Phelps Morris: Yeah, so, so thanks for your question. So from a countering perspective we were been working with the auditors. We do not anticipate what will be consolidating the results on, on our books. So we have a, a 45% interest in the joint venture. And so it won’t be contributed to revenue on the top line.
Pavel Molchanov: Okay. So it will be minority interest, essentially?
Phelps Morris: That’s correct.
Pavel Molchanov: Right. Okay. Okay. That’s clear. And yep. Kind of zooming out for a moment, when, when you guys went public, two years ago one of the statistics that you were highlighting was 75% of utility scale projects in the United States were using trackers, but outside the US it was the mirror image only one quarter. How have those numbers changed in the past two years, given everything that’s happened?
Phelps Morris: Yeah, I mean, I think we, we’ve seen the adoption of trackers and, and kind of continued progress, especially in the regions. that we operate typically when more sophisticated capital gets deployed in those, in those regions, you see ways for the developers to, to maximize their, their IRS. Australia’s a good example. We’ve seen more and more trackers ultimately get, get picked up there places in, in, in Africa, for example, where we’ve won a a, a number of projects to date, that’s traditionally been a fixed tilt market. And we’ve seen more and more growth and adoption growth and adoption there. I mean, I think, you’ve seen kind of, we talked about at the IPO, roughly 25%. I mean, I think the, the 2023 numbers are, somewhere in the, the low to mid thirties.
So we are seeing ultimately kind of forecast and forecast kind of sequential growth and, and, and trackers. We expect that they continue to improve as, as the markets outside of the US become more and more sophisticated and they’re focused on IRS and returns.
Operator: Thank you. One moment while we prepare for the next question. The next question will be coming from Kashy Harrison of Piper Sandler, your line is open.
Kashy Harrison: Morning everybody, and thank you for taking the questions. So first one for me great to see gross margins with deposited in q1 and your cost reduction initiatives, manifest in those numbers. If you’re able to generate 5% gross margins at just under 40 million, I was wondering if you could speak to where your gross margins would be at a hundred million quarterly run rate. And then maybe if you could give us a sensitivity on where gross margins go if you roll in the manufacturing credit?
Phelps Morris: So, th thanks, thanks for the question. I think, our, our our belief is still that we can achieve the the gross margins that were discussed back at the time of the IPO. So, that’s our, that still remains our objective as a company to get to the 20 and, and ultimately 20 plus percent gross margins. Yeah, I mean, I think the other way to think about it, if you want to go at a theoretical, just go back to our, I think those, our Q2 deck in terms of, we are showing kind of at different revenue ranges 12% to 18% at $150 million. That’s a good, good area just to, at least to put a pin in and sort of thinking about that, obviously this is really good results at this low revenue base. again, we anticipate these would improve over time as the revenue base grows, as, as you’re willing to get some, operating leverage on the, on the business and, and, amortize some of that overhead and, and, and cause overhead, et cetera.
Kashy Harrison: Gotcha. And, and do you have any sort of comment on where gross margins could go with the manufacturing credits from the 45x?
Phelps Morris: Yeah, so I, we’re not billing the baseline. We think it’s going to be upside as as, as Sean alluded to, we’re hearing different different sharing the pools right now. We think, it’s, the manufacturing JB was really critical to provide and service our customers with the domestic content. We do think there’ll be some benefit coming back to us. With that being said, until we finalize some of the, the IRA benefits, I think it’s a little bit uncertain to this point.
Sean Hunkler: Yeah. And the 12% to 18% that Phelps mentioned there, that does not, in mention there, that does not include any benefit from Yeah, that was pre the ira. That’s pre ira. So, we, we expect some benefit not forecasting any benefit in, but any benefit would ultimately be accretive to the, to, to the bottom line, so that 12 18% does not include that.
Kashy Harrison: Okay, fair enough. And then I, I was looking at the guidance section of the earnings release. in the release, you, you indicated that you expect to see continued operational improvements in the second quarter but you took out the commentary surrounding your expectation of sequential revenue improvement that you included in the last earnings release. And so I was wondering if you guys could just provide us with some qualitative direction on the revenue trajectory entering the the second quarter?
Sean Hunkler: So, we’re, we’re we’re not guiding beyond the first quarter, obviously. And, and so I would just say, the qualitative guidance we provided is that we, we, we feel good given the, the work that the team has done given the, the international success, the product portfolio that now includes the 1P the product portfolio that now includes first solar solution. So we feel good about the positive trajectory we’re on, but we’re really not, at this point, given the, the, overall market situation, we’re not guiding beyond Q1.
Phelps Morris: Yeah. And I, I just, as, as I said when we talk about continued operational improvements, right, I think the way you want to think about that is, as Sean said, there’s a lot of uncertainty as you go out in the future quarters. That’s why we’re not getting into the full year at this point. But we do think, Q3 last year was a lows and we’ll continue to build revenue off the revenue base on a quarter, over a quarter basis would be our expectation.
Sean Hunkler: Absolutely. That’s yeah, I feel very optimistic about that given given where we are and the great work the team has done.
Kashy Harrison: Gotcha. Fair, fair enough. And, and if I could just maybe sneak one more in apologies if you may have alluded to this a little bit earlier. But did you give us a sense of the commercial operational dates of the 400 million of non-UFLPA projects? I’m just trying to get a sense of, what the timeline is for that 400 million to be harvested since it’s, not restricted by UFLPA restrictions and I’ll leave it there?
Sean Hunkler: Yeah, we didn’t, we didn’t specifically call out, kind of quarter by quarter when the UFLPA non-UFLPA items are going to be recognized. I mean, I think kind of the expectation as you look at non-UFLPA whether it’s domestic or international, the, the cycle time to revenue is obviously much shorter because these projects have modules and they’re, and they’re moving forward in kind of accordance of what we would call a normal course business. So, these are projects that are, kind of nearing po and will be recognized over the, kind of coming, coming quarters sequentially and one little qualifier. I mean, some of those backlog wins would be over multi-year though, right? So they’re 2023 as well as some 2024 deliveries.
Operator: Thank you. One moment while we prepare for the next question. The next question will be coming from Maheep Mandloi of Credit Suisse, your line is open.
Maheep Mandloi: Hey, morning Maheep Mandloi from Credit Suisse here. Just falling the previous question, how much of that 400 is in the beyond 23?
Sean Hunkler: Yeah, we’re not, we’re not guiding kind of the, the breakdown of, of €˜23 versus €˜24. I guess the way I would look at it is, there’s projects that are going to be delivered over multiple quarters. So purchase orders that you receive in in 2023, you’re going to recognize in Q2, Q3, Q4, and, ultimately some could spill into to ’24 as well just based on project size and, and, and ultimate delivery schedule. But, the way we’re looking at these is they’re going to be shorter times to, to revenue than what we’ve seen kind of historically on modules that are, or projects that are subject to UFLPA review.
Maheep Mandloi: Gotcha. The other part, go ahead. I..
