Okay, we're ready? All right, good afternoon, everybody. Thank you very much for joining. Next session is with Shoals. So Brandon Moss, CEO, president, CEO? CEO. CEO. Ok ay, my bad. And then Matt Tractenberg, newly appointed IR, head of IR? Finance and IR, yep. Yep. Thank you very much for joining. So let's just get stuck in. Can we start with, you know, the topic du jour, for utility-scale solar? Just kinda project timing. I mean, you, Shoals took down your 2024 outlook on the last call. Can you just kinda talk about what you're seeing, the latest pain points with financing, interconnects, you know, kind of customer types, big, small- Sure. Whatever. Yeah, Mark, thanks for allowing us the time today, so appreciate that. Look, as far as project delays go, you know, we talked about at the quarter, we're seeing a variety of different reasons, and you said it, it's the topic du jour. I mean, it's all the reasons that you've mentioned. What is clear to us is if you look across our customer landscape, from large to small, the reasons for delays really vary on a site-by-site basis, so there's not a common thread. I think what you're seeing more of now is some of the industry publications picking up on these delays. You see it with the EIA data. American Clean Power put out a report with delays, so I think it's being discussed, you know, maybe in greater detail now. You know, we... Again, these project delays, we're confident in our backlog and awarded orders number. What is good about this is the demand for our products has not subsided. It's still very strong. At the quarter, we had, you know, re-record levels of quote activity, which is fantastic to see. And, you know, as far as the quarter's going now, things are playing out as we expected, and we're confident in our guide for Q2. Got it. Okay. Can we talk about kinda competition, market share? That's a question that we get quite a bit. You know, "Shoals is seeing all these project delays. Are they losing share? Sure. I am not finding that, but curious kinda what you're seeing out in the market. Yeah, I think first and foremost, we try to clear up at the quarter around project timing, and I'll do that again, right? So, our sales cycle typically is running a year, north of a year now, about 13 months. So our project sales in 2023 are related to 2024 CODs. So, you know, we have outpaced the market. We did so last year, and we've done it each year since we've been a public company, really outpacing the market 2x. So we're confident in our market share position. You know, as I've commented, like any business, we've got opportunity to grow wallet share. If you go down our customer portfolio from top to bottom, we've got opportunities to do better, and we are putting processes in place to do that. The really encouraging thing for me is, as we meet with customers, we've got, you know, everybody from top to bottom that still is engaged and interested in doing business with Shoals, which is, which is very important. So, you know, I look at it as potential upside for us to continue to grow wallet share with, with, with specific customers, and, and that's very exciting. Got it. Can we turn to shrink back? So there's been two quarters in a row now with no kinda incremental warranty charges. What are you seeing, I mean, since the last call, kind of with the projects in the field? And what are some of the key dates that the investors need to be aware of as far as kind of the case that you have against the supplier, Prysmian? Sure. Yeah, so, you know, I'm very pleased with Shoals' response to market regarding the warranty issue. I think the team has handled it quite well. We're hearing that from customers, which is most important. You know, when we go out and meet with a variety of customers, they're pleased with how we're handling it and the pace that we're handling it. And so, you know, like any business situation, there's bad things that happen sometimes, and you work your best to change that negative into a positive, and we're using these incremental touch points with customers to do just that. You know, our range of impact has not changed. You know, over the last couple quarters, our cash consumption has not changed. You know, the universe of impacted sites has not greatly changed, as we talked about at the quarter. So we're very pleased with that and very pleased with the remediation progress thus far. As it relates specifically to the litigation, this one likely won't be solved fast, right? We're in a discovery stage right now, and the litigation is progressing. Because it's active litigation, I can't obviously share much more than that Sure. Okay. On the ITC case that you have filed against two of your competitors, I believe that you are coming up on an important date there. Can you just kinda talk about what kind of the timeline for everything there and exactly what you're seeking with this, kind of, potentially what you might do down the road if things go favorable here? Yeah. I appreciate you pointing out that we, we filed. I know. I think there seem to have been some confusion around that. So, yes, we've got active litigation going on in the ITC, and as you alluded to, there is an important date coming up, July 12th, in fact, is the initial determination for the case. What is possible is that will be delayed. Because of the caseload, we have heard that these dates get pushed back from time to time. So, you know, we've got our fingers crossed that that it'll continue to progress at the same rate. Basically, what we are seeking is the bar of importation of infringing trunk bus product that is similar to our BLA product. The important dates in that are, again, the July 12th, and then the final determination or ruling will be sometime in November, assuming that July date holds. We are pleased with the progress in the case. We're pleased with, with how we are positioned in the case and, you know, look forward to that final ruling. If that goes favorable, the ITC case would prevent imports. Is there any potential damages that you're seeking? Yeah. So there's no damages in the ITC. That would be a second process through district court. So, you know, we're running our playbook now and, you know, we'll see how that plays out for us. Okay. AD/CVD, the news that case was put forth four or five weeks ago. I understand it's still pretty early, but kinda in this last month or so, can you talk about what you've seen with kinda any impact on project timing, customers not certain if they're gonna have panel availability or not? Sure. Yeah, the customer feedback really has been that this is a non-event in the short term for the most part, because of panel availability. We have heard as much as 18 months of supply on the ground in the U.S. right now. So we've not seen significant challenges here in early days. With the domestic content side of things, the only thing that we've experienced over the course of the last year or so is, you know, just obviously the confusion around domestic content, and then marrying panels to specific projects. Typically, in our design interaction with EPCs, we may have 5 to 10 iterations of design. And so we will see some movement, some potential short-term delays with aligning those panels to specific projects. But, you know, I'm hopeful with the capacity that's coming on online in the States, that this will not cause any long-term impact to the industry like we've seen in the past. Right. Right. Okay. Similar kind of question with election risk: Are you seeing any projects that are being held back because of uncertainty about the election? And on the other side of that, I mean, with domestic content guidelines finally out there over the last kind of four or five weeks, are you seeing any projects that are now finally getting across the finish line? We've had a lot of customers that are inquiring about domestic content. That is, that has been going on since I started with the company in July. I think this clarity has been very helpful. It's been helpful with our customer base, that allows them to better understand how we can apply the labor content of our particular products. It's a great competitive advantage for us as our manufacturing for our products that go into utility-scale solar in Tennessee. You know, we've made and announced a big investment in Tennessee and, you know, plan to remain a U.S.-based manufacturing company supporting the U.S. business. So, our IRA guidelines have been helpful. As it relates to the next presidential election, you know, well, the industry has flourished under both presidents, and I expect that will continue. We're not hearing, you know, broad concern from our customer base around election or that being a particular reason that projects are getting held up. You know, there's been significant investments in Republican states. I think the industry has been a really good piece of growth for the U.S. economy, and I don't expect big changes as a result of the election. Okay. I've noticed you've been talking more and more about, the C&I market being on the radar now. Can we talk about kind of the size of that market? Why—I mean, in the years that Shoals has been around, I mean, why, why now? Sure. Is there kind of a change in your product lineup or just customer interest? Yeah, it's a great question. I think, look, first and foremost, I think about Shoals and our value proposition to the utility-sc ale market. The first piece is around the labor savings and productivity, and that applies to the C&I market, right? In a utility-s cale project, typically, if you use our solution, we can save 20% material costs and about 40% in labor cost. When I think about the C&I market, the community solar market, labor is as much or more a challenge to those smaller EPCs as it is the larger ones. Supply chain is significantly a greater challenge to those smaller EPCs than larger ones. They are trying to piece together, you know, a supply chain infrastructure in some pretty rural areas. It is of huge appeal to them for us to be able to deliver, you know, an engineered product that is designed, built, and deliver that to their, to their site. So I expect, I expect us to have great success in that area. It is not, as all of you are aware, a massive market. I think of it as about 10% TAM expansion to our current U.S. business. You know, 3.5-4 gigs of incremental, of incremental market opportunity. Mm-hmm. Okay. Similar kind of question with international. So you, you've hired a, I forget the exact title, but, a head of, head of international markets. Yeah. Was it this morning? I'm trying to think when the product- This morning. It's been a long week. I'm sorry. The new product introductions, the language in the press release made it sound like those were geared more towards kinda global developers and EPCs. Kinda talk about the European market or just, let's say, international market, new products, kinda when do you think that those could be more meaningful for your financials? Yeah, it was, you know, an important first step for me in this role. International is a big opportunity for us to find a new business leader for those markets. Shoals historically has attacked the international markets with the sales team and really tried to sell a U.S.-based solution globally. And whether it's solar or another market, that is seldom gonna be successful. So we added a senior vice president and GM to the organization. He's part of our executive leadership team as well, and have made great progress here since he's joined the company, call it first of the year. One of his big takeaways was that we needed to do a better job with localization of product, and that is both in the product set that we offer and also where the product is manufactured. So as Mark alluded to today, there was a press release that went out in conjunction with our Intersolar exhibition of some new products that are specific to international markets. You'll see a Mini BLA, a SuperJumper product for home runs. You'll see some new combiner box products as well, and those products will be manufactured, or some of them will be manufactured in local markets, which is very exciting for us. So, look, we're taking a different approach to the marketplace to really drive organic growth. We've got some focus markets that we have really put resources toward, some countries in Europe, South America, Australia, New Zealand, and then as most people are, we are keenly interested in the Middle East and North Africa right now and doing a lot of exploratory work there. So, you know, we expect big things to come in the international space and be a great pillar for us to grow. We announced in the quarter that we had about $78 million in backlog and awarded orders, which is significant for our organization, north of 10%. So, we're excited to see that growth area for us and propel our company into the future. Will that be in-house manufacturing or outsourcing? We will probably crawl, walk, run approach there. Okay. So, yeah, we'll ease into that. Okay. Okay. Then I think you mentioned 20% savings on material cost, 40% in labor. I mean, what would be the target anyway for international markets? I mean, just assuming that some of these markets might have lower labor rates than the U.S. Yeah, we get, we get asked that a lot about our international business and whether Shoals can be successful because of lower labor rates. I guess, first and foremost, they're not lower everywhere, so that's one thing to point out. And really, where they are, where we can lean in is labor availability. So, you know, regardless of the cost of labor, if you can't find it, that is a challenge. So our products, because they are plug-and-play, you do not need skilled electricians to install our product, is gonna be a big, big benefit in other underdeveloped countries. So excited about taking those products to market. Okay. Any questions? Sir. Do you mind waiting one sec? Sorry. Thank you. Sure. When you think about your solar-plus-storage projects, what percentage of your projects are that, and what kind of ASP uptick can we see on that? Yeah, solar-plus-storage, I mean, we're excited about the attachment rates of battery storage. Shoals has participated in BESS solutions over the course of the last few years. We talked about, at the quarter, the sales associated with those products and our EV products are very small. So we are looking forward. We have retooled our product set around BESS. You'll see some load break disconnect products, some larger combiner box products, and very excited to go to market, either directly with utility-scale EPC partners or potentially as an OEM supplier with some of our wire harness products. So, we expect BESS to be a continued focus for the company, and part of our product line, really focusing on that Utility Scale, you know, storage space, along with the solar products. Mm-hmm. Yeah, good question. There was another press release last week. You're buying back some stock. Can you just kinda talk about what that was and what the decision behind that is? Yeah. Capital allocation, obviously a priority for us, something that's discussed quite a bit amongst the executive team and board. You know, Shoals has moved into a period where we are generating significant free cash flow, which is a fabulous thing, and we're able to put that cash to use now in a share buyback program. So we announced a $150 million share repurchase using a $25 million accelerated repurchase program here in the early days. With the dislocation between our share price and obviously where we think the company's valued, it'll offer a great return for our shareholders. The other great thing is the amounts that we chose to do still offers us some great optionality, in how we invest, whether that be inorganically or through organic measures. As I mentioned before, you know, we announced the consolidation of our manufacturing sites in Tennessee about six months ago. So we look to continue to invest organically in the business, you know, drive greater efficiencies and growth in our core solar business. Got it. You've also announced you're gonna have your first Analyst Day in September. That's gonna be in Tennessee, at the new building across the street. You guys kinda give us a sneak preview of what people should be expecting going into that? Sure. Yeah. So we're excited to have the Analyst Day. We chose to do it in Tennessee to give folks the ability to come see our sites. We won't be in the new site yet. We'll do probably a drive-by of the site, but you'll see one of the manufacturing sites that we stood up last year in 2023. Look, we've been working hard to revise our strategy. We'll share what that is. You'll see, you know, a multi-year growth outlook. We'll have some products there, obviously, to share our new product innovations. You'll get to meet a larger breadth of the executive team, and we're extremely excited to host. Any additional comments, Matt? I think we invited some customers to join us. We'll talk about the product portfolio, longer term financial model. So it's an important event for us, so we're excited about it. Got it. Okay. I think it's been about a year now, since the Blattner deal was announced. Can you just kinda talk about, A, progress with that specific customer, but then kind of, B, you know, I mean, that was a huge kind of project or contract. I mean, are you having other conversations with MSA-type agreements? Yeah, we continue to be closely aligned with Blattner. Obviously, they're a fantastic partner of ours. Great working relationship there. So excited to have them as an industry partner, and it's been really exciting to see their growth in the marketplace. You know, as far as MSAs go, I think they're a great thing for both us and the customer. It allows us to plan better, plan our supply chain, you know, achieve efficiencies together. So I think you'll see us continue to do more and more of those. And you know, we announced the acquisition of another large EPC two quarters ago. I think MSAs and framework agreements, probably like a lot of other our peers in the industry, are a great thing to do in, you know, uncertain times around supply chain. I think COVID probably taught us all a lot of lessons about making sure that you've got really strong foundational support in your supply chain. And, you know, MSAs and framework agreements will be a big part of that for Shoals and our customers in the future. Got it. Some financial questions, just gross margins, you know, best in the industry, 40% plus. There is some variability. I mean, this is Utility Scale, so each project is unique, I guess. But, can you just talk about the variability in gross margin, kinda what that means as far as kinda mix of systems versus components, U.S. versus International, anything else to be aware of? Sure. Yeah, look, we are confident in our range of guidance at 40%-45% gross margin. We believe those are sustainable margins for our organization. And, you know, there are mixes, mixed impacts, different impacts quarter to quarter. I think it's probably important to clarify, we get a lot of questions around solutions and components, and the word component is probably a term that I inherited coming in here. When I think of components, I think of almost shelf goods, right? Where you can pull something off the shelf and build it. That is not what we're doing and by way of components as we describe them. Everything that we do that comes out of Shoals is a custom-designed solution, and it's engineered. So where it may not be a BLA full system solution, and we would, we would call it a component solution, it is still an engineered-to-order product that carries, you know, strong margins. So that's, that's probably a point worth clarifying, and Matt and I are talking about how we can maybe bring more light to that at Investor Day. So in terms of quarter-to-quarter margin fluctuation, like any business, operating leverage is a, is a biggie for us. You know, the volumes that we put on the business obviously impact it. With our business, because it's project driven, managing our labor, obviously, is also a challenge quarter to quarter, month to month. As we're ramping things up, we've got to plan ahead. We've got to bring bodies into our facilities to build those projects, and that can have an impact on margins before those revenues are realized. But I think the biggest thing to point out, Mark, is we're comfortable. We get asked a lot around our margin profile, and we are comfortable with that 40%-45% gross margin range. Right. Okay. So you've been CEO for nearly a year now. Can you just talk about kind of the biggest things that you've maybe been surprised by over the last year? What are the things you've learned and kinda what are the biggest things you're excited about for the year coming up? Yeah, I think, look, I am extremely excited about our execution as an organization. When I came into the role, my goal was really to do three things quickly. One was to refine our strategy and make sure that we got buy-in from our board, and then cascaded that strategy to our employee base, and make sure that everybody across the organization was communicated to and aligned on what we're doing. And I feel really good that we've done that. It's crazy to think it's gone so fast that we're in the second cycle of planning now. Certainly it'll be easier than the first cycle of it, but we're working on the second cycle of that. Second, you know, like any small company, we had organizational gaps, and goal was really to drive really build a team and fill those gaps in the organization around functional areas and make sure that our resources were allocated correctly. And we've brought a lot of talent into the organization. Matt's a great example of that. We talked about our International GM. If you follow us on LinkedIn, you see the level of talent we're bringing in and how frequently it is. So I feel really good about the team that we've built. Not a lot of holes left in the organization. We are certainly getting there. Lastly, is really around driving execution. I wanna make sure that we're taking the strategy again and making sure that we've got a data-driven culture, and we've got really good, clear operating metrics all the way down to the shop floor. And if you walk in our facilities, you will see the impact of that throughout the organization, top to bottom. So I think we've made a lot of good progress. You know, we've got some issues, as everybody's aware of, on the legal front that we've got to clear up related to the warranty and the ITC. But I'm really pleased with the shape that this organization is in today and really the results that we continue to generate. Got it. Last chance. Any questions? Please, sir. So, just a fundamental economics question. So you used to share, like, a $0.025 per watt, kind of a pricing number earlier. So if I kinda think about, like you said, 20% material cost reduction, 40% labor, what are we working off? Like, this is, say, an EPC dollar per watt basis, from which you're kinda saving to kind of make the investment into Shoals, like net neutral for the project itself. How should we think about, like, what that base cost is on a cents per watt basis that the developer is spending without Shoals and save with Shoals? Yeah, I mean, we haven't commented specifically on a with and without number in terms of labor and material cost savings. You know, the assumptions that are made around our business and our cents per watt typically range between $0.025 and $0.03, is where people would model us, or I've learned that they've modeled us, and that's probably a reasonable number. Good question. Okay, Brandon, with that, we'll wrap it up. Thank you very much. All right, thank you. Thank you to everybody.