So we’re excited about that opportunity and obviously excited about the CCI opportunity that we talked about before. Having said that as we move out into 2025 and 2026 you know understand the WoodMac [ph] data that base case is probably not as exciting as we’ve seen in prior years as it relates to the solar market. But what we are very excited about is the load growth in the United States. We’ve had a period of about five years of no load growth in the U.S., and we’re entering a period where we’ve got a projected 4.7% load growth. We’ve seen some exciting things in the news recently. You guys have probably all seen the Brookfield Microsoft deal that was announced, 10.5 gigs. If you’ve listened to the Quanta earnings call, they mentioned the boom in data centers and customers coming at them with 100 gigawatt opportunities.
The data center space alone, we look at over the next four years that load growth potentially doubling from 70 gigawatts to close to 140 gigawatts. So, we are excited about the future in the U.S., but that load growth is going to break the solar generation space. The limiting factor on all this growth is labor, and Shoals is uniquely well-positioned to solve that problem for folks. So, I know the forecasts are tough and the Wood Mac information and others, but we really are excited about what we’re seeing in the broader macro area around power demand.
Maheep Mandloi: Thanks for that. And then maybe just like, one small one on just on new backlog or new bookings. You talked about your backlog is mostly for COD next year or REVREC is for COD next year. Are bookings mostly for late 2025, 2026 now, or other things about that here?
Brandon Moss: As Dominic was mentioning, we’ve got some opportunity here still for book and bill that will impact 2024 or could impact 2024. But yes, you’re right. The vast majority of our project, and I think we put some materials or I know we put some materials out in the deck that shows the difference between project COD and our REVREC. So, on average, it’s about 13 months, but you’ve got some outliers there that stretch out as far as two years.
Operator: Our next question comes from Jordan Levy with Truist Securities. Please proceed with your question.
Jordan Levy: Afternoon, all. Appreciate all the details. Maybe, and you might have hit on this and I may have missed it, but maybe can you just talk about any change in the competitive environment on the eBus side, if there’s been any, and how you see that evolving?
Brandon Moss: Jordan, thanks for the question. Look, no dynamic changes in the competitive market. We still believe that our best opportunity for growth is to really replace the traditional install methods of home runs, combiner boxes, and doing field installs. We still are huge advocates, obviously, that we’ve got the best solution in the marketplace. We’ve got the best technology. We have the best IP, which we are obviously in the process of protecting. So, still all good news on the competitive landscape as far as things go here, Charles.
Jordan Levy: Appreciate that. Maybe just as a follow-up, as it relates to the sales side of things, as you look to go more into the international market, I know that’s been an initiative for a while now, and also with the CC&I side of things. Just curious if you think the sales organization is the right size right now, or does that need to scale up as well?
Brandon Moss: Yes, I think, look, we’ve changed a lot of things around here related to our commercial organization in, call it, the last six months. Not just the sales organization, specifically. We’re making investments in our marketing function. We’re making investments in our product line management function, but as it relates specifically to the commercial organization sales. Yes, we’ve made some investments. We’ve hired a GM of our international business, who is now leading that effort for us cross-functionally from a manufacturing op standpoint, and even from a product standpoint as well. We have put in place a dedicated CC&I team. Again, a little different sales cycle there, and potentially could be even a different go-to-market structure than we have historically participated in the utility-scale space.
So, we’re excited about those investments. Even on our core utility-scale side, where, again, we’re market leaders, we have changed our sales organization to a pod structure. Our goal is to increase touch points with our customers, and not just the touch points of our salespeople, but the different functions that interact and engage with these large EPCs. Could be something as simple as legal, when we sign up a deal with an EPC, there’s a contract. So we’re trying to give our customers great touch points with our entire organization, and then also see familiar faces each and every time they transact business.
Operator: Our next question comes from Christine Cho with Barclays. Please proceed with your question.
Christine Cho: Good evening. Thank you for all the color today. I just wanted to touch on Slide 15 here, the slide where it delineates the projects that are on schedule, delayed six months or delayed less than six months. And in 2023, we see, these projects increasingly become delayed more than six months. So just trying to clarify what that meant exactly for you. Did that mean that in 2023 customers took delivery of your products and are delayed getting the project to the finish line? Or was it the other way around and that because projects were delayed they weren’t taking delivery of your product until they had better line of sight. And ultimately I’m just trying to I guess on the slide prior to that, the 50% revenue growth in 2023 but only having 26% year-over-year growth in utility-scale installations in 2024, I guess you know the it could that could be market share gains.
But I’m also I guess trying to figure out how much of that was your customers taking delivery of the product maybe a little earlier than they normally would have?
Dominic Bardos: Christine’s, this is Dominic, hi. I mean, you answered a couple of those. On the slide deck when we look at the project delays and we took all the EIA data from Form-A60. You’re right, it has been a trend that has been growing with projects being delayed. What we see also by the way is all new projects that are being added into the funnel at EIA and Form-A60s on their initial reports. They may have a COD target date to 2026, 2027. They’re naturally going to be on time. So what we have seen is an increase in projects that are being delayed. And we’ve seen the push out really started manifesting itself for us largely in Q4, because there was a lot of growth coming in that was just masking some of the delays that we were seeing.
In no case we aware, but customers agreeing to take product early, our products are shipped over a period of weeks to the sites where they’re installed directly on-site and construction. So if a project is being delayed and construction is being halted, or they have a permitting issue, we’re being told to delay for 30, 60 or 90 days. That length of time is going to increase and we’re just going to have to wait for our revenue recognition until they’re ready to receive product. We have seen the length of time from the time we’ve initially quoted something, so the time of purchase order comes in and revenue is recognized increased over the past six months. We have probably added a full quarter of visibility now and it’s lengthening as these projects are sitting out there longer.
So the project delays we believe are very real. We’re experiencing here and we just tried to show the color of how that is manifesting itself with some public data.
Christine Cho: Okay. Thank you for that. And then just wanted to go back to your earlier comments about some of your bookings and projects getting canceled and pushed back into the funnel. Can you talk exactly about what drove that? I understood that like if they got awarded orders and things like that that’s so much time and energy had been spent getting to that point that it was very rare to have something canceled. Just more color on that would be helpful.
Brandon Moss: Yeah, you’re exactly right Christina, it has been very rare that something like this has happened unprecedented and really for what we’ve seen historically at Shoals. We had one order cancel as I mentioned and that was worth a fantastic customer quite honestly. So it’s something that we’ve not seen in the past. Again as a reminder we talk about an awarded order. We are in a position where we’ve got a verbal agreement and we’re 70% through the design process with a customer. And so if the customer is moving forward with the project, we’ve got that order with the customer. So in these very few cases that we’ve seen the site, the project either was pushed back or canceled or we have had a situation where the EPC did not move forward with the project for a variety of reasons.
So again unprecedented for us, not something we’ve experienced in the past but I do want to make sure that everybody understands that our inbound order flow again was normal and consistent with what we’ve seen in the past.
Operator: Our next question comes from Donovan Schafer with Northland Capital Markets. Please proceed with your question.
Donovan Schafer: Hey, guys and thanks for taking the questions. So first I want to ask, I was just having the slowdown that you’re seeing right now and that resulting in lower fixed cost absorption and some maybe lower utilization at your facilities and whatnot. My question is are you — is there a material portion of your resources hat you are able to redirect in some way on the other initiatives like if you have a sales folks that are well-versed and they have contacts on the US. Maybe you’re not able to pivot then temporarily to focusing on international and maybe you are. And maybe you are I’m just curious is it does that give you a silver lining, sometimes. If something like this gives you an opportunity to throw more at other things or people you already have under your roof, doesn’t being able to do or the skill sets are quite specialized and geographically focused.
Dominic Bardos: I’m sure there’s a couple of things Don there, I think. This is Dominic by the way. Yeah, thanks for that question. From a cost of goods sales standpoint, we had ramped up and we’re ramping up significantly in Q4 to be prepared for the business. And so some of our gross margin, we had some labor ready on the floor that we don’t want to whipsaw for short-term scenario. And similarly with our salaried sales force and our salaried team members, we don’t want to be that abrupt and swing quarter-to-quarter based on short-term results. Brandon would you like to add a little bit more to that?
