FTC Solar Inc Stock

Thank you. Good day and thank you for standing by. Welcome to the FTC Solar Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again.

Please be advised that today's conference is being recorded. I would now like to hand the conference call over to Bill Michalik. Please go ahead.

Thank you and welcome everyone to FTC Solar's second quarter 2026 earnings conference call. For today's call, you may have reviewed our earnings release and supplemental financial information which were posted earlier today. If you haven't reviewed these documents, they're available in the investor relations section of our website at fdcsolar.com. I'm joined today by Anthony Carroll, the company's president and CEO, Kathy Beynon, the company's chief financial officer, and Patrick Cook, the company's head of capital markets and BD. Before we begin, I remind everyone that today's discussion includes four of the forward-looking statements based on our assumptions and beliefs in the current environment and speaks 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 accepted 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. With that, I'll turn the call over to Anthony.

Thanks Bill and good morning everyone. I'm pleased to speak with you all today following my first full quarter as CEO. Today I'll share some thoughts on the state and positioning of the business and some recent highlights. Then turn it over to Kathy to tell you about our second quarter revenue, which was at the high end of our range. as well as our continued outlook for a strong second half of the year. If you've been following FTC Solar's progress over the last couple of years, you know that it's about taking the company with a great technology in a 2P niche and opening up the vast majority of the market with a 1P platform. This included developing a really compelling 1P tracker platform, getting quality qualified on all the modules, expanding the platform for customer needs across wind, stow, and terrain, and then systematically going through the customer qualification and AVL process to gain access to bid on projects. It's been an incredible amount of work by the team, and great work at that, really put the company in a great position to grow and scale.

During that timeline, I was brought in to lead the customer advisory board. Then late last year, I joined the board of directors. At the time of my first conversation with you on the last quarter's earnings call, I was only about five days into my tenure as CEO. have another 90 days behind me and by my wife's count I have spent more than 80 of those days on the road. During that time, I've met with countless customers, prospects, suppliers, employees, and others, and I believe we have continued good progress in the areas where we have momentum, and we have taken early actions in some areas where we have opportunities to improve. Today I'm going to focus on five key areas. The first is the need to methodically expand our customer base with the top 10 EPCs and developers. We shared last quarter that we had achieved AVL approval from nine of the top 10 EPCs.

This is meaningful, as EPCs don't just add vendors to their AVL for nothing. It's time consuming and requires a lot of work on both sides. So it truly puts us in a position to bid on a significant and increasing amount of business. focus now is on converting these opportunities with this group. A good recent proof point. Just within the past two weeks, we received the new 400 megawatt PO from a top five EPC for a new 1P project that is also for a top five developer in the US. We have worked with this EPC on other projects recently, and we're excited to see a nice-sized follow-up on project. We hope to share more news about continuing growth with these customers. We also recently received a new 1P purchase order from a top developer that has been a 2P customer of ours.

It's about a 100 megawatt project on the East Coast, but notable that it is our first 1P project with them and represents a continued strengthening of the relationship. obviously it's a project in the past would have gone to another top provider so that's two new projects with top players and I expect we will add more with the two new customers from the top ten lists by year-end There are a couple of common themes that I hear repeatedly from customers and prospects that support our optimism for continued penetration. One is the desire for diversification in the tracker space. While there are good companies in the space, the share is pretty concentrated, and I'm believe there is a strong interest in having better selection and diversification with another strong player in the mix. And the other theme, which has been remarkably consistent, is that customers genuinely value our products and services. The CEO of a leading developer regularly tells me that our tracker technology is best in class. and that we should be a much larger company by now. When our solution, which customers describe as easier and faster to install, enables a crew to finish an installation up to 40% faster and move on to the next project sooner, that translates directly into higher profitability for them. Another industry leader told me recently that IRR is the number one factor in selecting suppliers.

Whether we add value for customers through a faster install, or as is also increasingly the case, through our engineering team enabling more power or less land grading through a more efficient design, that is real value. The second key focus area is to quickly make progress on bookings. We've done a great job getting on AVLs, and actually since the last call we were added to the AVLs of five more large EPCs and six more large developers. continue that work but I believe we have a critical mass with customers at this point and we are in great shape with a significantly expanded opportunity set Now that we're on the AVLs and getting access to BID, and the quality of our pipeline is improving as more business is tied to larger players, we need to close on an increasing number of projects. To support this, we have been adding strong new talent to bolster our sales team, and will continue to add strategically there and in other parts of the company. We've also been utilizing our software team and AI to help improve our bidding and other process throughput and quality, and we are seeing material improvements. International markets also represent a significant opportunity for us. I'll talk more about this in future calls, but to give a couple of updates.

We recently had a new win in Australia at about 90 megawatts that has deliveries happening in the second half of the year. We're also set to begin deliveries on a 330 plus megawatt project in Australia in the second half. This is a project that we did first announce in March of 2025, but the project timeline was revised and we just received notice to proceed in Q2. So while it's not a new win, it's moving ahead, and we're excited about that. And I'm also pleased to announce that we recently entered the India market and have already won multiple initial projects there, ranging from pilot size to 100 plus megawatt projects with large and well-known customers. We will have more to share about our progress there in the coming weeks and months, but I did want to share that news. shipments in this region have been ongoing in 2026. in aggregate over the past three quarters now we've been booking close to 60 million per quarter and we're looking to materially increase that The third focus area is ramping revenue in the second half of this year and into 2027. We were able to grow revenue by 52% sequentially in the second quarter.

We're guiding for Q3 growth at the midpoint of another 24%, and we're reaffirming our full year growth outlook for 2026 of 40% for the year. applying an even stronger Q4. At this point, we have about 80% of our second half revenue needs already covered with a number of additional project decisions expected in the coming weeks that have the potential to drive that above 100% and that's what we're aiming for. More important to me than any particular quarterly growth rate is that we're continuing to execute systematically and layer in more and more projects and build that sustainable growth for the future. And we're on a good path. Fourth, our cost structure and break-even revenue level must improve. The company has made great strides over the past couple of years that will allow for margins to expand materially as revenue grows. But I believe there is a lot more we can do here across engineering, supply chain and sales to increase our near and longer term margin capability and accelerate that improvement.

For example, we have recently implemented targeted labor and non-labor cost savings initiatives that will more than offset the strategic hiring we're doing. We have also increased our use of software and AI to automate routine workflows and are already seeing improving productivity and new savings opportunities. And another that I'd mention is that since we offer customers an overwhelming advantage in constructability, sharing in or capturing a portion of that incremental value in pricing is another opportunity. Fifth, and finally, we believe robotics will be a major productivity driver for our customers, and we want to help lead that transition. Our team has been engaged since the early days of this technology, optimizing our tracker for robotic compatibility and working closely with vendors across the ecosystem. Last month, we hosted our first Robotics Day at our Austin training facility, bringing together more than 100 attendees from robotic companies, EPCs, developers, and technology partners. The event focused on how automation can accelerate utility scale construction with live demonstrations across module installation, fastening, pile installation, quality control, and material handling.

What I appreciate most about these pioneers is that they aren't just building robots. They're building tools that help people work better. That mindset aligns closely with why FTC was founded. Construction robotics isn't one solution. It's an ecosystem of innovators delivering measurable improvements in productivity, safety, data quality and decision-making. Robotics is a natural next step in solar installation. The industry needs faster, safer and more automated processes to reduce install costs and support continued growth. FTC is investing in this future by working with leading companies on open platform agnostic solutions.

We've already generated promising test and pilot results and expect to have these technologies operating on commercial projects with real-world data soon. So, overall, while we still have work to do and need to win much more business, I'd I believe we have the ingredients needed for a strong future growth. The team has done incredible work to make sure that we have excellent products, a complete product offering, one for which now we have AVL approval with a critical mass of customers. We are winning projects and strengthening those customer relationships. We are expanding our international market presence and seeing early wins. And we are working to improve our own efficiency and processes to improve our margin potential and lower our break-even revenue level. I am extremely proud to be the CEO of FTC Solar.

This company has a long history of supporting this industry and really focusing on helping customers. We have been through a lot and this is a tough industry where so many things can impact your ability to grow and succeed. but our opportunity is great. Our plan is clear. The path to profitability is there, and our second half revenue growth is very strong. My commitment to our shareholders, employees, customers, and partners is to to be the best partner we can be. Continue with great support, competitiveness, response and a true partnership approach. And I will continue to be there on the road where the action is and I'm looking forward to seeing everyone out there and I also look forward to keeping you updated on our progress.

With that, I will turn it over to Kathy. Thanks, Anthony, and good morning, everyone. I'll provide some additional color on our second quarter performance and our outlook. Beginning with a discussion of the second quarter results, revenue was $26.2 million, slightly above the high end of our target range for the quarter. This revenue level represents an increase of 51.5% compared to the prior quarter and an increase of 30.8% compared to the year earlier quarter. GAAP gross loss was $2.2 million, or 8.5% of revenue, compared to gross loss of $1.2 million, or 7.1% of revenue in the prior quarter. Non-GAAP gross loss was $1.3 million, or 5.1% of revenue, and this quarter's results compared to non-GAAP gross loss of $.4 million, or 2.2% of revenue in the prior quarter and a $3.5 million gross loss in the year-ago GAAP operating expenses were $11.5 million.

On a non-GAAP basis, operating expenses were $8.5 million, which was in line with our target range. This compares to non-GAAP operating expenses of $7.8 million in the prior quarter and $6.5 million in the year-ago quarter. Gap net loss, which is a reminder, includes a non-cash accounting adjustment each quarter to adjust warrants to fair value based on the change in our stock price was $27.1 million, or a net loss of $1.69 per diluted share, compared to income of $32.6 million, or a loss of a $0.72 per diluted share in the prior quarter and a net loss of $15.4 million, or $1.18 per diluted share in the year-ago quarter. Adjusted EBITDA loss was $9.8 million coming in within our guidance range. Adjusted EBITDA excludes approximately $17.3 million net for the change in fair value of the warrant liability, certain transition costs, as well as other non-cash items. On the balance sheet we ended Q2 with about $11.2 million in cash. While the cash balance was higher than last quarter, this level fell short of the minimum unrestricted cash covenant of $15 million pursuant to our credit agreement.

We were also not in compliance with the required minimum direct margin covenant for the quarter. Our lenders have provided waivers for these second quarter covenants, so the debt is not callable. However, as a result of the accounting treatment associated with these covenant matters, all outstanding borrowings under the credit agreement were classified as current as of June 30th. This classification will be reconsidered following the actual results of our near-term operating results and any capital raising activities. Subsequent to quarter end, we entered into an agreement to establish an equity line of credit, or ELOC, with an institutional investor. This facility, which has an aggregate maximum value of $20 million, has been established but not yet utilized. We believe this agreement will provide the company with an additional and flexible source of funding, as may be Combined with our expected revenue growth and ongoing working capital initiatives, we believe we have multiple avenues to support our liquidity needs as we execute against our growth plans.

With that, let us turn our focus to the outlook. We indicated last quarter that we expected full year 2026 revenue to outpace the market and grow by at least 40% relative to 2025 and that we would see sequential growth for the remainder of the year. continues to be our expectation. Breaking that down further, our targets for the third quarter call for the following. Revenue between $30 million and $35 million. Non-GAAP gross profit between negative $.9 million and a positive $1.8 million, or between negative 3% and positive 5.1% of revenue. Non-GAAP Operating Exemptives between $7.7 million and $8.3 million. And finally, Adjusted EBITDA Loss between $9.3 million and $6 million.

With that, we conclude our prepared remarks and I will turn it over to the operator for any questions. Operator?.

Thank you. At this time, we will conduct our question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. The first question comes from the line of Jeff Osborne of TD Cohen. Jeff, please go ahead.

Thank you. Just a couple questions on my side. Kathy, I think on the covenants on the debt in the past, I believe for Q3 you needed $50 million of revenue, and obviously the guidance is below that. Do you have a waiver on that provision as well? You mentioned a few waivers in your prepared remarks. Yes.

Oh, hi, Jeff. Thanks for the question. The waiver that we got was for Q2 specifically, and we'll continue to work with our lenders. They've been very supportive to us as we've had this opportunity debt with them and they will, you know, we expect they'll continue to work with us as we go forward, but this was specifically a waiver for Q2.

Got it. And then maybe for Anthony, thanks for all the detailed remarks on the call. How should we think about the typical lag of the purchase orders that you highlighted on the call relative to the timing of revenue recognition? I'm just trying to reconcile the bookings momentum relative to the guidance that you gave. you gave and reiterated for the year, but acknowledging that it's only 80% covered.

Thanks for the question, Jeff. I think the percentage of projects that we have in Bookings is actually a very positive percentage. You know, when you talk about revenue recognition, there's a few rules that tie into that, but also tied into your lead time in the tracker industry. Lead time is around or even sometimes less than that. under that 20-week mark. So it's actually a very positive indicator that as of the end of last quarter, we have more than 80% of the revenue of the second half of the year guaranteed by book projects that are currently in execution.

Got it. Maybe the last one for me, Kathy. Some of your peers have talked about IEPA refunds from tariffs. Were there any refunds in the quarter? Do you anticipate any in the second half of the year?.

Yes, we continue to work with our brokers and so forth in filing for the IEPA refunds and working those through. But they did not occur in Q2, but we expect to see some of that activity flowing through.

Got it. Thank you. It's all I had. Thank you, Jeff. One moment for your next question. The next question comes from the line of Philip Shin of Roth Capital Partners. Philip, please go ahead.

Hey guys, thanks for taking the questions. I wanted to see if you could give us a sense of how gross margins might trend in QVC. Q4, Q1, and beyond, would you expect, looks like the guidance for Q3 is, you know, roughly break even. Would you expect to see positive gross margins in Q4? And do you think that could sustain if positive in Q4?.

want. Thanks. Yes, I think, Billy, as you look at our business, right, we've talked we've talked quite a bit before that, you know, we have a good cost structure and we continue to focus on improving our cost structure. And Anthony has put in a lot of, you know, programs since he's joined on focusing on improving our cost structure, continuing to do process improvements, and as we scale, we'll continue to scale more efficiently, right? So it's a volume game. continue to see our volume our top line volume growth you'll also see you know expanded expansion in our margin performance as well.

Thanks, Kathy. And to add to that, Phil, I think when you think about gross margin and how they trickle through the financials, it's important to highlight that as we work with those Tier 1 customers, we are going to be working on more large projects that have an ability to forecast margin better. a lot in our supply chain, signing MSAs with large, for example, steel suppliers that allow to improve those margins going forward. And as Kathy mentioned, we're also implementing some efficiency strategies internally to be able to continue to support those margins. So yes, we do expect that they will continue to improve in the future.

Sure. Great. Thanks, Anthony. You shared some color on how you're working to improve cost structure and taking costs out. Can you give us a little more color on the internal strategies, for example? Thanks.

Yes, and this is a usual question, right? When you talk about efficiencies, people have different ideas of what that means. I think it's a combination of a couple of things. We have a very strong software, AI, and robotics organization within the company. When I joined, I identified some really strong talent there and what we decided was let's apply AI systems and processes across the rest of the company to be able to be more efficient to be able to reduce cost to be able to increase that efficiency as not just we execute the same tasks but we continue to So you have the balance between larger pipeline, we're executing more projects, we're quoting more projects, but at the same time, we're reducing the time that it takes us to quote these projects. So in the areas where talent is needed, as I mentioned, sales and customer support team, we're actually growing. And then in other areas where we are processing tasks that are repeatable and can be systematically improved, we are executing those efficiencies.

Great. Okay. Thank you. And then what do you think is what kind of margin benefits could we see, you know, in the near term, or do you think it takes a year or so to have these programs mature? And do you think this is like a 50 basis point move in margins, or it might be too early to quantify? But just curious if you have any thoughts. Thanks.

Thanks, Phil. It's a very good question. I don't expect it will take a year to trickle through the organization. As you know, I'm 90 days in, and they have been great 90 days, and those efficiencies and those strategies are being implemented as we speak. I really hope to be able to show results, not just promises of these efficiencies in the next call and I definitely expect some of those efficiencies to trickle through our financials in Q4. Okay, thank you. Shifting over to your business.

development and activities was wondering if you could give us more color on the potential wins that we might see ahead. You received this 1P order from, I think, EPC or a developer that historically had been 2P. And so what's on the docket here with all the travels that you have? Thanks.

Thank you, Phil. Let me break that down into a few different parts, maybe. One, with regards to the U.S., as you know, we just didn't have the right product a year ago, right? So it took time to go through those ABLs and get approved by those customers. This very large order that we just share with the group today, is an example of a very known, very strong EPC selecting us for one of their biggest projects that is also for one of the largest developers. So I see that as a result of all these initiatives and strategies that we've been sharing with you in the past. So good progress there with one of our top customers the other customer you mentioned who has always used R2P, I think that really validates how good the company is in supporting customers. They wouldn't continue to work with us with now a new product if they weren't extremely happy with the support we've been giving them. So with regards to the U.S., as I shared, we see really good traction.

Allow me also just to mention a little bit on the global expansion. On my first earning call, I shared that one of the reasons why I had been brought on was to scale the company, but also focus on international growth. We saw great success in Australia. I'm actually going to be there next week, tying into your comment about travel, meeting the CEOs of many strong developers and EPCs in the region, and I'm happy to see that progress. We also mentioned India. I think India is a great market where we have competitors that have healthy margins. I think the companies that have struggled in India are the ones that don't have a strong infrastructure in India. We do have that infrastructure. And then we've also hired some critical talent in Spain.

As some of you know, I'm very closely tied to that country and my previous companies. And we found some great talent, many of them from competition, that have chosen to join us. And we'll be able to share more about that soon.

Great. Thank you very much. I'll pass it on. Thank you, Philip. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. one moment for your next question the next question comes from the line of Samir Josie of HC Wainwright Samir please go ahead.

Good morning Anthony, Kathy, Patrick. Thanks for taking my calls. So just digging a little bit deeper into the order activity and how it relates to the revenues. I think it was 60 million that you are booking on average a quarter. Given your outlook of 40% year-over-year growth, your fourth quarter needs to be about that 60 million given your 3Q guidance. Also, that with the 20 week lead time you mentioned I'm just trying to figure out what your 2027 revenues might look like.

Thank you for the question, Samir. I will answer it in two different ways. One, I won't be giving guidance to our 2027 revenue or target just yet. That should come soon. But with regards to our confidence on the bookings, yes, I am very confident that we are going to trail at the number that you just mentioned. And my confidence comes from from a few different places. One, as I mentioned, we're expanding the customer base in the US and we quote more projects than we've ever quoted before. So if you extrapolate that to your question, that gives me optimism and confidence on turning those bookings into revenue.

And the other one is diversification, right? we were focused on the US market, and it was a binary approach where some of these large projects may happen or not happen, which then caused that fluctuation if they didn't happen. I think now with having more regions, with having a global approach, and with the progress that we mentioned in the US, I am comfortable with being able.

to keep the booking level high and continue to succeed in the coming quarters. Sounds good. And just a little bit more on converting pipeline into backlog. It's great to see you have nine of the top ten AVLs. I just would like to understand when you are winning, how you are winning, and what are the reasons that you may be not winning some of these bids.

That's a great question, Samir. Thank you. Let me start by the not winning. It takes time. When you think about the design of a project, some projects are designed years before they're built. A year ago, nobody could design the 1P incredible product by FTC because it didn't exist. So there is a process that has to be followed. Getting on those AVLs, as you very well know, takes time and takes a lot of effort, and it is not a free effort. EPCs don't just qualify trackers for the sake of having more options that they're never going to use.

They qualify a tracker because they intend to use it. I think one of the challenges we have faced is just time. Getting through that process, we would have loved that process to be faster, but we follow the timelines of our customers and it is a very thorough process. It includes financial due diligence, it includes technical seminars, it includes meetings, and maybe as an anecdote I was on a call with a top customer of ours that you know very well from the market who had along with the developer more than 20 people in our lab in our installation facility in Austin and I got from them the continuous feedback that we have a great product and that they continue to want to work with us on new projects. So it's a process and the time that it's taken has been, as I mentioned, a challenge. On the positive note, customers that use the tracker use it again. And for me, this is fundamental.

If a customer uses your tracker and then and decides to go somewhere else, that means you have a problem either in execution or in the product. We don't have those problems. Customers continue to trust us and continue to invest in FTC. And if I may, the last positive remark I would like to share is we're competitive. We continue to compete with companies who are great and much bigger than we are, but we believe we have a great product that is faster and safer to install, and we can compete head to head with these customers in the market.

That is really good color. I think if in the future you could highlight the number of repeat orders from, rather repeat orders from customers, that would be great. Thanks for that color. And then this last one on inventory management. It seems given your revenue levels, the inventories are really nicely managed. Should we expect that kind of working capital control in the future when revenues might increase from here?.

Hi, Samira. Yes, thank you for the question. Yes, we watch that very carefully, and, you know, we really try and time our inventories with the project needs and trying to be just in time. So we'll continue that as we scale the business moving forward.

Sounds good. Good luck for your future. Thanks. Thanks, Mir. Thank you very much, Farah.

I am showing no further questions, so this concludes the question and answer session. I will now turn the call back over to management for any closing remarks.

Thank you, and thank you everyone for listening in and joining us today. I did want to share some closing remarks. As I mentioned on the call, I'm very proud to be the CEO of FTC. This is a tough market, but for those of us who have worked in it for a long time, we really do love what we do, and we continue to support our customers and the market in general. As you know, we beat on revenue in Q2. As I also mentioned, we were awarded multiple new projects that make us very excited about the future. We also are going to guide to a great H2, and we have more than 80% of that revenue already in backlog with executed projects. promised you that we would grow the company internationally, and we have done that, and we continue to do that, and we continue to focus on better systems and AI to improve efficiency and serve our customers better.

And also robotics, I believe, is going to be a great part of the future of this industry, and FTC is going to be right there. and growing and increasing efficiency and building projects for our customers. So thank you very much.

This concludes today's conference call. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Thank you for standing by, and welcome to the FTC Solar First Quarter 2026 Earnings Conference Call. I'd like to remind everyone that this call is being recorded.

[Operator Instructions].  

I would now like to turn the call over to Mr. Bill Michalek, VP of Investor Relations. You may begin.

Thank you, and welcome, everyone, to FTC Solar's First Quarter 2026 Earnings Conference Call.

Before today's call, you may have reviewed our earnings release and supplemental financial information, which were posted earlier today.

If you haven't reviewed these documents, they're available on the Investor Relations section of our website at ftcsolar.com. 

I'm joined today by Shaker Sadasivam, Chairman of the Board; Anthony Carroll, the company's newly appointed President and CEO; Cathy Behnen, the company's Chief Financial Officer; and Patrick Cook, the company's Head of Capital Markets and BD.  

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.

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'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.  

With that, I'll turn the call over to Shaker.

Thank you, Bill, and good morning, everyone. I felt it was important to speak with you directly on behalf of the Board of Directors about the leadership transition we announced today. 

I'm incredibly pleased to welcome and congratulate current Board member, Anthony Carroll, on his appointment as the new President and CEO of FTC Solar.

Anthony is a truly talented leader with a proven track record of scaling operations and driving value creation. He has served on the FTC Board of Directors since last December and has been the Chairman of our Customer Advisory Board since 2023.

He most recently served as CEO of BEV, a division of Lennar, where he was brought into scale operations.  

Many of you may also know him from his time as the President of Boeing, the CEO of Power Electronics, or his time at Siemens or Schneider Electric.

He has been in the industry for many years, has helped scale multiple billion-dollar businesses, and is well-connected. The Board and I believe that, based on the progress made to date and recent project wins, FTC is at a critical inflection point, positioned with a strong foundation and the potential for very significant growth.

Anthony's operational depth, dynamic leadership, and demonstrated success in scaling growth businesses make him exceptionally well-suited to lead FTC Solar into its next chapter.  

On behalf of the Board, I would like to thank Jan Brown for his many contributions to the company. Jan stepped into FTC at an important point in time, one that was focused on stabilization and recovery.

Under his leadership, the company secured strategic financing completed its 1P tractor introduction and experienced good customer reengagement, resulting in increased AVL list access, pipeline visibility and new project wins.

While today's leadership change may not have been expected, the Board and I believe it represents a tremendous opportunity for us to build on the strong foundation that is now in place and to leverage Anthony's capabilities to accelerate momentum, scale the business and achieve profitability.

Now I will turn it over to Anthony.

Thanks, Shaker, and good morning, everyone. I'm very excited to be speaking with all of you for the first time in my new capacity as CEO of FTC Solar.

As Shaker mentioned, I've had the pleasure of working with the Board of Directors, the management team, and several other FTC Solar employees over the past couple of years in those other FTC Board capacities.

And I have seen firsthand all the great work the team has done to position itself for future growth and strong performance. For these reasons, I am so excited to take on this new role.

As Shaker alluded, the majority of my career has been in or around energy and renewables, including with leading companies such as Schneider Electric and Siemens, focused on power conversion, solar and energy storage.

I have also led other companies, such as Power Electronics and Talen, which became very successful in their respective industries, growing from start-ups to corporations with over $1 billion in revenue in both cases.  

I most recently led the real estate and construction company, VeeV, focused on product innovation, manufacturing evolution, and growth. The growth and success there have been rewarding, and it's truly a great team, but I knew I wanted to get back to renewables, and I'm very excited to be at FTC.

The team at FTC has done a great job laying the groundwork for a strong future. I couldn't be more pleased to join as CEO and spearhead the next phase of our growth and to work with all of you. 

I'll turn it over to Patrick to discuss the highlights from Q1 and the progress that's being made.

Thanks, Anthony. I think the key operational takeaway from this call is that even though our Q1 revenue was a bit lower than our expectations, our customer momentum and new business bookings have been exceptional, and we now have greater confidence that we will outpace the market and deliver strong growth in 2026. 

So starting with Q1. We did have one key project that was expected to sign and contribute revenue in the first quarter, but it was delayed.

Given our current run rate and the expected contribution from that project, that was enough to cause revenue to come in short of our range for the quarter.

Operating expenses were better than expected, however, and helped offset some of that shortfall, and all our other metrics were within our target ranges.

More importantly, in my view, is the progress we're making in setting ourselves up for the future. And in that regard, I am very pleased with the progress.  

On our last call, we shared that our commercial momentum was accelerating on a number of levels, from approved vendor list additions to project bidding, bookings, and contract conversion.

These are all leading indicators of where our business is going and that progress continues. In terms of the approved vendor list, last quarter, we told you that in Q4 alone, we were added to 4 ABLs of the top 10 EPCs, bringing the total to 8 of the top 10.

We have since added another top 10, in fact, the top 3, bringing us to 9 of the top 10. We are getting visibility into the pipelines of these prospects and customers. And overall, we are bidding with more customers on larger project sizes.  

Last quarter, we also talked about how FTC is winning new projects, including bookings from 2 leading EPCs. Since then, we have had some great new wins.

One of particular note is a new 1 gigawatt award. It's a safe harbor award from a private equity-backed portfolio company for projects with very high-profile off-takers, including a global Fortune 20 company.

The first of 3 equal tranches of the project has already been contracted. These projects are expected to add meaningfully to 2026 revenue and continue into 2027.

In total, it's a triple-digit million contributor to revenue. We have had improved net bookings over the past 4 quarters, now with a positive book-to-bill or positive net bookings in Q4 and accelerating in Q1 as we are starting to convert our MSAs into firm orders and book new projects.

Since our last earnings call, we have added about $70 million to the contracted backlog, or roughly a $52 million addition net of Q1 revenue. 

Over the past seven months or so, our bookings have been running at about a $55 million quarterly run rate. 

The leading indicators on the customer front are what are driving this business, and they are looking good, improving, and we are having good momentum. 

From MSAs, ABLs, and strong bidding activity, these are clear signals that show that FTC is on the right track. 

We have turned the corner on our bookings, and now we want to accelerate the business. 

This customer momentum is driven by a great team that is doing great work across the board, from R&D and engineering to sales support and our support teams and is driven by our great products. 

We continue to receive excellent feedback on our trackers, supporting our belief that we have what is unquestionably the fastest, easiest-to-install tracker in the marketplace. 

And our team is not stopping as we look to achieve another 20% in labor savings. 

In an environment where we have an increasing need for new energy supply, combined with labor shortages, our trackers provide incredibly compelling solutions, allowing our customers to build more megawatts in less time at a lower cost. 

We have done a great deal to prepare the company and lay the groundwork for strong growth ahead. 

We're increasingly optimistic about our future. 

While we are seeing a first-half lull similar to others, our strong bookings momentum gives us increased confidence in the full year, and we are providing a bit more detail on our expectations, which Kathy will discuss. 

With that, I'll turn it over to Cathy.

Thanks, Patrick, and good morning, everyone. 

I'll provide some additional color on our first quarter performance and our outlook. Beginning with a discussion of the first quarter results, revenue was $17.3 million, which was below our target range for the quarter, as Patrick mentioned, driven by a key project that was delayed. 

This revenue level represents a decrease of 47.5% compared to the prior quarter and a decrease of 17% compared to the year-earlier quarter. 

GAAP gross loss was $1.2 million, or 7.1% of revenue, compared to gross profit of $4.9 million, or 14.9% of revenue, in the prior quarter. Non-GAAP gross loss was $0.4 million, or 2.2% of revenue. 

This quarter's results compare to non-GAAP gross profit of $5.7 million, or 17.3% of revenue, in the prior quarter, and a $3 million gross loss in the year-ago quarter. 

GAAP operating expenses were $10.8 million. On a non-GAAP basis, operating expenses were $7.8 million, which is better than our target range, as we identified and executed some cost-saving opportunities during the quarter. 

This compares to non-GAAP operating expenses of $8.2 million in the prior quarter and $6.6 million in the year-ago quarter. 

Moving to GAAP net income, I want to remind everyone that the warrants issued as part of last year's capital raise are subject to liability rather than equity accounting. 

As a result, we are required to remeasure the fair value of the warrants each quarter in our GAAP financials. 

If our share price goes down during the quarter, as it did in Q1, it will show a non-cash gain, and conversely, a share price increase would result in a loss. 

The share price decrease we saw in the first quarter drove a decrease in the fair value of the warrant liability of about $48.7 million. This is a noncash accounting adjustment that does not reflect the underlying business performance or cash flow and will be excluded for purposes of adjusted EBITDA but does impact our GAAP financials.

So, including this adjustment, GAAP net income was $32.6 million, or on a per share diluted basis, a loss of $0.72 per share compared to a loss of $36.4 million or $2.40 per diluted share in the prior quarter and a net loss of $8 million or $0.58 per diluted share in the year-ago quarter.

Adjusted EBITDA loss was $8.2 million, coming in close to the midpoint of our guidance range as the OpEx management largely offset the lower-than-expected revenue.

Adjusted EBITDA excluded approximately $40.8 million net for the change in fair value of the warrant liability, certain transition costs, as well as other noncash items.

The contracted portion of our backlog now stands at $543 million, with a net of approximately $52 million added since March 5.

In terms of liquidity, we ended Q1 with about $5.6 million in cash, although that was due to the timing of customer payments, which came in shortly after the quarter end.

Given the new cash that has come in and the cash expected from new business, including the Safe Harbor project, we do not intend to utilize the ATM going forward, and we'll take actions to terminate the program.

With that, let's turn our focus to the outlook. Our targets for the second quarter call for the following: revenue between $22 million and $26 million, non-GAAP gross profit between negative $1.4 million and positive $1 million or between negative 6.4% and positive 4% of revenue; non-GAAP operating expenses between $8.4 million and $9 million; and finally, adjusted EBITDA loss between $10.5 million and $7.4 million.

We continue to expect the first quarter to represent the low point in revenue for the year, with sequential quarterly growth for the remainder of 2026.

The commercial momentum we've been seeing since the last call gives us even more confidence that full-year revenue will outpace the market in 2026 and represent growth of approximately 40% relative to 2025.

With that, we conclude our prepared remarks, and I will turn it over to the operator for any questions. Operator?

[Operator Instructions]

And your first question comes from the line of Philip Shen with ROTH Capital Markets.

Shaker, I was wondering if you might be able to provide us a little more color on why now is the right timing for this CEO change.

And then Anthony, welcome as the new CEO of FCI. And I was wondering if you could help us understand your vision for where you would like to take the company next. And what might be the contrast with what Jan was doing and what you would do either differently or the same, and so forth?

Thank you, Philip. And I'll take the first part of the question. The company has made great progress over the last couple of years.

We have a comprehensive 1P product line, a strong pipeline, and good positioning with customers, and several new wins, and you heard some of that in Patrick's opening remarks, there are a lot more on the horizon.

And so we have a significant opportunity to really accelerate the growth of the business. And the Board saw a need to bring in a CEO with a lot of experience scaling businesses.

And we felt this was the right time to bring Anthony in as the CEO, and he was available. It allows us to leverage his significant strength and experience in scaling businesses as we enter the next phase of our growth.

He's been in the industry a long time. He has extensive industry contacts, scale, multiple billion-dollar businesses, and he also brings good global experience, which will be important for us in the future.

So we felt this was the right time, and hence, the Board made the decision. I'll turn it over to Anthony now. Thank you.

Thank you, Shaker, and thank you, Philip, for the question. I think I've known FTC for multiple years now, and it was clear to me that I wanted to be part of this project.

And as Shaker said, I think there are a few things about my background that are especially connected to what FTC wants to do. 

One is to become a global leader in the tracker industry, and I have that global experience. Another one is scaling the business. And you mentioned what has been achieved by Yann and what we want to build on. 

I think the company has great foundations. Like from a product perspective, a few years ago, the company didn't have the 2P and the 1P variety to choose from and didn't have as much traction with the customers as they do have now and didn't have an operational pillar like they do have now. 

So the team has been able to do great things. And now I'm just very pleased that the Board considered that I could be a good candidate to take the company to the next level.  

On top of that, you asked me why FTC and why now? I think we all agree that solar is growing globally and is an unstoppable source of energy, whether it's for providing power to hyperscalers or providing affordable power. 

So this is really the time to join a company in this industry. And FTC's product is very unique. It's fast to install, and it's safe. I've been in touch with the EPCs, developers, and utilities that are familiar with the product, and the feedback has been very consistent during the time that I was on the Board and on the Customer Advisory Committee. 

So this gave me the excitement and the momentum to trust the company. And as Shaker said, the Board believes that I was the right person at the right time, and I'm extremely excited to take this role.

Shifting over to some of the news from the quarter. You guys announced this 1-gigawatt award. 

I think you guys said that there could be projects that add meaningfully to 2026 revenue. So I was wondering how many megawatts might be able to hit in '26.

If you could give us a little more color on the award and maybe how you guys won it versus maybe the competition. And then I think you guys said for Q1, there was a project that was pushed out.

I was wondering if you might be able to share a little bit of color on why that project was delayed and if that could be an issue for other projects as we get through '26?

Yes, Phil, this is Patrick. Thanks for the question. I think it relates to the 1-gigawatt safe harbor award that we announced. And as we said in my opening remarks, we signed the first tranche of that project.

We do expect it to create meaningful revenue in the back half of the year and into early 2027, just given the project schedule. And so we're really excited about it.

And I think when you look at why FTC versus some of the competition, I think it piggybacks on a lot of the things that Anthony just said. They really like the constructability aspect of the system, the ease to install.

Quite frankly, it was the customer service that we provided. This is a big project for this developer and the EPC, and we were able to be in lockstep with them throughout the process and give them comfort that they're going to hit their deadlines.  

Given that this is tied to safe harbor, timelines are of the essence. So we really partnered with this private equity group to deliver the expectations that they want in order to achieve their project.

On the project that got pushed out in Q1, it was really nothing material or major. It was more just delays in the project scheduling.

We still expect that project to move forward here in the very short term, but there were just some delays in construction progress timing.

One more for me, and then I'll pass it on. We've written a fair amount about this tax equity pause, and I was wondering what you guys might be seeing out there as it relates to how this pause might impact you guys, especially in '26.

Do you see things adversely impacted? Or is it too early to say at this point with the 4 major banks pausing on Section 48E? And maybe help us, if you can, understand what percentage of your business for 2026 and '27 might be dependent on 48E as opposed to the Section 48 ITC?

No, it's a great question. I think part of it is that it's too early to tell. A lot of what's going on in Washington, I think it obviously creates some ambiguity on tax capacity or the timing of certain things.

However, the near-term projects that we have secured their tax equity financing and feel confident about the project schedules ultimately going forward. And that's the one nice part about continuing to grow the international business.

We have continued wins in Australia and South Africa that we talked about, and those will contribute to our revenue on a go-forward basis. 

So we're not really contingent on just making sure that the U.S. market is solid. But as it relates to the ITC, I think we're watching it closely, and we'll see how it ultimately progresses. But we're in contact with all the major tax equity banks.

Your next question comes from the line of Sameer Joshi with H.C. Wainwright.

Welcome, Anthony, to the new role. Can you remind us of the historical geographical distribution of your revenues and how it matched with the 1Q revenue, and how it figures in the outlook for the rest of the year?

Yes. I think as it relates to our revenues, obviously, we're very kind of U.S.-centric when it comes to the near-term revenues.

Obviously, we continue to build out the team in Australia, Europe, and certain parts of Sub-Saharan Africa. But as it currently stands, there's a lot of revenue in the U.S.

But as we continue to grow and scale, and with Anthony's background, we expect the international sector of our market to continue to gain momentum and speed.

And just a little bit on the delayed project. Was that closer to a $3 million delay or closer to an $8 million delay?

And I think you mentioned it will be executed over the next 12 months or so. Just wanted to see what the actual dollar impact was from this delayed project.

Yes. So our expectation that we were expecting in Q1 was in the $3 million to $4 million range. But the project is a good, solid project, and we're expecting that execution to hit soon and continue to drive revenue into 2026.

And then one more. I think you mentioned bookings are at a $55 million quarterly run rate. 

Contrasted to the revenues of around $20 million to $30 million on a quarterly run rate for you guys. Is this activity because of the safe harbor action? Or is it that you are getting designed in earlier in the project cycle?

Yes. The safe harbor, while it's a great win for us, and we're excited about it, only makes up a portion of the $55 million quarterly run rate that we're talking about.

Where we're seeing traction and momentum is if you think about the evolution of engaging with new customers, the first is to get on the ABL. And as we talked about on the last earnings call, we were on 8 of the top 10.

Today, we told you we're on 9 of the top 10. Now we're able to participate in RFPs, participate in the designs, and really partner with these larger EPCs and even developers who are ultimately buying the project, which allows us to really showcase the constructability of the tracker, the ease of install, the safety, and then also our engineering shops as well.

And so, really partnering with these EPCs earlier in the design process has really allowed us to showcase who we are and what we can do and how we can really partner with these folks, and it's really gaining traction and momentum.

And that concludes our question-and-answer session. I will now turn the conference back over to the management for some closing remarks.

Thank you. I think, just as closing remarks, I wanted to reiterate my excitement for joining FTC.

The solar market is unstoppable. We see some respectable competition, but we believe FTC has a very strong positioning in the market. I'm very familiar with the product, the speed, and the quality, and also with the customers, utilities, EPCs, and developers, both in the U.S. and globally.

And I'm very sure that we're continuing to grow that penetration into these customers.

As I said, I'm very excited to lead the company, and I'm going to be investing not just my time but also continuing to invest in the company. I appreciate your time. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good day, and thank you for standing by. Welcome to the FTC Solar Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Bill Michalek, VP of Investor Relations. Please go ahead.

Thank you, and welcome, everyone, to FTC Solar's Fourth Quarter 2025 Earnings Conference Call. Before today's call, you may have reviewed our earnings release and supplemental financial information, 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 Yann Brandt, the company's President and Chief Executive Officer; Cathy Behnen, the company's Chief Financial Officer; and Patrick Cook, the company's Head of Capital Markets and BD.

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. 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'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.

With that, I'll turn the call over to Yann.

Thanks, Bill, and good morning, everyone. I'm pleased to share that we have achieved another quarter of strong growth in Q4 and continue to position the company for long-term success. Our financial results came in at the high end of our targets as we work to strengthen our product, operational performance and overall positioning, including enhancements to one of the most innovative 1P tracker platforms in solar. Every day, we're seeing excellent commercial momentum as we build a foundation for future growth.

In terms of financial results, we achieved several key milestones in the fourth quarter. Our results came in at the high end of our target ranges on all metrics. Revenue grew by 26% sequentially, which follows the 30% sequential growth posted in the third quarter and came in at the highest quarterly level since the first quarter of 2023. Gross margin for the quarter was our best as a public company and one of the best in company history. And we posted our best adjusted EBITDA performance in 6 years and our best since going public, coming in just shy of breakeven for the quarter, missing our 2025 target of breaking even by the narrowest of margins, not bad considering the insane year that solar went through with tariffs and legislative disruptions. Our fourth quarter results were fitting in to an incredible year of progress for FTC, a year I am proud to call my first at the company.

For the year, we grew revenue by more than 110% versus the prior year, significantly improved margins, added multiple gigawatts of MSAs and secured purchase orders from Tier 1 customers, added new cash to our balance sheet with strategic financing, saw new incredible talent join our team, especially in sales and have positioned our product platform as the most innovative tracker portfolio in the market by far the easiest and fastest to install.

Turning to customers. Our commercial momentum is starting to accelerate at every level, from approved vendor list additions to project bidding, bookings and contract conversion. It takes time and won't impact revenue tomorrow, but our progress here is clear, accelerating and to me means everything. It's the foundation of our future growth. It's what is making this company successful and has me excited about where FTC is going. So first, we're getting on approved vendor list. Just in Q4 alone, we were added to the ABLs of 4 of the top 10 EPCs, bringing the total to 8 of the top 10. We are getting increased visibility in our bidding with more customers and larger project sizes, actively providing proposals on the pipelines of these new EPCs and of those of many new customers. FTC is winning projects and seeing previously announced MSAs convert into bookings, including with a top-tier customer base.

In the fourth quarter, we received bookings from 2 leading EPCs, and we expect some MSAs to start expanding in volume from the original capacity in the near future. We have had improving net bookings for the past 3 quarters and had a significant increase in the fourth quarter with a positive book-to-bill or positive net bookings in the period as we are starting to convert our MSAs into firm orders and book new projects. Since our last earnings call, we added $61 million to our contracted backlog or roughly a $29 million addition net of Q4 revenue. We expect this progress to continue and to accelerate. In addition to the positive net bookings, we've had recent wins in the form of multiyear MSAs that aren't yet included in that backlog with more expected to be announced in the near future. One notable addition we are announcing today is a new 1 gigawatt supply agreement with a leading developer and operator of wind and solar farms. This is a 3-year agreement for 1 gigawatt of our 1P and 2P trackers at sites across the U.S. This agreement also includes our SunPath software to achieve additional energy yield at these sites.

Another example we announced just last week is a multiyear MSA with Lubanzi in South Africa. That was for about 840 megawatts of trackers delivered across the country and is a great win on the international front. The first project under that agreement is expected to begin midyear. So those are MSA wins on top of the net backlog additions we announced, which brings us to over 9 gigawatts of MSAs added in just 1 year. The leading indicators on the customer front are what will drive this business, and they are starting to look very good. They are improving, and we have a lot of momentum. From MSAs, ABLs and strong bidding activity, these are clear signals that show us that FTC is a critical part of the tracker diversification trend that we are seeing every day. While we have very admirable competitors, a market without choice is no market at all. And every meeting I'm in, I hear about the need for diversification. Having met with most of the top 10 EPCs, I can tell you they're happy for FTC to be in the room, innovative, bankable and competitive.

Our team is a known counterparty with decades of relationships and our product continues to show very well. FTC is now a valued 1P tracker provider, and we see a significant opportunity to gain share. Our goal remains to be a top 3 tracker provider before long, and we hope to have much more to share on the new MSAs and new contracted backlog in the weeks ahead as we work toward that. On the product front, independent row architecture is the gold standard for solar. It has the highest production for asset owners and has the best long-term effectiveness for solar farms. It is also ideally suited for automation and construction and O&M activity. I've shared that I believe we have what is unquestionably the fastest and easiest to install tracker in the marketplace, independent row or otherwise, a product that is superior on a total installed cost basis, one that can be built from piles to mounted modules with an unmatched efficiency of 0.053 labor hours per module, driven by our innovative Python Clips, slide-and-glide rails and open trunnion design and power cinch clips. You can see from the customer comments as we have announced some of the recent wins that customers are already recognizing the benefits of this efficiency, and our team is focused on achieving another 20% in labor savings.

This is crucial as labor shortages are increasingly a pinch point for the industry and expect it to continue and as labor continues to increase as a proportion of the total project cost. We have engaged with Tier 1 EPCs and developers and due to our constructability savings, they tend to look at the total install cost of our tracker rather than just price. As more in the industry recognize our total cost of installation advantage, it should help further insulate us from pricing concerns or competition on projects. 2025 was a strong step forward in positioning for what's ahead as we doubled sales while expanding the balance sheet, built out the product set, expanded our pipeline and continued building a foundation of new project wins and MSAs. We have definitely been on a steady upward trajectory during my time with FTC. Quarterly revenue levels for Q4 were 3x higher than when I had started. Gross margin went from double-digit negative to double-digit positive and adjusted EBITDA loss improved to where we nearly reached some breakeven milestone.

Our enthusiasm doesn't stem from what happened in the past alone. It comes from what's ahead. While the solar industry endured a challenging 2025 from a regulatory uncertainty standpoint that will have some carryover effects into 2026, FTC's positioning is significantly improved, and we are closer to achieving broad adoption from Tier 1 players than we have ever been. Our financial progression won't always be linear, but we have made great progress so far and are building a solid base of orders to enable strong long-term growth. We have done a great deal to prepare the company and lay the groundwork for the strong growth ahead and aiming for a top market share position, and I firmly believe that is possible. I remain incredibly optimistic about the prospects of the business, and I look forward to providing you with continued updates on our progress in the months ahead.

With that, I'll turn it over to Cathy.

Thanks, John, and good morning, everyone. I'll provide some additional color on our fourth quarter and full year performance and our outlook. Beginning with a discussion of the fourth quarter, revenue came in at $32.9 million, which was above the midpoint of our guidance range of $30 million to $35 million. The quarterly revenue level represents an increase of 26% compared to the prior quarter and an increase of 149% compared to the year earlier quarter.

GAAP gross profit was $6.9 million or 21% of revenue compared to gross profit of $1.6 million or 6.1% of revenue in the prior quarter. Non-GAAP gross profit was $7.7 million or 23.4% of revenue, marking one of the highest levels in company history and our best as a public company. The strong gross margin performance was driven primarily by a favorable product mix in the quarter. This quarter's result compares to non-GAAP gross profit of $2 million in the prior quarter and a $3.4 million gross loss in the year ago quarter. GAAP operating expenses were $10.6 million. On a non-GAAP basis, operating expenses were $8.2 million. This compares to non-GAAP operating expenses of $7.4 million in the year ago quarter and $8 million in the prior quarter.

Moving to GAAP net loss. As a reminder, the warrants which were issued as part of last year's capital raise are subject to liability rather than equity accounting and therefore, requires us to reflect changes in the warrant fair value each quarter in our GAAP financials. If our share price goes up during the quarter, as it did in Q4, it will show as a noncash loss. And conversely, a share price decline which show as a gain. The share price appreciation we saw in the fourth quarter drove an increase in the fair value of the warrant liability of about $26 million. This is a noncash accounting adjustment that does not reflect the underlying business performance or cash flow and will be excluded for purposes of adjusted EBITDA, but does impact our GAAP financials. So including that adjustment, GAAP net loss was $33.7 million or $2.23 per diluted share compared to a loss of $23.9 million or $1.61 per diluted share in the prior quarter and a net loss of $12.2 million or $0.96 per diluted share post split in the year ago quarter.

On an adjusted EBITDA basis, we almost achieved breakeven, posting a loss of just $300,000, which is our strongest result since becoming a public company. That excludes the net of approximately $33.5 million for the change in fair value of the warrant liability, certain transition costs as well as other noncash items. This represents our best adjusted EBITDA result in 6 years and a substantial improvement from adjusted EBITDA losses of $4 million in the prior quarter and $9.8 million in the year ago quarter. Overall, another solid quarter of financial progress, delivering some of the best results we reported in years. The contracted portion of our backlog now stands at $491 million with approximately $60 million added since November 12.

To touch briefly on annual results, for the full year 2025 revenue was $99.7 million, representing a 111% increase over 2024. The increase was primarily attributable to higher product and logistics volume, partially offset by a decline in ASP. GAAP gross profit was $1.1 million or 1.1% of revenue compared to gross loss of $12.6 million or negative 26.6% of revenue in the prior year. On a non-GAAP basis, gross profit was $3.2 million or 3.2% of revenue compared to a gross loss of $10.9 million or 23% of revenue in the prior year. The higher volumes and increased absorption were the primary drivers of the significant year-over-year improvement, which was partially offset by higher tariff costs.

GAAP operating expenses were $34.5 million. On a non-GAAP basis, OpEx was $29.4 million, which compares to $35.5 million in the prior year. So we were able to take OpEx costs down 11% on revenue that was doubled year-over-year, demonstrating our continued focus on efficient growth. GAAP net loss was $76.9 million compared to $48.6 million in 2024. Adjusted EBITDA loss, which excludes the change in fair value of warrants, stock-based compensation expense and other noncash items was $24.3 million compared to a loss of $43.1 million in 2024.

With that, let us turn our focus to the outlook. Our targets for the first quarter call for the following: revenue between $20 million and $25 million, non-GAAP gross profit between negative $0.5 million and positive $2.3 million or between negative 2.5% and positive 9.2% of revenue; non-GAAP operating expenses between $8.2 million and $8.9 million; and finally, adjusted EBITDA loss between $9.6 million and $5.9 million. For the full year 2026, we expect to continue to grow faster than the industry as our recovery progresses. Due to the timing of orders, which follows some regulatory uncertainty in 2025 as well as the ramp-up of our MSA project, we expect the results will be weighted to the back half of the year.

With that, we conclude our prepared remarks, and we'll turn it over to the operator for any questions. Operator?

[Operator Instructions] Our first question comes from the line of Philip Shen of ROTH Capital Partners.

Congrats on the strong results and good news that you have in the quarter. I wanted to check in with you on the 2026 outlook. So you talked about significant growth. I'm guessing you may not want to quantify, but I was wondering if you could qualify or provide some color on what kind of growth we could see in '26 year-over-year?

Yes. No, thanks, Phil. I appreciate the question. Yes, look, it's -- we're really excited about where FTC is sitting from a competitive landscape standpoint vis-a-vis our peers and the overall market dynamic. Obviously, continuing to sign MSAs with large volumes, both in the U.S. and abroad. We're seeing good growth, obviously, some seasonality around the timing of the early part of the year, really strong ending to 2025 and results '25 compared to '24. But it really comes down to where we are from an execution standpoint that gives us the enthusiasm and optimism, really adding strong talent to the sales pool.

We and me in particular, who's been on the road full time talking to the EPCs and developers and IPPs around the world. There's a strong need for diversification. There's a need for constructability features that puts FTC into a product mix with each of the companies. So I think a really important quantifiable trend, and I'll qualify it is around approved vendor lists, particularly with the EPCs that make a large number of the procurement decisions of who they're going to use on their pools of projects.

Now being on 8 of the top 10 EPC AVLs is a strong indicator, and it gives our sales team the ability to go and now close those projects. But that's what comes along with the process of developing a product portfolio is you develop it on a technical basis, then you have to go out and sell it and get into a position to be improved. And obviously, our improved bankability throughout the year and the growth has been a good indicator for those EPCs to then add us to the approved vendor list and put us into the bidding cycles.

Great. You guys also talked about the backlog does not include almost 2 gigawatts that you guys have publicly announced since Q1. And then I think you alluded to more MSA signings to come. And so you have a couple here that seem meaningful. Historically, we've seen some of your MSAs not pan out. So I was wondering if you might be able to give some color on the timing of these MSAs, like do we see meaningful revenue in '26 and '27? And then the ones that you might sign, maybe a little bit of insight into what they might look like?

Yes. You bring up a good point, Bill. When we talk about backlog, we talk about ink on paper, delivery schedules, et cetera, right? So it's -- compared to our peers, a little bit more farther in the cycle, it doesn't include verbals, for example. And the MSAs, I know where you're coming from, and it's a great start of what I always tell to the team, but we're starting to see those MSAs flow through, and we expect to be able to announce some expansions of those MSAs in the near future as we've been working through them. And that's an indication of both strong partnerships, us being able to convert through the project list that our partners have had, some are developers, some are EPCs. And while there's obviously some air pocket in '25 that kind of caused projects to have to wait for capital to come in or some permits, things that obviously, everyone in the solar industry has been working through, we've been able to find the right projects, get some moving forward, but we do anticipate an acceleration of the utilization of the MSA volume to accelerate here in '26.

Okay. Great. And then shifting to -- well, you're talking about some of the kind of air pockets of activity and challenges from last year. What are you seeing now? Do you think things have stabilized? Or we've been talking about some challenges sometimes on the front end with tax equity and FIOC uncertainty. And so I was wondering if you could provide some perspective on if there are some issues now on the front end of the chain. And then if you can address your liquidity situation a little bit more and help us understand from a -- you're getting to breakeven, you're almost breakeven last year for the full year, but what do you see ahead?

Yes. One of the important aspects is for FTC in particular, is that we're looking at a lot more projects, right? So on an FTC-specific basis, having more projects in the pool of possible additions for both bookings and revenue is that we are in more deals. And so that gives us more at bats in terms of finding the projects that get to the start of construction phase, right? And that's -- I think that's an important variable in the overall equation. Every project has a path to get to start of construction. There are positives. Obviously, the offtake environment for projects is as good as I've seen since I've gotten Intersolar in 2006. While some projects obviously have to contend with federal permit issues or wet lands, there are certain challenges that come into it.

But overall, I would say the trend is optimistic around more projects getting to the start of construction for the overall market. But specifically for us, as I look at our both pipeline of projects in MSAs, for example, and the projects that we're bidding, it seems like there's an overall trend that it's trending in the right direction. And we're obviously trying to put ourselves into a position where the -- we're in the best projects that have the ability to move forward. And I think that's where the alignment is with the goals that both the developers and the EPCs have. We want to be building solar for the American consumers and companies that need the electricity more so than ever. And being part of that product mix where projects are allocated for diversification's sake amongst 2 or 3 tracker vendors, FTC being a part of those top selected trackers more than, I would say, ever. And I think our financial results speak to that since going public, it bodes well for where I think we're going.

From a liquidity standpoint, I'm happy with where we ended up at the end of the year. Obviously, we had really great growth from '24 to '25. Just the back half alone, up 44% when our peers were flat to down. We look at our Q4 results and by the narrowest of margins, nearly hit the breakeven for profitability, which would have been phenomenal, but yet still the best results that FTC has ever had. So I'm happy for where we've been able to guide the company. This kind of growth while lowering overall operating expenses is a good indicator of the efficiencies that we can gain. And I think there's more to be had, and we're certainly running the company as such.

But ultimately, it comes down to putting a great product into the market, being accepted by getting on to the AVLs and then putting just a phenomenal sales team in the field that has the relationships. I think when I think about the meetings that we're having and the feedback that we're getting, our sales team is going to be in a really good spot to take advantage of this consolidating market landscape in trackers and put ourselves in this top 3 position that I believe is in our future.

Our next question comes from the line of Sameer Joshi of H.C. Wainwright.

So you have a considerable pipeline of $491 million rather backlog. Do we know who the end customers are, like what industries or commercial or any other type of users are there? And then more specifically of the $61 million new orders received this quarter, any insight into the end customers would be great.

Yes. No, great question. We do. We have, obviously, the counterparty that's buying from us. Oftentimes, the EPC, but there is -- there are times, including our new bookings in Q4, where we have more global relationships with the asset owners. Asset owners view the longevity of the product as well as the long-term benefit on the total installed cost basis that FTC has an advantage of as something that they want to invest in by going into multiple projects. So for the most part, our counterparties end up being the EPCs. If you're talking about the counterparties on the offtake, certainly, the big data center players are fighting over the generation. We're starting to see a pipeline of the behind-the-meter concept, the bring-your-own-generation concepts that we see in the data center headlines. That is certainly starting to happen. Just in the past quarter, we saw a project that had some interconnection cost issues that maybe wouldn't pencil that project is now under consideration for bring-your-own-generation data center play, right? So that obviously will open up a new field of opportunities for solar at large that FTC will be able to compete in.

And this -- I think Phil asked you about this, but I will just dig a little bit deeper. The 2 MSAs just announced the 1 gigawatt and the 840 megawatt and they are 3 years. When should we start seeing like actual orders from this? And also, are these -- do you have any kind of regional exclusivity or any kind of exclusivity with these customers?

Yes. So let me speak about the Lubanzi one first, the one we announced last week. We -- that we do expect to start. We have projects that are slated for midyear. So the MSAs, the way they work is the MSAs -- some MSAs are announced, some are not, where that they -- what we do is we oftentimes negotiate a standard template for purchase order, make contracting a lot easier, and we start doing co-designs on those sites. So the Lubanzi one, certainly, we have multiple projects that will start hitting in 2026.

The new one we named here in my announcements this morning, that's a pretty large pipeline here in the U.S. We're excited about where that's going to go. We're deep in design on several of the sites. But they have to go through permitting. It's likely that there's -- or it's possible that there's projects in the back half of the year that we'll start to book. But it also depends on -- it could very well accelerate if offtakers come to the table. Those projects, in particular, are more in a regulated market. So that's where the regulated utilities are under extreme pressure by offtakers to increase generation and make generation accessible to them. So we actually have seen some strong movement in negotiations for the offtakes of those agreements that will then flow through and make permitting easier.

And some do have projects listed from an exclusivity standpoint. Some are more volumetric in approach, but there is a win-win for both, i.e., a partnership where FTC is investing in resources to provide design services, things of that nature and obviously, priority access to some both design as well as capacity. And so it is something that you're seeing since I've gotten here, more and more customers wanting to enter into them, and that's what's gotten us to the 9 gigawatts.

Understood. And will you remind us of what the revenue model is for the SunPath software? Like are the recurring revenues? Or what kind of a structure it is?

Yes. SunPath is actually a great tool, and it's an interesting one, just looking at it from my seat. And FTC has been around a long time. So it's been under development and refinement for quite a long period of time. So it's -- while our 1P tracker is a relatively new addition to our overall portfolio, our ability to bring 3D backtracking to the market is as good as anyone in the market, right? And I think people see that. And revenue models differ by geography. There's a -- some customers prefer to pay for it upfront for a period of time, some people view it as a recurring revenue model. And it really depends on the site itself. It is a -- I will say the 3D backtracking software is particularly advantaged for FTC and particularly for independent row architecture on when sites have undulating uneven terrain, the need for 3D backtracking for energy yield increases is really important and independent row architecture where motors can run each row independently of each other, especially over the course of the year is where you're going to see the best energy yield advantages, which is why the market is consolidating around this independent architecture in our opinion.

And it improves your value proposition. Good to know. Just a question, maybe this is for Cathy. The service margins were lower despite sequential growth in service revenues. Is this some GAAP reason? Or are there more structural reasons?

Thanks for the question. So I think what you're kind of seeing flow through there is, our service revenue includes all of our logistics services that we provide. And so as you see the increasing tariffs that came through, those are pass-through costs. And so that kind of squeezes a little bit of that margin.

Our next question comes from the line of Jon Windham of UBS.

I wanted to follow up on, I think, Phil Shen's question a little bit about the liquidity. There's obviously the note in the release about not being in compliance with the purchase order covenant for the credit agreement. Can you just talk through the status of that and what you need to do to be in compliance for it?

Yes. No, I appreciate the question. I'll give you the high level, and I think we put in the note accordingly. This is -- our opinion is, and our lenders believe it's a technical issue and a technical default. The language in the agreement was a little bit unintentionally restrictive and led to a surprising kind of accounting outcome even from the lender's perspective. So while it sort of came in the audit process, we haven't yet resolved the issue, but we anticipate that we will. It was related to the bona fide purchase orders, bookings that we signed and believe, like I said, technicality that led to a handful being excluded for the covenant.

Appreciate that. And then completely shifting gears, ask a completely different type of question. A lot of your competitors, NextPower, Array, GameChange have been making diversifying acquisitions in tangential product categories, whether it be wires, foundations. NextPower all the way out to inverters at this point. Just love your thoughts about how your strategy around that and whether you think you need to provide a more diversified product lineup to be competitive? Or you like a single product? Just your general thoughts, John.

Yes. I mean, look, I appreciate that they're doing that. And in some ways, understand the premise of it. Obviously, our relationships as tracker vendors with procurement teams is such that they -- obviously, the procurement teams are buying other things. While there's overlap with who you're talking to, the value proposition really depends on each unique product, right? So obviously, when we're growing at a pace that exceeds what our peers are doing, so they're looking for, in my opinion, for growth and other things.

So I certainly understand where they're coming from. Our focus is, like I said in the recording, is getting -- becoming a top 3 tracker provider, and we're well on our way for that. That's the importance of it. Hence, we've been adding to our sales team and growing those -- our ability to do just that. It is a, like I said, dynamic tracker landscape for sure and both in what you're describing of our peers going elsewhere. But if you compare our growth here in 2025 and even heading into 2026, we believe our growth will be significant and well ahead of the market. And so we're going to, at the moment, focus on exactly what we're doing, which is getting on AVLs, converting the MSAs into projects, and that's exactly what we're going to do.

Can I ask a quick follow-up on that? Sorry to throw in three, but I mean you make a great point. You're talking about being a top 3 tracker provider. Let's use Array as a benchmark, $1.2 billion of revenue. That's 12x growth for FTC from here. So how do you think about time lines of achieving that? And then how do you feel about your ability to expand capacity to deal with that level of growth?

Yes. I mean look, it's -- like I think I said this before, it's not going to happen overnight, and it's likely not going to be linear. But if I compare the projects we're looking at on my first day at the company versus what we're looking at now, I see 300, 400-megawatt projects on a weekly basis that we get to bid, and we're on the approved vendor list on both the IPP side and the EPC side, right? Like those are some of the prerequisites that come along with it. The headways that we've made on the product portfolio in order to get there, the longer tracker, the washerless trackers, the terrain following features, those are all things sometimes uniquely for a particular set of customers because they're focused in a particular region or they have a certain way of installation.

I don't think that we're going to have a capacity constraint if we're able to convert the MSAs or project opportunities into bookings. That is not going to be a limit to what we're able to do. We have a strong supply chain, both with our acquisition of Alpha Steel in Q4 that's going to put us in our own control of it as well as our contract manufacturing both here and across the world. It really comes down to what the customers are saying, right? What are the EPCs telling us? What are they telling you around what the tracker mix is going to look like. Things can change pretty quickly, right? And a couple of years ago, it changed in a bad direction for FTC. Now it's pivoted and moving into the right direction for FTC. And I would point to the back half growth in '25 versus our peers as a leading indicator of that. But fundamentally, I'm relaying the optimism that I get when I sit down with customers both here in the U.S. and abroad that they want diversification. There's a lot of concentration within some of the customers that they're trying to get themselves out of. And that's not a negative thing about our peers. Some are doing a really good job, but it's the need for what is the architecture that works for the sites that are evolving and who's going to do what they say they're going to do, and they're going to look at relationships in order to leverage their decision-making.

And so it's an important moment for FTC to deliver what we're saying what we're going to do. And I think you see that in '25 that we were able to get customers to trust us and to buy from us. I think every MSA is another indicator of that. And so I don't look at it as 5x, 10x, 12x or more equation. I view it as I sit across the table, my team sits across the table of the customer, and we win one project at a time and one portfolio at a time, and that starts with MSAs, ABLs, et cetera.

Our next question comes from the line of Jeff Osborne of TD Cowen.

Maybe just a few follow-up questions. The debt that John mentioned, the $19.9 million, what Cathy specifically needs to happen to be in compliance with that? I missed the answer to that.

So as Jon was saying, it's really just a technical definition that's in the agreement. So we're really working with the lenders to develop the right solution for that. So it's just ongoing discussions, and we have good confidence that it's all moving in the right direction. So we'll be able to get to the resolution quickly.

In the event you needed to tap the ATM, I think you still have outstanding. Is that available to you? Or can you just remind us of your liquidity options beyond what's on the balance sheet today?

Yes. We still have the ATM available to us. We did actually use the ATM in Q4. And so that continues to be available to us moving forward. And we also have expanded liquidity also within the debt agreement with our lenders.

Got it. Maybe just switching gears then, for Yann. Post the FIOC announcement and maybe just give us a sense of the past month or so, what have the shifting patterns been as it relates to delivery schedules would be helpful to understand. And then maybe just at a high level, the sequential decline with Q1, how much of that is normal seasonality versus the adverse weather conditions that we've had across the U.S. over the past few weeks?

Yes. Look, I mean, I think you guys are more of an expert in the FIOC announcement, but some things were answered, some things were not. So overall, I think the market is continuing the way it was. And some tax equity providers are a little bit more cautious than others, but we haven't seen that affect us in any particular way on a project or otherwise. And the cyclicality around Q1, I mean, I think it's pretty normal when you look at historically for us as well as our peers. It's a modest -- our midpoint is modestly up year-over-year, obviously, from a growth standpoint versus our peers that are down significant year-over-year in Q1.

And I would -- like if I were to put a root cause, I think, particularly for us is it was rather difficult to contract in the middle of OBBB and tariff Q2, Q3 last year. And I think that's what you're starting to see. That's sort of a lagging indicator of what was really going on in Q2, Q3 of last year that muted where I was hoping we would be here in Q1. But it's not like the projects have gone away. It's just getting the contracting and really for them, for our customers to get the capital into those projects were delayed as the legislation and tariffs were figured out.

Thank you. I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Hello, and thank you for standing by. Welcome to FTC Solar's Third Quarter 2025 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to Bill Michalek, Vice President of Investor Relations. Sir, you may begin.

Thank you, and welcome, everyone, to FTC Solar's Third Quarter 2025 Earnings Conference Call.

Before today's call, you may review our earnings release and supplemental financial information, which are posted earlier today. If you can not review these documents, they are available in the Investor Relations section of our website at ftcsolar.com.

I'm joined today by Yann Brandt, the company's President and Chief Executive Officer; Cathy Behnen, the company's Financial Officer; and Patrick Cook, the company's Head of Capital Markets and BD.

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. As such, these forward-looking statements include risk 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'll discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this morning includes the full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure.

With that, I'll turn the call over to Yann.

Thanks, Bill, and good morning, everyone. I'm glad to be with you again to share the continued and exciting progress at FTC Solar is making to position the company as a leading single access tracker provider in the market, a path that continues to be clear every day for us to the technology we bring to the market that is looking for additional competition.

It was 1 year ago that I joined you for my first earnings call as CEO of FTC. I'm pleased to say that over that year, the company has been on a recovery and growth trajectory, and our third quarter results represent a great market traction and continuation of that progress. Third quarter revenue and adjusted EBITDA both came in above the high end of our guidance ranges.

Adjusted EBITDA was at the highest levels in 5 years and one of the best in company history. And compared to a year ago, third quarter revenue was up 160%, and represents our highest quarterly revenue level in 8 quarters. More importantly, we are continuing to improve our positioning, strengthen our balance sheet, improve our daily execution and enhance our product innovation, resulting in faster speeds of installation for our customers. All of this while gaining traction with existing and key new customers. We remain on an impressive growth trajectory, 2026 is setting up nicely, and I see our long-term upside is even greater than I did a year ago, or even just 3 months ago, especially as we continue to execute.

On execution, we have been working to enhance all aspects of our daily operations, working to make the business better, stronger and more resilient each day. We're continuing to optimize our global supply chain, including for geographic capability, flexibility around tariffs and reducing landed costs.

We're also increasing our capabilities at our Alpha Steel facility to best support customer domestic content needs while increasing access to 45x credits. We're ensuring that we are engaging with customers early and often understanding their needs and creating value for them, and we're optimizing our product road map and providing customer service that go extra step. Speaking of progress, I'd like to take a moment to share a bit of insight into some of the steps involved as FTC looks to move up the market share leader board.

We've been doing these things since I joined, but there's quite a bit of activity that happens below the surface and may shed some light on why we highlight qualitative traction in our presentations. Since we've launched our 1P Pioneer tracker, we have embarked on the process to secure purchase orders. That process involves several layers. Approvals from IPPs that will own the project, focus on how we deliver service, O&M, software platforms like SUNOPS and SunPath, this ABL process is about the long-term operations of the site.

In the past year, Pioneer has been vetted and added to dozens of approved vendor list. EPC have similar vendor approval list that is focused a bit more on how the product is procured, design, delivered and installed. EPCs are learning one by one, not only how easy and fast our tracker is to install but also how robust our supply chain is. I may be biased, but I also find that we have the most responsive team in the market, led by seasoned solar professionals that have decades of relationships in solar, something that I'm very proud of.

Just this quarter, we were approved for procurement by one of the largest EPCs in North America. MSAs don't just make for good PR. It means that 2 companies typically negotiate agreements for procurement, making it easier for us to contract when the projects near the start of construction.

This quarter, we highlighted an MSA with 1 IPP, but we also have nonvolume-based agreements with large EPCs that make contracting easier in the future. We hope to share some exciting developments on that front as we move ahead. As we go through these processes, one thing we noticed is that our tracker does best when people see it and touch it.

Every company talks about how fast they are. But when people see it and have the aha moment, it tends to be quite impactful, and that has led to some positive traction for us post RE Plus. Since then, we've been hosting EPCs at our Austin demonstration facility so they can install it for themselves and see how easy it is.

We've also built demonstration rows at operation centers for EPCs, an important step forward towards contracting. Starting this quarter, we're taking the show on the road with a new demonstration trailer. Now that some of the regulatory noise has lessened, we see many opportunities to capture new business, thanks to the benefits and labor that we provide that are so badly needed by our customers.

Track this progress internally, and we'll continue to give you updates as we take the steps to make FTC the market leader, I know that it can be. On the product front, we believe that we have what is unquestionably the fastest and easiest to install tracker in the marketplace.

This is not from some third-party study that backs into results, but from the actual measurement of workers installing our tracker. Today, FTC's independent row 1P architecture, where each row is controlled by a single motor is aligned with the majority of the market, and is the future of the industry. It is also significantly cheaper to install without expensive electrical work to power heavy-duty multi-road motors.

Independent row, 1P architecture has been known for benefits and uptime, ground access maintenance and slope adaptability, leading to higher production for asset owners when matched with the right software. As these benefits become more important and as developers increasingly utilize software to optimize individual road positioning to capture up to $0.04 additional output, we believe the share of market will only continue to improve.

Match with center mounted slew drives, only a few tracker vendors, including FTC, have both slew drives and single row architecture, and we believe we have the best solution. Our constructability, which can be built from piles to mounted modules with an efficiency of 0.053 labor hours per module, we believe is unmatched in the solar industry, and there is at least 20% more labor savings to we had.

Already at 0.053 labor hours per module, we believe we are nearly 2x faster to install than our largest peers. In fact, we recently posted a video on LinkedIn showing a crew of 4 installing a 75 module row in less than an hour, and I would encourage everyone to view it. This efficiency is driven by our innovative Python clips, our slide and glide rails and open [indiscernible] design and power clips. And this productivity is something that any customer crew can achieve with our tracker, and I encourage every EPC to review this for themselves.

This is crucial as labor shortages are increasingly pinpoint for the industry and are expected to continue and as labor continues to increase as a proportion of total project cost. And as the industry looks to increase use of robotic solutions, including for construction, we believe our trackers are better suited there as well with fewer factors and overall fewer components to be installed, clear robotic interface advantages, including hardware free module placement and consistent geometric reference points.

Our tracker allows modules to glide and hold it to a proper position self-supported and aligned. Once you slide the module to the rail, it is fixed there and ready to take [indiscernible] clip, which can be done with 1 hand or 1 robotic actuator. There's no need to hold on both ends, no need to move back and forth to align bolts, no need to hold mobile both components and no need to twist or turn anything, which means it dramatically reduces the human or robot labor and complexity relative to competing solutions.

Over the past few quarters, I've shared with you all of the great progress we have made in taking the great underlying 1P platform and expanding our product line to ensure we have the right products to meet customer needs across their portfolio. This has included adding solutions by wind zones up to 150 miles an hour, compatibility across module type, the ability to make module changes late in the design cycle, drain following features to reduce and eliminate the need for land grading and introducing the widest range of snow in the industry and up to 80 degrees to maximize hailstone flexibility and customization.

And we're continuing to innovate. Last quarter, I told you about our next-generation extra long tracker for 2,000-volt system, which will enable reduced EBOS and O&M costs while increasing power capacity by 33%. Today, I'll share with you that we're also introducing a washerless tracker, which is exactly what it sounds like. We're eliminating the need for washers for any connections. It may sound simple, but it takes the part count down by an additional 15% or more on a tracker that we already believe had fewer parts than competing solutions, furthering our mission to make the most constructible trackers on the market, reducing labor time and complexity.

Through continued innovation in R&D and software, our goal is to be twice as fast as our largest peers. We see this innovation push through our long-term agreements and our mission to add to the more than 7.5 gigawatts of MSAs we have added over the past year. The most recent being the 1-gigawatt agreement we announced in Q3 with Levona Renewables, which has the first project expected to begin in early 2026. Supported by our strong and expanded product line and the strengthened balance sheet, we have seen a meaningful step forward in our discussions with customers and prospects.

In the U.S., our largest market, our pipeline has expanded with more customers and larger projects. This includes many new prospects and notably new and renewed discussions with multiple industry leaders, including Tier 1 EPCs. We're gaining visibility. We're getting more access and more projects are available for us to win.

Internationally, we are also continuing to make progress strengthening our team, building our relationships and advancing pipeline and project discussions. We hope to have much more to share on the customer front in the coming weeks and months. So as I look back on the past year, it's possible I didn't fully anticipate everything that was going to happen on the regulatory and legislative fronts, which included uncertainties around ITC 45x and tariff adjustments just to name a few.

And the net result of these things did push some expected new business to the right. But overall, we have been on a steady recovery over the past year and are in a greatly enhanced position with adjusted EBITDA hitting the highest levels in 5 years. Quarterly revenue levels were up 160% year-over-year and at their highest levels in 8 quarters with new cash on the balance sheet and additional capacity with a financing arrangement. Our product offering is more compelling and complete than ever, with a great deal of features added. And I'm confident that our growth will continue, including as we convert to 7-plus gigawatts of MSAs.

We have made great progress over the past year. And to me, this is just a start. I often tell the team, don't judge us based on where we're starting, but rather where we're going. So look at all that we have accomplished in 1 year, the product, the balance sheet, the MSAs, the pipeline. Now looking ahead, we positioned our technology as an independent road tracker with slew driver. This is the dominant technology, same as the market leader and structurally advantage in our view, picking the boxes and expanding the market with our software suite and 80-degree [ health cell ].

Of course, the market leader has significant volume advantages. So does the market value innovation, it does and not all trackers are created equal. There is a great new innovation in IP and the market wants more competition. Where our trackers excel perhaps the most is in constructability, some great technology that is a labor accelerator like ours gain traction in the market that will face only increasing labor constraints, we believe so. We have been getting on the AVLs of more top developers and EPCs, further expanding our customer and prospect list.

In addition to our current momentum, gaining only a small portion, even 5% of the top developer projects to start would provide incredible growth rate and a long runway for us. And as we grow, we gain those volume advantages to become even more efficient and give back more to our customers who can now complete more projects with the same amount of labor using our tracker, and have a healthier, more competitive tracker market.

We have done a great deal to prepare the company and lay the groundwork and now more than ever, I believe the company is in a position to do great things, lock in many new projects and reap the reward of the great work and innovation. And we're aiming for a top market share position that is now possible.

I have never been more optimistic about the long-term potential of the business, and I look forward to providing you with continued updates on our progress in the months ahead.

With that, I'll turn it over to Cathy.

Thanks, Yann, and good morning, everyone. I'll provide some additional color on our third quarter performance and our outlook. Beginning with a discussion of the third quarter, revenue came in at $26 million, which is above the top end of our guidance range of $18 million to $24 million. The outperformance versus our expectation was largely driven by a pull-forward of material production to meet customer demand that was originally expected in Q4.

The quarterly revenue level represents an increase of 30% compared to the prior quarter and an increase of 157% compared to the year earlier quarter, fueled by higher product volumes. GAAP gross profit was $1.6 million or 6.1% of revenue compared to gross loss of $3.9 million or 19.6% of revenue in the prior quarter. Non-GAAP gross profit was $2 million or 7.7% of revenue, and marking the company's returned to positive gross margin for the first time since late 2023.

This turnaround was driven by the additional revenue I mentioned, which was at a higher margin. This quarter's results compared to non-GAAP gross loss of $3.5 million in the prior quarter and $3.9 million in the year ago quarter. GAAP operating expenses were $93 million. On non-GAAP basis, operating expenses were $8 million. This compares to non-GAAP operating expenses of $8.1 million in the year ago quarter and $6.5 million in the prior quarter.

Moving to GAAP net loss. As you may know, the warrants which were issued as part of our recent capital raise, are subject to liability rather than equity accounting, and therefore require us to reflect changes in the warrant fair value each quarter in our GAAP financials. Essentially, if our share price goes up during the quarter, it will show as a noncash loss. And conversely, a share price decline, which shows a gain.

The positive share price appreciation we saw in the third quarter drove an increase in the fair value of the warrant liability of about $16 million. This is a noncash charge that does not reflect the underlying business performance and will be excluded for purposes of adjusted EBITDA but does impact our GAAP financials.

So including that GAAP net loss was $23.9 million or $1.61 per diluted share compared to a loss of $50.4 million or $1.18 per diluted share in the prior quarter and a net loss of $15.4 million or $1.21 per diluted share post split in the year ago quarter. Adjusted EBITDA loss was $4 million, which excludes a net of approximately $20 million for the change in fair value of the warrant liability as well as certain transition and special stockholders' meeting cost September 2025 and other noncash items.

This represents our best adjusted EBITDA loss since the third quarter of 2020 and a substantial improvement from adjusted EBITDA losses of $10.4 million in the prior quarter and $12.2 million in the year ago quarter. As Yann noted, during the quarter, we strengthened the balance sheet by closing our previously announced term loan financing, which was [ $37 ] million before fees. As you may recall, this was part of an overall $75 million financing facility with the remaining $37.5 million in funding available to the company as may be needed in the future upon mutual agreement between the company and the investors.

So overall, very good progress on financial side with some of the best numbers we've seen in many quarters as well as new cash on the balance sheet. We are energized by the progress and remain focused on delivering term value. Finally, 1 subsequent event to note, following the quarter end, we acquired 55% interest in Alpha Steel, which is owned by our joint venture partner. As you may know, Alpha Steel is a manufacturing joint venture partnership established by the companies in 2023 to manufacture steel components, including torque tubes, rails and other items.

Following the close of transaction, which occurred this week, FTC Solar became the sole owner of Alpha Steel giving the company full control over a key contributor to our domestic content capability and unlocking additional profit potential, while ensuring full confidence with the guidance included in the OBBB. Alpha Steel was modestly profitable in the third quarter. And while we haven't given overall guidance for 2026 yet, we would expect Alpha Steel to be accretive to adjusted EBITDA. This acquisition is expected to drive lower COGS improved gross margin and higher adjusted EBITDA.

With that, let us turn our focus to the outlook. Our targets for the fourth quarter call for the following: revenue between $30 million and $35 million, which at the midpoint would represent another 25% growth sequentially. Non-GAAP gross profit between $3.8 million and $8.2 million or between 12% to 7% and 23.4% of revenue, which even at the low end would represent our highest gross margin as a public company.

Non-GAAP operating expenses between $8.2 million and $9 million; and finally, adjusted EBITDA between a loss of $5.4 million and breakeven. At the midpoint of this range, would also represent our best results as a public company. In 2026, we expect to continue our growth trajectory, and we'll plan to provide additional detail on our next call.

With that, we conclude our prepared remarks, and I'll turn it over to the operator for any questions. Operator?

[Operator Instructions] Our first question comes from the line of Philip Shen with ROTH Capital Partners.

Congrats on the strong quarter. Congrats on the bookings as well. I was wondering if you could share a little bit more about the booking with Levona in terms of -- and I know you gave a lot of detail already, but much more could there be beyond even what you guys have shared? And then talk to us about the international bookings that might be coming and the other activity you're having with customers?

Appreciate the comment there. Look, I think Levona is indicative of a little bit of the type of clientele that we've been working hard on, working on developments in the early stages and special projects like this where it's a developer that has a tremendous track record in previous endeavors and now has several projects that we ultimately wrapped into this gigawatt MSA. And I think just from a standpoint of the team at FTC and something that's akin to what we're working on with many developers is -- is helping them maneuver the buses, right?

We have obviously experienced in project finance. Our core expertise in supply chain and helping those projects get to close. So that's what we've been hard at work there. Obviously, there's a tremendous appetite for energy and generation coming from these solar developments. So sometimes it is straightforward as getting the projects to the point of construction. And we have been investing in supporting folks like Levona in early stages of design where many of our peers won't, right?

They will wait for the project to get to RFP. But we'll spend time and design and helping them get the project to this standpoint, and that's borne good fruit. On the international front, we're -- I think we're quite optimistic. Couple of quarters ago, obviously, we announced a 300-plus megawatt project in Australia that we've been working on, and we think that's a strong market. Australia, in particular, because of the labor constraints and the labor cost, FTC solution in that 1 case ended up being millions of dollars cheaper to install.

And we're continuing that notion, looking at additional markets where we might have product solution, but always making sure that we have a value proposition. But ultimately, the tracker market really has a lot of customers that have this global portfolio, right? It is not uncommon for me to spend time with a customer internationally that's working on a project in the U.S. or a U.S. customer that's acquiring a project internationally. So it is becoming a quite a bit of a global supply chain -- both global on the supply chain procurement part, but also on the customer support portion of it.

Great. Great job to you and the team for getting to the gross margin positive strong, so Q4 guide, but I was wondering, to what degree could you give us some commentary on how you expect things to -- either the margins or revenues to trend through the early part of '26 or through '26. I know you don't have an official guide, but so far as you can give us some qualitative commentary or even quantitative, that would be fantastic.

Yes. No, I think -- look, as I said in my prepared remarks, I'm very optimistic about where we're heading, right? We're looking to take share of the overall 1P market, obviously, coming into the space, as the latest entrants focus with built on innovation and having a little bit of a different mousetrap for EPCs and IPPs to consider, especially EPCs that are looking at labor savings and schedule constraints.

So while quantitatively, not much to give you on 2026. I think it's fair to say at this point that we expect to be adjusted EBITDA positive for the full year 2026. I'm optimistic about where we'll be on both margins and revenues. Our focus has been on just execution day after day. I think the third quarter results speak to that. We hope to continue that trend. And when we have more guidance to get, we certainly will.

Okay. Just a little bit hear you on, do you think you guys remain gross margin positive through Q1 and 2?

Yes. I don't -- I think I'm going to leave it at where I think we'll be for the year, thinking that it's fair to say that we'll be adjusted positive for the full year. as soon as we have definitive numbers to give for any period of time, Q1, Q2, we certainly will.

Our next question comes from the line of Sameer Joshi with H.C. Wainwright.

Congrats on a great progress. Just a couple of questions from me. The $37.5 million that was drawn down and rather the remaining that is expected to be drawn down. Are there any plans to do that, now that you have almost $25 million cash on hand and nearing positive adjusted EBITDA?

Yes. Right now, we're focused on the business. Thank you for the question. Right now, we're focused on the business. I think it's nice to have the facility. It certainly is -- it's helpful with customers that are looking at FTC's balance sheet, so that it's been helpful in the conversations to advance our commercial efforts this quarter.

I think right now, we'll continue to focus on the blocking and tackling of getting our bookings in continuing to work on our execution, just sort of the story that third quarter results tell that's certainly the trend line, but it's -- I would characterize it as it's nice to have the facility and additional cash that we've been able to bring in at the beginning of the quarter, and we'll see how the execution goes from here.

Understood. The couple of quarters ago, you had announced a 5-gigawatt 5-year sort of a master agreement. Are you seeing a sort of pull forward from that and maybe it may be completed in less than 5 years by the current [ term ].

Yes. Let me give the framing of all of our MSAs, which now stand at over 7.5 gigawatts. These are the investments that we've been making in helping developments to get to the start of construction or notice to proceed. And we expect many of which -- and some MSAs have started to roll projects into our bookings and revenue. So certainly nice to see. And it's an important tool for us because it is a relationship between 2 parties.

And it's not just, as I said in my comments, for good PR and fourth in terms of the actual procurement contract and brings it to the forefront, right? We know where we sit in terms of the relationship contractually and allows us to contract more quickly. But fundamentally, our business, especially the solar business is built around relationships.

It's not hard to see that there's -- in most MSAs, it's built around people trusting people and the relationships that we've all collectively had at FTC over the past couple of decades with other solar professionals. So we do -- there's a lot of enthusiasm, especially from my spot on sort of burning off and leveraging those M&As and actually bringing those gigawatts through but also increasing the number of MSAs that we possibly are into with others, both people that we're currently looking -- talking to about it. and those that already have signed MSAs. And I will say, because sort of a sideline on my comments, not all MSAs have gigawatts attached to it, right?

It's -- the relationship can be non-volumetric especially with EPCs because it does set this preferred vendor type of relationship where we know and have reviewed collectively, what the terms and conditions would be of a purchase order. So spending more time with top-tier EPCs, including EPCs that are really growing quite nicely in the solar space, there's such a need for with all of labor constraints, there's also quite a bit of new EPCs that are growing significant volumes that we're spending time with bringing towards our demonstration facility, et cetera.

So we're quite bullish on the use of the MSAs and see the customers really appreciate those as well, in some cases, even bringing projects into exclusivity under those MSAs. So it's all progressing quite nicely in building the mid-funnel that will ultimately lead to more backlog in bookings.

That was really helpful. May I squeeze one last one on working cash management. Accounts receivables are substantially elevated, does that -- any part of the answer is the answer that you gave, is that responsible for this high AR?

Yes. I'll let Cathy give a little bit color. But just obviously, if you kind of compare where we were and where we are having run manufacturing businesses in the past, there's always going to be a little bit of a linear relationship between the growth on the top line and the rest of the balance sheet, but I'll let Cathy give a little bit of color.

Thanks for the question. Yes, that is -- it really reflects kind of the increase in the activity that we're seeing. And as our projects go through the production and execution phase, you'll see that time line continues to grow with the growth in the revenue.

[Operator Instructions] Our next question comes from the line of Jeff Osborne of TD Cowen.

Most were asked, but just a couple of questions on the Alpha Steel joint venture. Did the historical ownership structure of that impact any bookings and potentially this now 100% owned by you, would that free up anything or any folks proactively or preventatively concerned about rules implementation?

Yes, it's a good question, Jeff. Over concern or question, I think it was good housekeeping for us. It does create an additional lever for us in terms of operating of the site, especially as the company grows pushing the volume through Alpha steel. But with the global supply chain, it's another tool for us. Obviously, we have a lot of contract manufacturing around the world for project base, both in the U.S. and external.

But certainly now, it creates a 100% certainty for the market knowing that FTC is the owner of Alpha Steel and sort of our domestic torque manufacturing and some of the ancillary parts and fasteners that we're looking to increase the capacity of Alpha Steel will give us additional access to 45 credits, but also make it easier for folks around their project level, regulatory compliance, et cetera.

Got it. That's helpful. Maybe just two other quick ones. I might have missed it, but did you folks or Cathy disclose what the tariff impact is on the business, just given all that's going on with tariffs and then potential Supreme Court involvement there?

We did not most -- I think previously, we have talked about tariffs and contractually the pass-through customers. And I think the commentary I said on previous calls is, tariffs do create pressure on project level CapEx, right? So the cost increases back to the customer, there needs to be some flexibility to the PPA.

So we've certainly seen offtake agreements have to take a little bit longer to negotiate. Obviously, when the tariffs came into effect, we were a little bit smaller as the business in terms of volume. So we were able to maneuver pretty easily with our global supply chain. But so we've never disclosed the tariff number itself for the most part, really just a pass-through to the overall project supply chain.

Got it. And last one I had is just I think 2 of your 3 competitors have made significant M&A around piles, foundations, et cetera, trying to differentiate on different characteristics of terrain versus you folks are leaning into the installation time, 2,000 volts, et cetera. What's your thoughts as it relates to your competitiveness as it relates to difficult soils or frozen soils, rocky terrain, terrain, et cetera?

Yes, it's a great question. And for the just to kind of give a little bit of color. Obviously, the tracker itself really comes into 2 parts, right, which is where we are as the tracker system itself and then the foundations as a separate. For us, the thing where we're differentiated quite substantially is our top of pile loads are significantly less than all of our peers.

And there's a couple of sort of structural reasons, but the way that our system is designed and built actually does come up at times where we are the better tracker for foundations that one of our peers may own for the most part, still available to still available to our customers. Most piles, the relationship between the foundation companies actually doesn't usually sit with RECONNECT with the tracker vendor like ourselves, it sits with the end user themselves that are trying to find the right solutions.

But there's quite a deep portfolio of foundation solutions in the market.

I certainly hope that our peers are recognized the advantages for their customers that at time would want one of their solutions and wouldn't sort of leverage that to their sole advantage. I think that would be bad for the way that customers would view their relationship overall. It really speaks to -- and I'm going a little bit off script here, but we need a healthy market dynamic, right? And competition in the market is really inherently important. I've always viewed the sole industry as such.

And I made it -- I said it in the comments, is that the customers want healthy competition. But overall, we haven't had any issues around access to foundations. There are several solutions for each problem and we've been able to maneuver it. But our focus has been just having a really wide product portfolio. Obviously, 1P releasing the 80-degree hail stow, having the best top of pile loads in the market. but also really helping customers where their pain point is, which is labor, right? 0.053 labor hours per module is not an insignificant KPI productivity KPI for EPCs, it is nearly 2x faster than what I've been told personally folks have with some of our peers. Those are real hours. Those are real possible schedule reductions that are going to be both CapEx, helpful, but also the ability for margin expansion at the EPC level.

So that's why we've seen -- we're seeing a lot of EPCs take a look at us and the opportunities they have in leveraging the constructability. And then further down the road, sort of the advantages we have structurally with robotics, et cetera, where these third parties are coming up with incredible solutions that we'll be able to leverage into that our customers will be able to leverage into installing the tracker even faster.

I'm showing no further questions in the queue. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.