in the joint venture, it won't be contributed to revenue on the top line. Okay. It will be minority interest, essentially? That's correct. Right. Okay. Okay, that's clear. Yeah, that's correct. Yep. Kind of zooming out for a moment, when you guys went public, you know, two years ago, one of the statistics that you were highlighting was 75% of utility-scale projects in the United States were using trackers. Outside the U.S., 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've seen the adoption of trackers, and kind of continued progress, especially in the regions, you know, that we operate. Typically, when more sophisticated capital gets deployed in those regions, you see ways for the developers to maximize their IRR. You know, Australia is a good example. We've seen more and more trackers ultimately get picked up there. You know, places in Africa, for example, where we've won a number of projects to date that's traditionally been a fixed tilt market. We've seen more and more, you know, growth and adoption there. I mean, I think, you know, you've seen. We talked about at the IPO, you know, roughly 25%. I mean, I think the 2023 numbers are, you know, somewhere in the low to mid-thirties. We are seeing ultimately kind of forecast and forecasted kind of sequential growth in trackers. We expect that to continue to improve, as the markets outside of the U.S. become more and more sophisticated, and they're focused on IRRs and returns. Got it. Thanks very much. Thanks. Thanks. Thank you. One moment while we prepare for the next question. The next question will be coming from Kashy Harrison of Piper. Your line is open. Good morning, everybody, thank you for taking the questions. First one for me, you know, great to see gross margins with the positive in Q1, and your cost reduction initiatives, you know, 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 $100 million quarterly run rate? Maybe if you could give us a sensitivity on where gross margins go if you roll in the manufacturing credit? Thanks for the question. I think, you know, our belief is still that we can achieve the gross margins that were discussed back at the time of the IPO. You know, that still remains our objective as a company to get to the 20 and ultimately 20+% gross margins. Yeah. I mean, I think the other way to think about it, if you wanna go at it theoretical, just go back to our, I think it was our Q2 deck, Kashy, in terms of, you know, we were showing kind of at different revenue ranges, 12%-18% at $150 million. That's a good area just to at least to put a pin in and start thinking about that. You know, 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 you're willing to get some, you know, operating leverage on the business and amortize some of that overhead and cost, overhead, et cetera. Gotcha. And do you have any sort of comment on where gross margins could go with the manufacturing credits from the Section 45X? Yeah. You know, we're not billing the baseline. We think it's gonna be upside as, you know, Sean alluded to. We're hearing different sharing of pools right now. We think, you know, it's, you know, the manufacturing JV was really critical to provide and service our customers with the domestic content. We do think, you know, there'll be some benefit coming back to us. With that being said, until we finalize some of the IRA benefits, I think it's a little bit uncertain at this point. Yeah. you know, the 12%-18% that Phelps mentioned there, that does not include any benefit from. Yeah. That was pre the IRA. That's pre-IRA. You know, we expect some benefit, not forecasting any benefit in, but any benefit would ultimately be accretive to the bottom line. That 12%-18% does not include that. Okay. Fair, fair enough. I was looking at the guidance section of the earnings release. You know, in the release 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. I was wondering if you guys could just provide us with some qualitative direction on the revenue trajectory entering the second quarter. You know, we're not guiding beyond the first quarter, obviously. I would just say, you know, the qualitative guidance we provided is that we feel good given the work that the team has done, given the international success, the product portfolio that now includes the 1P, the product portfolio that now includes for a solar solution. We feel good about the positive trajectory we're on. We're really not, you know, at this point, given the, you know, overall market situation, we're not guiding beyond Q1. I just, you know, as I said, when we talk about continued operational improvements, right? I think, the way you wanna think about that is, as Sean said, there's a lot of uncertainty as you go out into future quarters. That's why we're not guiding to the full year at this point. We do think, you know, Q3 last year was the lows, and we'll continue to build revenue off the revenue base on a quarter-over-quarter basis, would be our expectation. Absolutely. That's. Yeah, I feel very optimistic about that given where we are and the great work the team has done. Gotcha. Fair enough. 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, you know, what the timeline is for that $400 million to be harvested since it's, you know, not restricted by UFLPA restrictions. I'll leave it there. We didn't specifically call out, you know, kind of quarter by quarter when the non-UFLPA items are gonna be recognized. I mean, I think kind of the expectation as you look at, you know, non-UFLPA, whether it's domestic or international, the cycle time to revenue is obviously much shorter because these projects have modules, and they're moving forward in kind of accordance of what we would call a normal course business. You know, these are projects that are, you know, kind of nearing PO, and will be recognized over the, you know, kind of coming quarters sequentially. One little qualifier. I mean, some of those backlog wins would be over multi-year, though, right? There are 2023 as well as some 2024 deliveries. Got it. Helpful. Thank you. Thanks. Thanks for the questions. Thank you. One moment while we prepare for the next question. The next question comes from Maheep Mandloi of Credit Suisse. Your line is open. Hey, morning. Maheep Mandloi from Credit Suisse here. Just following on the previous question, how much of that 400 is in the beyond 2023? Yeah, we're not guiding kind of the breakdown of 2023 versus 2024. You know, I guess the way I would look at it is, you know, there's projects that are gonna be delivered over multiple quarters. Purchase orders that you receive in 2023, you know, you're gonna recognize in Q2, Q3, Q4, and, you know, ultimately some could spill into 2024 as well, just based on project size and ultimate delivery schedule. You know, the way we're looking at these is they're gonna be shorter times to revenue than what we've seen kind of historically on projects that are subject to UFLPA review. Gotcha. The other part- Yep. Sorry, go ahead. I was gonna say with these multi-project awards, what's nice is it gives you a good base and good kind of, ability to forecast, you know, short and, long-term revenue basis. We're excited about these multi-project, multi, customer award wins because it does build us a nice baseline for revenue and revenue growth for us to be able to feel comfortable about what we're, what we're talking about externally as well. Got it. Got it. Steel prices have gone up or almost up 60% since the lows we saw in December, at least in the U.S. How does that impact the discussions you're having with your customers, either for future orders or existing bookings? Just trying to understand the impact on pricing and margin for you guys on that. We have quite a few lessons learned from the past year when we dealt with the historic highs in both steel and logistics. While you're right that as of late some of the steel pricing has gone up, but we continue to provide quotes to our customers that have a limited window of time because we want to prevent any sort of surprises with our customer base, which they like about the approach we've taken. We basically manage it the same way we managed it before, which is to give quotes that have a limited, a limited shelf life. Then how should we think about like pricing later this year? Say, if steel prices remain low, do you expect pricing to come down over here or is pricing relatively stable right now this year? We continue to watch the market very, very closely and, you know, there are so many factors at play right now. If a positive outcome happens for UFLPA and suddenly there's a significant increase in demand for trackers driven by crystalline module supply with the resolution of UFLPA. I mean, there are so many geopolitical issues and things going on. It's hard to predict exactly what's going on. We have, we continue to have our DTV, our design-to-value and our design-to-manufacturability initiatives to continue to have a cost down roadmap so we can, you know, regardless of where the pricing goes, that we'll continue to be able to have a good margin outcome for our shareholders. Thanks. Just one last one from me. Since there's a limited market for the non-UFLPA projects, does that increase competition in that, you know, non-UFLPA RFPs and kind of, how should we think about the margins for those projects versus, on a, you know, normalized margins for the UFLPA or the regular projects? We never ever underestimate the competition, but frankly we're really happy with the way that the sales team has been able to win projects. Going up against some pretty stiff competition. Frankly speaking, we feel really good about, you know, the manufacturability advantage that we offer our customers. There's more to it than the price. Many of our customers recognize that and give us value for that manufacturability when we go head-to-head against the competition. The thing I'd add is I think that's informed by everything Sean said about the Q1 margin guide that we have of, you know, +2% to +8%. Got it. All right. No, that's all for me. Thanks. I'll take the rest offline. Thank you. Thank you. One moment while we prepare for the next question. The next question is coming from. One moment. Julien Dumoulin-Smith of Bank of America, your line is open. Hey, guys. Thanks for squeezing me in here. Appreciate it. Just wanted to ask on the backlog. I mean, it's pretty wild, right? If we look at what you guys are guiding to in 1Q, I mean, even on a sort of growing rate through the year or annualized, the level of backlog or line of sight, however you wanna think about it, is really long versus what we would see from your peers. Just wanted to ask, 'cause I know you guys include the sort of a combination there between contracted and awarded. You know, what portion of that is not contracted currently? I guess if it's, you know, sort of you're on a verbal or there's, you know, negotiation of terms still to come, like, what's to prevent somebody from, you know, I guess, adjusting or walking from those contracts as it sits currently? Thanks. Well, I mean, I think the way, you know, we look at kind of the contracts and awarded, obviously these are projects that are, you know, at times multi-project awards, you know, kind of PO dates are over multiple quarters and multiple years. As we look at kind of the non-UFLPA, the 400, you know, as Phelps talked about and as well as myself, you know, there's a portion of that that's gonna be recognized in 2023, and there's a portion of that that's gonna be recognized ultimately in 2024 as well based on project delivery schedules. If you think about from the customer's perspective, they're looking to simplify their overall supply chain. Going out and having these kind of onesie and twosie type negotiations, they're really looking at, you know, I've got three to five to seven projects that I wanna go out and kind of lump together in a portfolio more a-approach. Certainly, we've been approached by those customers that wanna look at kind of these multi-project awards, and there are certain benefits, in doing that. Got it. That's super helpful. Just one more. I wanted to ask just on the cash piece. You know, Congrats to gross margins trending back into positive territory is a very welcome sign, but realize, you know, you're still gonna be negative cash, it looks like, on an EBITDA base at least, in the first quarter. When you think about cash on balance sheet, you know, I know you have, I guess, the debt covenant terms extend to the first quarter. 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 1Q specifically? Would be helpful. Thanks. No, I mean, you know, cash it had $44.4 million. If you think about the cash usage for the year, most of that was actually in Q1, right? We were pretty neutral in the last three quarters of the year. You are correct. The revolver covenant will go back to 125 at the end of Q1. Overall, you know, we're thinking that cash should be relatively neutral for the quarter. There will be some potential timing that we could pull some cash in that you have every quarter or push cash out. Overall, we feel good from that perspective. Again, getting the turn in terms of getting an improved margin profile, et cetera, we think that's gonna help alleviate some of the potential cash usage going forward. Got it. Thanks, guys. We'll take the rest offline. Okay. Thanks. Thank you. Well, thank- 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 and that we're well-positioned for the future. We have a lowered cost structure, innovative product line, a record pipeline, and very strong backlog at $1.2 billion. 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.