Good afternoon, and welcome to Shoals Technologies Group Second Quarter 2021 Earnings Conference Call. Today's call is being recorded and we have allocated 1 hour for prepared remarks and Q and A. At this time, I would like to turn Conference over to Megan Peetz, General Counsel for Shoals Technologies Group. Thank you. You may begin your presentation.
Thank you, operator, and thank you everyone for joining us today. Hosting the call with me are CEO, Jason Whittaker CFO, Philip Partin and SVP of EV Solutions, Jeff Sonar. On this call, management will be making statements based on current expectations and session, which are subject to risks and uncertainties. Actual results could differ materially from our forward looking statements if any of our key made during this conference call or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www. Schoels.com.
We do not undertake any duty to update any forward looking statements. Today's presentation also includes references to non GAAP Financial Measures. You should refer to the information contained in the company's 2nd quarter press release for definitional information and reconciliations of historical non GAAP measures to the comparable financial measures. With that, let me turn the call over to Jason.
Thank you very much, Megan, and good afternoon, everyone. I'll start off by giving an overview of the current solar market landscape and the opportunities that it's creating for Shoals. I'll then discuss the progress Shoals is making on 3 of its core growth initiatives, converting the industry to beer led, growing wallet share with new complementary products and entering the EV charging equipment market. As most of you know, 2020 was a record year for Shoals, both in terms of revenues and profits. That momentum continued in Q1 and now again in Q2.
Revenues and adjusted EBITDA for Q2 were up 38 percent and 34%, respectively. Our 2nd quarter results were driven by continued growth in our system solutions business. That growth was a result of sustained strong demand for utility scale solar as well as market share gains. Increasingly, customers are seeing the value that our combined as ecosystem provides and we are converting customers to BLA in a much shorter period of time than it took In our core U. S.
Solar business, we're seeing increasing levels of demand as the build out of new projects accelerate. The acceleration is being driven by continued declines in the LCOE of solar, which makes it more competitive with other sources of generation, The growing corporate utility commitments to source energy from renewable resources, the 2 year extension of the solar ITC that was passed in December of 2020, The IRS expansion of the continuity safe harbor to 2025 in June and the normalization of permitting processes as According to many industry analysts, the effect of all that has been to increase the size of the addressable market over the next 3 years, about 30%. That's a huge increase in
the size of the market
and aligns with what we've been seeing in the marketplace and hearing from our customers. It's also important to highlight that the acceleration of the solar market does more than just increase our addressable market. We find it is also indirectly leading customers to choose our solution versus conventional EVOS. The reason for that is as activity levels grow, labor rates rise and labor availability falls. And many of our EPC customers are telling us they're having difficulty Staffing jobs.
The opportunity right now is that big. And because our combined ecosystem installs much faster than conventional EVOS and does not require skilled labor. We can be the difference between our customers being able to take an incremental job versus letting it go to a competitor because they don't have the Crews available to do the work. So to give some perspective for how strong demand is for our products currently, Our quoting activity has more than doubled from what we were seeing last year. Average project size measured in dollars has increased 62% versus last which is very favorable to us because we have certain fixed costs that are the same regardless of the job size.
So as the job gets bigger, We get more leverage on those costs. More leverage on our fixed costs usually translates into higher job margin. The growing demand for our solutions is reflected in our total backlog and awarded orders, which was $200,500,000 as of June 30, 2020 An increase of 63% versus the same period last year. And to put that in perspective, That's more than our total revenues last year. So now turning to our progress on our growth initiatives.
We're continuing to take share with our combined ecosystem and we're converting EPCs and developers to our system faster than ever before. To provide some context for how much we've accelerated the customer conversion process, when we went public in January, there were 4 Major EPCs that use our system for most or all other projects and another 10 that were in transition, meaning that they've placed an order that is included in our backlog and awarded orders. Winning over those first four EPCs took years. Contrast that with the last 6 months where we completed conversion of an additional 5 EPCs. We're getting faster at winning new customers.
More importantly, the amount of time that it's taking for sales prospects to place their first order is compressed. Since our IPO in January, we identified 32 new prospects. During the first and second quarters, 9 of them place Extremely short period of time for an EPCR developer to move to a new system that has different means and methods. And we think it underscores the tremendous strength and differentiation of our product offering. We are not standing still.
We remain focused on expanding our wallet share with new products, including our recently introduced ivcurb benchmarking solutions. IP curve benchmarking systems give owners unparalleled insight into the performance of their products, all the way down to the stream level. And we believe that will be a valuable tool for owners to improve production and lower O and M costs. Our wire Solutions are an improvement on conventional wire ties that have a high rate of failure in the field and will be a high volume, high margin product for us. Both of these new products are currently being field tested with customers and we're on track to generate revenues from both in Q4 of this year.
And finally, we're progressing steadily on our expansion into easy charging equipment, which we are confident will be an attractive new leg And further accelerate our growth. On our last quarterly earnings call, our SVP of EV Solutions, Jeff Tullinar, Spoke in detail about the opportunity that we see for Shoals in EV charging. Installation is nearly half of the cost of deployment. For a solar project, it's about 30%. The reasons for high cost installation revolve around a lot of the very same issues encountered in solar.
The need for trenching, complex interconnections, home run cabling and the need for expensive skilled labor. Together, those characteristics make EV charging market right for innovation and the innovation it needs are at exactly the areas Scholes has unique expertise and manufacturing capabilities. To capitalize on this immense opportunity, We're currently developing 4 new product families for the EV charging market, which we believe will reduce the insulation costs of a charging deployment by 20% to 30 1, skid solutions that package the key components required for an EV charging station in the factory with the objective of reducing the amount of labor required in the field and increasing quality. 2, Raceways that allow wire to be run above ground rather than an underground conduit. 3, EV BLA that eliminates home runs from each dispenser and offers benefits similar to our solar BLA including a 75% reduction in wire And 4, prefabricated skids for DC or high power chargers and AC skids either 2 or 4 dispensers.
Charging skid solutions minimize placement time and increase quality while reducing cabling and cost. Importantly, each of our product families can be used individually or in concert with one another. We will encourage customers to purchase a complete system, which will be a value multiplier. But we design each product to stand on its own if customers want to purchase only We expect to introduce our first offerings for EV charging in the Q4 of 2021, Specifically, our Phase 1 products, skid solutions and the quad chargers are already in advanced development and we expect to have our first units deployed with customers in Q4. Our Phase 2 products, Raceways and EVBLA are being developed now and we expect Have our first units deployed with customers in the Q1 of next year.
We currently expect full commercial launch of all products will occur in the Q2 of 2022. I'll wrap up by saying that we're very excited about what we see ahead for our core solar business and our new EV charging business. I'll now turn it over to Phil who will discuss second quarter and 1st 6 months financial results.
Thank you, Jason. For the Q2, revenues increased 38% versus the prior year period to $59,700,000 driven by a 62% year over year increase in our system solutions revenues, which was partially offset by an expected decline in components The growth in system solution revenues reflect strong demand for our combined as you go system. The declining component revenue was consistent with the expected change in certain customers' order timing relative to last year and the conversion of our other from components to system solutions. The sale of system solutions represented 86% of revenue versus 73% in the prior year period. Prices across our product lines during the Q2 were comparable to the prior year.
Gross margin in the 2nd quarter increased by over 500 basis points versus the prior year period to 43.8 percent as a result of higher portion of our revenue coming from combined as you go system solutions, Purchasing efficiencies from increased volumes, improved materials planning, which reduced logistics costs, enhancements to product design and lower manufacturing costs and other manufacturing efficiencies resulting from higher production volume. 2nd quarter general and administrative expenses were $10,000,000 compared to $9,300,000 in the prior year period. This was driven by a planned increase Payroll expense via higher headcount to support our growth and product initiatives, new public company costs and public offering expenses, partially offset by a decrease in equity based compensation. Adjusted EBITDA for the Q2 was $20,600,000 up 34% from $15,400,000 in the prior year period, with adjusted EBITDA margin decreasing approximately 90 basis points year over year to 34.5%. Adjusted net income was $14,700,000 in 2nd quarter compared to $13,100,000 during the same period in the prior year, increasing 12% primarily due to the increased systems solutions revenue, partially offset by an increase in interest expense.
Please see the adjusted EBITDA and adjusted net income reconciliation tables in our 2nd quarter press release for a bridge to our GAAP results. Now turning to our results for the 1st 6 months of 2021. Revenues grew to $105,300,000 compared to $84,200,000 in the prior year period, an increase of 25%, driven by a 55% year over year increase in system solution revenues, partially offset by a decline in components revenue. This reflects strong demand for Shoals' combined as you go system for the 1st 6 months of 2021. We derived 80 during the first half of twenty twenty one were comparable to the prior year period.
Gross margin in the first half of the year increased by 5.90 basis points versus the prior year period to 42.7% as a result of a higher portion of revenue coming from combined as you go system solutions, Purchasing efficiencies from increased volume, improved materials planning, which reduced logistics costs, enhancements General and administrative expenses were $16,800,000 for the 1st 6 months of 2021 compared to 11,900,000 for the prior year period. This was driven primarily by new public company costs and public offering expenses, planned increased payroll higher headcount to support our growth and product initiatives, partially offset by a decrease in equity based compensation. Adjusted EBITDA for the first half of twenty twenty one was $34,700,000 up 26% from 27,500,000 in the prior year period, with adjusted EBITDA margin increasing more than 30 basis points year over year to 33%. Adjusted net income for the 1st 6 months of 2021 was $23,400,000 compared to $22,100,000 for the prior year period. Please see the adjusted EBITDA and adjusted net income reconciliation tables in our Q2 press release for for a bridge for GAAP results.
As of June 30, 2021, we had backlog and awarded orders of $200,500,000 an increase of 63% year over year and 11% versus March 31, 2021. The increase in backlog and worded orders reflects continued robust demand for Shoals products from our customers. Turning to our outlook for 2021. Based on current market conditions and input from our customers and team, We are reaffirming our previous guidance and expect 2021 revenues to be in the range of $230,000,000 to 240,000,000 scores, up 31% to 37% year over year. We expect adjusted EBITDA to be in the range of $75,000,000 to $80,000,000 and adjusted net income to be in the range of $47,000,000 to $51,000,000 As we noted last quarter, we expect year over year with Q3 to be comparable to up modestly on a sequential basis from Q2.
And from a margin perspective, as previously communicated, The mix related to gross margin expansion that we saw this quarter may not reoccur next quarter when we expect to have a greater percentage of component sales. Before I turn it back over to Jason, I wanted to make a couple of comments regarding the growing pain the solar market is currently experiencing. The ones we hear about the most are price of commodities, potential for project delays given supply chain disruptions and shipping costs. Now while we're not immune to what happens in the market, we set our business up in a way that these issues have a minimal impact on us. First, when we quote a price, we match that price against the quote for key inputs from our suppliers and we'll only honor that quote for 7 days.
That means we are not caught in a position where we promised to price to a customer to then have the cost of the inputs for that order increase on us and change our margin profile. We essentially locked both sides of the ledger when the order gets signed. We've been doing things that way since before the current inflation in commodity prices And it has served us very well in this environment. And with respect to project delays, we're aware of some of the market, but we're not seeing them materially impact Shoals. And the reason for that is that most of our customers are already in construction or about to start construction when they sign a contract today.
That means it is very unlikely that it will cause a delay for the project. And I think a good analogy here is once you start a new Even if the real estate market changes, we're still going to order the windows and finish that project. And we're essentially the windows guy. And lastly, as it relates to shipping, we've seen increases in costs like many other players in the But in our case, shipping is not a big component of our cost structure. And the reason for that is that our products are fairly lightweight and packed very densely.
So We have a lot of options for how we get products to the customers. Also, on the supplier side of things, most of our suppliers are located in North America. But we don't have the challenges with overseas shipping that some of our peers are experiencing right now. Jason, Back to you.
I'd like to close by thanking all of our customers for their commitment to Shoals, our employees for their contributions to our company's success and our shareholders for their continuous support. And with that, thank you everyone and I really appreciate your time today. I would now like to ask the operator to open the line for questions.
To remove your question from the queue. One moment while we poll for questions. Our first question comes from the line of Maheep Mandloi with Credit Suisse. You may proceed with your
Just a question on Q3 margins, if you could talk about what's Driving that weakness is just mix shift and how should we think about that in Q4 or next year?
Hey, Meade. This is Jason here. Good to speak with you. So I think the easiest way to cover that is point you back To the updated investor deck that's out on our website where we really talk about our BLA and how it's gaining share. So kind of looking at that, when you look at those new prospects that we're moving into in transition, sometimes when we're working with those clients as we're Moving in over to our full system BLA solution, the opportunity presents itself to offer that more component based While we're moving towards that.
And when that happens, we're obviously going to capitalize on that. So it's really just a function of a mix shift between the full system solution and more of that component based offering in this particular quarter. So as we continue to go forward, we expect our margin profiles To decline or to increase, I'm sorry, but you're going to have some ebbs and flows along the way depending upon the mix shift, whether it's more of a component base mix On that full system solution.
Got it. And then maybe if you can just talk about the backlog here, And then it could be a good indicator of your growth later this year or next year. But if you could talk about How much of that backlog is for 2021 versus 'twenty two or later years? And what are the different buckets of whether components of BLA or Maybe other new projects in that backlog today?
Yes, great question, Vip. So we're not providing any type of guidance on the Specific products as far as components versus system solutions. And when you look at the backlog itself, Going back to the same investor deck where we talk about the timing and the visibility that we have. So we have excellent visibility over that 12 to 18 month period with a large portion of that backlog obviously taking place over that next 6 to 12 months, but we've not provided any exact breakdown between 2021 2022.
Got you. And just one last one for me and then jump back in the queue here. For that EV charger market, there are a lot of details in the slide deck around The market opportunity, but maybe one thing, like, if you could highlight is just who's the buyer here or who is the target Customer, I know we've been talking about the EPC companies in the past, but has anything changed recently? What are you seeing on the buyer side for echarges?
Maybe I'll turn that one over to Jeff.
Yes. I'm sorry. Your question broke up a bit for me. Can you restate, please?
Yes. Sure, Jeff. I just Wondering
who is the incremental customer here for those EV charger projects for you here. And I think you certainly kind of expect new orders sometime next year, right?
That's right. We spent large part of Q2 On customer outreach, and that continues to go extremely well. We're having multiple on-site visits starting in August and continuing throughout the duration of the year. We do expect those to materialize into first orders in Q4 as stated. We're continuing to work with our Cornerstone customers in the EV space, much like We did when we deployed our BLA solution in solar.
And in the presentation posted on the IR side, We updated the assumptions for EV charging around the benefits of the infrastructure plan. We do expect the infrastructure plan to help us with customer outreach and growth.
Our next question comes from the line of Philip Shen with ROTH Capital Partners. You may proceed with your question.
The first one is on margins. Just as a follow-up to Maheep's question there in Q4. Can you give us A sense for what the cadence of what that might be in Q4 and maybe even Q1 'twenty two? Do you think we see Some improvement there or perhaps it kind of stabilizes at the Q3 level and it goes sideways. So sorry
Phil, I can take that. This is Phil. I'm battling a cold, so I apologize. But As we've stated before, we expect our margins to continue to increase our gross margins as we go forward, But there's going to be bounces up and down, but the trend will be positive. So we do not think by that comment, we do not think that The Q3 balance is a permanent number at all, but rather we will continue to see improvement as we One is more people switch to BLA and as did we roll out the new products, which we all have hurdles, which match our current margin profile.
And then as it relates to your domestic versus international mix. I was wondering if you could comment on what you think that mix might be for maybe Q4 of this year or maybe full year 'twenty one? And then by the end of 'twenty two, what do you think that mix can shift
So I guess The easiest way to really address that is kind of pointing back to the BLA share gains that we talked about. And I think when you look at the times that we went We had 11 particular customers that were prospects. And when you look at that number now, that number Significantly increased to north of 30, but what's more important is we now have 11 customers in the international market in that exact same state. So very excited about the outreach and the effort that the sales team is putting forward. But at this time, we're not providing any exact specifics on what the breakout is between North America and International.
Our next question comes from the line of Brian Lee with Goldman Sachs. You may proceed with your question.
Hey, guys. Good afternoon. Thanks for taking the questions. Maybe first off, just on the demand environment heading through the second half. And I know you're reiterating guidance here.
It sounds like the backlog is and ordered orders are up a ton. So Things are trending in a very positive direction. But can you maybe give a bit more color around kind of what you're seeing real time In the demand environment where, let's say, lead times are for your products, how does that compare to historical or what do you consider average lead time? Just In general, wondering if you've seen any push outs or project timing issues related to inflationary pressure
I'll take those. So looking at backlog, one of the things that really drives that would be your inputs, right? So we constantly monitor inputs based on the market And if there were any type of significant shift that would affect operations, we're very comfortable being able to from one particular vendor to another. And then going specifically about projects themselves, As we've talked about before, I mean, we can see some project movement on quarter to quarter. But as we've discussed and reiterating guidance, We're not really seeing any material changes overall.
And more importantly, we do have to see any particular projects cancel.
All right. That's great to hear. And then maybe one just kind of on the model for Phil, And not to get too bogged down in the minutiae, but if I just take the midpoint of guidance for Revenue, EBITDA and the adjusted net income for the year, it seems like second half versus first half Revenue and EBITDA are pretty similar sort of in that 20%, 25%, up half on half range, But then the adjusted net income is a little bit lower than that, sort of in the low teens. Is there anything with respect to 3Q, 4Q That would be flowing through differently below the line and impacting your net income growth in the second half relative to EBITDA growth?
Well, the big issue there I'm trying to think exactly what you're saying. But our driver there as we mentioned, adjusted net income and adjusted EBITDA will probably adjusted Yes, net income and adjusted EBITDA will probably be slightly lower this year because as we're ramping up expenses, the overhead expenses From all these growth initiatives that we've got, there'll be that slight step down, but then there'll be a positive as we go forward, we'll be able to lever those We go into next year, as we start, as Jeff mentioned, seeing the revenue from these initiatives and both EV, international, all of those, the new products. So that was kind of that step down, which was has been mentioned throughout the year as we looked in our forecast for the year. But we should see the overall margin continue to improve as we stated before as well as adjusted EBITDA and adjusted net income In the longer run.
All right, fair enough. Maybe it's a tax or interest item. I can take that offline. I appreciate the follow ups guys. Thanks.
Our next question comes from the line of Colin Rusch with Oppenheimer, you may proceed with your question.
Thanks so much, guys. With the new bookings that you had during the quarter, can you break out How much of that was from new customers and how much of that was repeat customers that you've gotten in the portfolio already?
Yes. Hey, Collyn, Jason here. Good to speak with you again. So we've not provided any particular specifics on the exact breakout of that outside of Pointing out the fact that the number of customers that we're able to convert in such a short period from being in Prospects directly to in transition within that 90 day period in this particular quarter and roughly over the 1st 6 months Since we've went public.
Okay. Maybe I'll pass into that a little bit offline. But, The second question is really about pricing. As you guys think about pricing the product and rising labor rates and the efficiency that you offer Your customers, how are you thinking about offering up pricing here and potentially raising pricing, capturing up a bit more margin as you go forward?
Well, I think, Colin, really we're in what I would consider to be the growth sector, more specifically Company as a whole, but more specifically with the BLA and combined as you go product line. So we price that product on par with what I would consider to be more of the conventional solutions that are out there. And that's the methodology that we utilize.
Our next question comes from the line of Mark Strouse with JPMorgan. You may proceed with your question.
Yes, good afternoon. Thank you very much for taking our questions. So you've obviously seen some quite impressive acceleration In your business since the IPO, just curious if you can touch on the competitive environment, if the IPO and your results have actually invited new competitors
From a competitive landscape perspective, we obviously keep a very healthy paranoia and keep your And here's to the ground and monitoring what's going on. But really from a competitive landscape perspective, I would say it's very similar So what we saw at the time of going forward.
Okay, thanks. And then just maybe No, it's right out of the gate with the EV charging stations. But just over time, how do you think Your pricing power and your margins in that business, just given that the installation cost is higher than it is For the core solar business?
Yes. From a margin profile go ahead, Jim.
Go ahead. Yes. I was going to say, we price very similarly to how we do with solar NextBest alternative pricing. So as our solutions and as the NBA, Next Best Alternative increases over time, we're going to have stability from that regard. We're always looking to optimize margin and Phil is very adamant about that and we'll continue to do that.
So as our solutions become more broadly deployed in the market, we expect that our NDA So we'll yield very solid margins comparable to what we see in solar.
Our next question comes from the line of Joseph Osha with Guggenheim Securities. You may proceed with your question.
Hello, everyone. Thanks for all the great answers. Just one question for me. You refer in Stated slide deck again, so this incremental $0.03 per watt for our storage attached systems. I'm just wondering if you can Comment on how the mix is evolving in terms of storage versus not in your business?
Thanks. Yes. Hey, Joseph, Jason speaking. When you look at storage, I'm happy to say that the attach rate of storage of projects It's increasing drastically, which is very exciting. And you look at that $0.03 of incremental spend, that really It changes somewhat depending upon whether you're talking about an AC coupled or a DC coupled solution, Which there's bone out in the particular marketplace.
But when you look at that attach rate, again, pointing back to that, very exciting and especially when you consider the And as we continue to bring in new customers, we grow our core solar business. It's a natural progression to be able to support our partners in the market that are moving into that storage or are supporting storage on top of solar. Can you I wasn't going
to ask a follow-up, but now I am. Can you comment a bit on the Between your value for AC coupled and DC coupled?
Yes, it really depends upon where the It's a very similar product. It just really depends upon where the product is located, whether it'd be located Specifically like intercontainer or out of container, but it's a very similar product offering.
Our next question comes from the line of Kashy Harrison with Piper Sandler. You may proceed with your question.
Hi. Good afternoon, Linda. Thank you for taking my questions. And my first question is on just the market commentary. As you indicated, you're closer to the construction side of the equation, which is why your 2021 guidance is unchanged.
But a lot of projects for 2022 have not yet started construction. And so I was just curious, what are your customers Indicating to you in terms of the potential for delays into 2023, has that entered the discussion at all? Or does it Even the 2022 projects will remain on track.
Yes, Jason speaking. I've not had any intimate conversation regarding 2023 outside of just very strong demand for the particular product So kind of pointing back to our growth in our backlog and awarded orders and the number of projects that we have. I think it's really just an exercise in Optimization based upon all of the items that are out there, just waiting on the dust to settle. When you talk about the Biden infrastructure plan, The potential further extension of the ITC, possibly even increase in rate, as well as The potential removal of the tariffs for panels coming in North America. Those are really the key things that everybody is kind of watching and seeing again how that falls Just to make sure that they have done their proper diligence and optimization for each one of these projects.
Thanks for that. And then my follow-up is maybe a quick question for Phil on just the modeling question. So Q1 and Q2 looks like working capital represented a use of cash. I was just wondering if you could Just been through working capital entering the second half of the year, would you expect the full year working capital to be relatively Flat or would you expect working capital for 2021 to represent a use of cash?
Well, from a dollar standpoint, it will obviously use cash. From a day standpoint, We think we can do better or the same. The issue is one of the things we're doing and I think it's very prudent is that as the market has seen a lot of these supply chain issues in that and we're constantly doing it is work on the second flyers and those type of things and we've got them. We're very, very comfortable with it. But things like that might be a little bit, You might give longer days or something or shorter days I guess to payables.
But receivables the same thing as you get new customers for that first order. But, no, we expect Dave's working capital to be very consistent or improved.
Question comes from the line of Moses Sutton. You may proceed with your question.
Hi. Thanks for taking my question. I may have missed it. Can you provide how much international revenue is in 2021 guidance, maybe roughly? How much is in backlog and which Hey Moses, this is Jason speaking.
So we're not providing any specific breakdown when you look at the international versus the domestic market. But again, very excited about where things are, what the team has accomplished. The EU is obviously an important reason. That's part of the reason why we So utilize that area as our first movement and where our team itself is staffed. And then that's outside of Australia and then of course LATAM that we have.
And when you look at the backlog and awarded orders, obviously, we're building up our pipelines, we're moving into other areas and Continue to have conversations with customers that we've served already in North America and happy about where we are when you look at the pipeline as well as the back And any thoughts on potential M and A internationally, Some small companies that can sort of jump start your presence in certain markets? Yes, I mean from an M and In general, obviously, we'll take a look at anything that we feel like adds real value. When you look at M and A, there's nothing really noteworthy to speak of internationally, Maybe something that we take a very hard look at on down the road as we elect Further expand our manufacturing and see if there's an area that's more conducive in one region or another that may give us some local content requirements, but Nothing worth mentioning right now, Moses.
Our next question comes from the line of Jeff Osborne with Cowen and Company, you may proceed with your
question. I wanted to go back to your analogy of the skyscrapers and windows analogy and being late cycle in the construction process. I think one of your slides in your investor deck talks about as you become more strategic with your EPC vendors, Giving preliminary engineering drawings and designs and doing a design layout in conjunction with the pricing. So, can you talk about What you're seeing at the front of the sales funnel that is well before the preconstruction process?
So when you look at the sales funnel or the sales pipeline, Jeff, Sales pipeline remains very strong, continues to grow and accelerate. And again, very excited And it just it further supports that backlog and awarded orders that we have and the growth that the
My second question was So I think with this quarter's results, I believe you're probably in the history of publicly traded solar, if not the highest, one of the highest Reported gross margins, just given the broad 10% inflation that you're seeing on utility scale solar with Price of steel as well as panels and labor rates that you alluded to. Do you have any concerns that your EPC vendors or developers We'll flag that as, hey, I'm taking pain in this other area of cost, maybe you should as well.
So, when you look at gross margin perspective, Jeff, from that standpoint, obviously, we go through and we optimize that particular So when you compare that specifically that full system BLA solution, which has the higher margin profiles we've talked about, An alternative of going back to that like a conventional home run solution would be more costly than that particular product itself. So from that standpoint, I mean, obviously, every time you talk to someone regardless of what markets you're in, you always talk about price, but we've not seen any additional pressure from that perspective, given the market conditions that you just mentioned.
This also concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.