Shoals Technologies Group, Inc. (SHLS) Earnings Call Transcript & Summary

Good morning. Am I live? I'm live. Excellent. Well, good morning, everyone. Welcome to Shoals 2024 Inaugural Investor Day. Thank you for joining us. We're so glad to have you all with us today. We also have a live webcast going on. I think there's probably 80 or 100 people on the webcast. So for those of you joining us virtually, thank you as well. To those of you in the room, welcome to Nashville. Anybody's first time here to Nashville? Anybody? Just a handful. Okay. Nashville is the capital of the world for, anybody? Sorry?

Shoals.

For Shoals? I was going to say that's rave parties, but that's a much better answer. If you went out last night, you would get that joke. But it's really a fantastic town. So if you haven't been here before, take some time tonight or come back, you will enjoy. It's a lot of fun. My name is Matt Tractenberg. I am the Vice President of Finance and Investor Relations for Shoals. And I'm looking forward to meeting you all today. I've done a handful of these in my career. One of the first ones I've done that I remember was on September 15, 2008. Anybody know what happened on that day? Lehman, thank you. Lehman Brothers collapsed. That was not a good day to do an Investor Day. There were a lot of resumes being updated, and I don't think anybody was paying attention to me droning on about cash conversion cycles. But today is going to be different. Today is different because this is our first Investor Day, and we're extremely excited to have you with us today. We've put a lot of work into the content, and we hope that it will be a valuable use of your time. But we have a lot to get to, and a few housekeeping items before we start. As you would expect from us, we're going to make some forward-looking statements, probably a lot of them today. And all the usual caveats apply. The disclaimers and risks are available in this presentation or in our SEC filings for you to review, if you need them. We're happy to have a conversation with you about them. Also, we've divided the morning into 2 halves, and we will take Q&A after each one of those halves, with the speakers in those respective portions. So as you make your way through the day -- through the morning, please write down your questions. We will get to as many of them as time allows. And we have quite a bit of time for Q&A. We know that, that's important to you. We'll have a break midmorning for you to return that important phone call or refill your coffee cups. The slides that you're going to see today are available for download from our event website. They're available now, if you'd like to download them in PDF format and follow along with us, certainly for those on our website as well, with one exception, I know no fun. The financial slides are not available. They will be before Dominic takes the stage later this morning, and we'll give you some instructions. And of course, I'd like to ask people to kindly silence their cell phones and their laptops. We have a lot of content, and that will allow us to stay focused and stay on schedule. So my part is done. Now on to the good stuff. We're going to roll a quick video and then Brandon Moss, our CEO, is going to join us on stage. [Presentation]

Good morning. As Matt said, we truly appreciate everybody being here today. We know it's a short week. We know we've got #REPlus next week, and many of you are traveling out West, so thanks for being here. And for the folks that are not here today, I look forward to seeing everybody next week at #REPlus. Please stop in and see us, come to the booth, come to the party, come, say, hi, for sure. So I'm really excited to kick things off today. I've been in the electrical industry for 20-plus years. I joined Shoals in July of last year. What has become very apparent to me that maybe I didn't have an appreciation for before I joined the organization is how much of a pillar Shoals actually is in the solar industry. We've got deep innovative routes that actually really created a product category in solar. We created the EBOS product category in a sense. Those deep innovative roots not only helped us grow the company, but it's helped us grow the solar industry. We've been a part of 70 gigawatts of solar deployments. And most folks think of Shoals as a U.S.-based domestic company. We've completed projects in 16 countries outside of the U.S. That growth, the company growth, the industry growth is a great source of pride for our organization and for our 1,200 employees, and you're going to get to see those employees today when you come up to Portland and visit our plants. While we've got a great employee base, what really makes our company special is our relationships with our customers. And while we do business directly with EPCs, we've also got deep relationships with investors and owners of sites that appreciate our quality, durability and help get our products specified into their specific sites. The really neat thing about today is we're not going to tell you about our customer relationships. We've actually got customers here. We've got a customer panel. So I want to thank Bru Weber from Blue Ridge; and Steve Newby from Radiance Solar, who will be on our panel today. You'll get to hear from those folks directly. We've also got some other customers here supporting us in the crowd, so feel free to talk to them as you please. So thank you to our customers for your support every day and also your support being here. Whenever I get a chance to speak, I'd like to remind people what it is we do because electrical balance of systems is often misunderstood. Solar fields seems scary, they're big, but all in all, they're not that complex. When you think about a solar field, they're really one part mechanical and really one part electrical. The mechanical part of a solar field or the pilings and the trackers, those go into the site first, then followed by the Electrical. Electrical is obviously where we live. When folks think about electrical, they oftentimes think about the modules. They oftentimes think about the inverters. Shoals is the third leg of the stool in the electrical system. I like to think of us as the central nervous system of the solar site. If you think about the capital stack of a solar field, we represent only about $0.02 to $0.03 of the capital stack. But I think we're probably the most critical part of the field on what is a mission-critical site. So it's an exciting space for us to play and a very valuable one. I also think it's important for everybody to understand Shoals' history. Shoals was founded in 1996, but I still think of us as a relatively young company. The reason I say that is because, like a lot of companies, we've had different evolutions the business has changed. And a lot of people may, may not know, our company started as an automotive company. We are an OEM manufacturer for the automotive space. We actually made wire harnesses. The founder of our company had the foresight to take that application of wire harnesses and bring it to solar. And it really changed the dynamic of electrical installations on solar fields forever. Soon after that, Shoals' had a very big innovation called Big Lead Assembly or BLA. Those of you who are following an ITC case here lately are probably familiar with that term. That particular innovation really changed the company because it offered tremendous value to our EPC customers, it offered a tremendous value to our investor owner partners by reducing connection points in a solar installation and improving quality. That innovation really drove the company forward, along with an investment from Oaktree. And soon after that, the company went public in 2021 and really develop the company of Shoals, as you know, today. Not only did we grow and go public, we rode a tremendous wave in the solar industry. We went public, and we also accomplished our financial goals set forth in our IPO. Our innovation, our value proposition has led to essentially 2x market growth since our IPO. It's also led to some of the industry-leading best margins that are out there today, that same value proposition. And now as the company has matured, we are driving significant cash flow that is going to enable us to really fuel our next cycle of growth. So what's next for Shoals? What's next? We have an unbelievable opportunity to protect and grow our core business. And the key point that I want to make is the word grow. I want everybody in this room to understand when they leave Nashville that we are not done growing in our core markets. We're not done growing in utility-scale solar, and you'll hear more about that today. The other thing that you're going to hear about is as we grow in our core, we're also going to diversify our business. We want to attack some new markets that are adjacent to solar, and we may even attack some markets that are outside of solar that maybe you would have not thought of, and you'll hear more about that today. While we do that, we're going to put a significant focus on developing a foundational strength that our company can grow on. That's something maybe historically that hasn't been contemplated as much at Shoals. So we will build a very strong foundation, and we're going to do that not only by investment in plant, property and equipment, we're going to do that by strong investment in our people. So what's next? I'm really excited to talk today for other folks to talk and you understand leaving here that we are going to make this great company even better over the course of the next few years. We're very excited about that. So you can have a great strategy, you can have great people, you can have a great customer base, it also helps to have great markets. And I think over the medium to long term, we are going to have some really strong markets. It has been incredible to see recently the growth of electrical companies, actually, even the growth of the value of electrical companies as the world changes from fossil fuels to an electrified economy, seeing substantial growth. So that is happening the fossil fuel transition. It's also been fantastic to see the reshoring of manufacturing in the U.S. that's driving growth and the need for electricity. A lot of lessons learned through COVID, through tough supply chains and also the investment of the IRA that's driving this. But perhaps the single biggest thing that we're seeing today is around data centers and AI. Over the course of the next few years, 8% of the generation of the U.S. is going to be used by data centers, which is hugely significant. Fun fact around AI, the chip, the NVIDIA chip that we talk about or that you hear about a lot, the H100 chip, that chip alone has peak energy usage of 700 watts. The usage of electricity for that particular chip is essentially the same as one household occupant. There will probably be 1.5 million to 2 million of these chips deployed just in 2024. So if you think about that particular chip alone, is going to require about as much power as a small U.S. city does today. So there is no question that the U.S. needs more generating capacity. And what's exciting about that is a lot of the big consumers of electric have taken sustainability pledges, whether their data center companies or large commercial operators, most have taken sustainability pledges. And that puts solar power in an unbelievable spot because it continues to have the lowest levelized cost of energy. We have seen a 76% reduction in energy costs from solar over the course of the last 14 years. So solar will be in the heart of the energy transition and the new capacity that is coming online in the U.S. and around the globe. Now while there's some great opportunities for solar, it's important to mention that there are some short-term challenges. And we see them play out this year and, in some cases, in pretty extreme ways, right? We've got some significant challenges, obviously, with interconnection and permitting. We see those every day at Shoals. We have had supply chain challenges around medium voltage switchgear and transformers. We've seen a pretty big change in the dynamic of interest rates play out. I look at all 3 of these as being short-term challenges that will eventually give way to the needs for more generation. What probably doesn't change is the lack of skilled labor. And what's fantastic about that for Shoals specifically is we're in a unique position to address that problem because of our innovative products and the way that they're installed on solar sites. So we are uniquely positioned to address that challenge. There are a couple of slides -- there are a couple of models on here that everybody in the room, I'm sure, is familiar with. While solar is essential to addressing the load growth in the U.S., there are 2 very different forecasts of how that will happen. The orange bars on this page represent a BNEF forecast. The green bars represent a WoodMac forecast. Shoals, as some of you are aware, uses WoodMac -- Wood Mackenzie, to forecast our business. We think that's the most responsible forecast for us to use. It's obviously more conservative. They're taking much more into account these short-term headwinds that are challenging the solar market today while BNEF probably contemplates more around the specific load growth here in the U.S. So what's the difference between these 2 forecasts? Well, it's obvious math, right, 50 gigawatts. So what does 50 gigawatts mean to Shoals? What does it mean for others that are in the electrical balance of systems space? The difference between these 2 models is about $1.25 billion of total available market opportunity, $1.25 billion. Those are the differences between these models. Now I'm not sure which one will play out. Obviously, I like the orange bars better than the green bars, right? But we're not sure which one plays out. Whatever the case is, there is about $5 billion to $6 billion of market opportunity on this chart for Shoals to take advantage of over this period. So we have some really, really nice markets to play in, in the future. As excited as I am about the market opportunity, I'm even more excited about this slide. And Karen Bazela, our VP of Sales, is going to unpack this a little bit more. There's a lot of numbers on here, so let me explain these to you. In 2024, there will be about 40 gigs of solar power installed in the United States. About 6 of that is resi. Shoals historically has not played in the resi market. That leaves us with 34 gigs. What we understand in the utility space, that number is about 30 gigs, and we historically have not been addressing about 1/3 of the utility scale market. We've not been quoting the business. We've not been interacting with some of the customers in that space. That gives us 9 gigawatts of opportunity that is untapped serviceable market for Shoals. In the past few quarters, you've also heard me talk about CC&I, or community commercial and industrial solar. This is another area that Shoals typically has not participated in. Our value proposition serves it well. There's no reason that we couldn't play there, but we haven't been. And you think about that market, it's another probably 3 to 4 gigs. So you've got essentially 12 gigs of available market opportunity where Shoals can go, attack and win business. And that 12 gigawatts translates to roughly $300 million of serviceable market. So when I talk about us being able to continue to grow in our core markets, this is what makes me so confident that we can do so. So as we grow in our core markets, and we will, we are also going to diversify both in the short term and the long term. You're going to hear from Gary Uren, our SVP and GM of our international business today, and we're going to talk about how we will grow internationally. That's always been part of the Shoals' strategy and we're going to execute on that. So you'll hear from Gary. You're also going to hear from Karen Bazela and Troy Renken. Troy is our VP of Product and Engineering. How in the short term, there are adjacent products and there are adjacent markets that Shoals can go attack and win business. You'll hear about that today. You're also going to hear from Jeff Tolnar our President, about some new markets that Shoals can play in and win. There's an abundance of opportunity in markets that are driven by this transition from fossil fuels to electrification, where our value proposition will resonate, and we'll talk about some of those today. I'm excited not only to continue to grow our core and excel on solar, but have a business in the future that's more diverse and can withstand different business cycles. So why does Shoals win? Why would you bet on us? Look, we are, as I said, a pillar of the industry. We've got a proven track record of execution. We've got arguably the most recognized brand in the solar space. And that's a big thing to say, but I truly believe it. There's not anybody in the industry that does not know who Shoals is, and that is a big deal for us. We've got both core and adjacent markets that are prime for growth, which is very exciting for us. And you're going to see today that we've got a clear mission, and we've got a clear strategy to execute that our entire company is rallied around. And most importantly, probably, we've got a heck of a team to do it. We've built a great team here to augment the talent and the knowledge that has historically been at Shoals, which is extremely, extremely exciting. So everything we do in our future, we're going to do through our operating principles. You'll hear about those operating principles from Inez Lund, our Chief Accounting Officer, today. What is really exciting is through inventing simple. We can deliver an unbelievable amount of value to our customers and our other stakeholders. But what is really cool is we get to wake up every single day coming to work at Shoals, knowing we're doing something good for the world. And that makes this a pretty cool place for people to come work. And I think that's important for us in recruiting and retaining talent in the future. So not only do we have a cool place to come to work, I get to deal with great people. Like I said, we've built a fantastic team. We've had fantastic talent here to start with. And we've got a leadership team to execute our strategy in the future. It's a team that's proven. We've got great background, just proven professionals. One person I'd like to point out on here is [indiscernible]. We have recently hired a Chief Operating Officer that will be joining us soon. And [indiscernible], along with Dana that you're going to hear from today, look forward to how they're going to transform our operations in the future. So we've got great people. We've got a clear mission. We also have a very clear and simple strategy. I believe that strategies are best when they are extremely simple. You'll hear from our team today, and you'll hear from folks even if you ask them throughout our facilities about our Big 5. Our Big 5 is our strategy, and we've got a team that's rallied around this. We have a commercial strategy that we'll execute, and we're also equally is putting emphasis on building our foundation for growth. So driving operational excellence, building our organizational capability and solidifying our operating system, that will underpin our ability to continue to grow in core markets and diversify into new businesses. Along with the simple strategy, we've got a very simple value proposition. By the look of the slide, it probably doesn't look too simple, but I'll try to explain that for you. Electrical balance of systems is pretty complex. Typically, the labor cost to install electrical balance of system solutions, whether it's in solar and other areas, costs about 1.5x that of the product, 1.5x labor cost of the cost of the product. In solar, that means about $0.035 for the DC EBOS system. These installations are complex. There are 100,000 or more connection points. Why is that important? Those connection points, #1, they're costly to install; #2, they present a potential weakness in the system. Connection points, anybody that's ever done electrical, is where things fail, right? So reducing connection points is a fantastic thing to do. Also requires a pretty immense amount of engineering. There's a lot of thought that goes into planning, the electrical balance of systems solution on a utility scale solar side. In utility scale solar, the engineering cost of the DC system represents about $0.005. You also, if you're an EPC, not using Shoals, are aggregating a pretty large supply chain. There'd be 15 or more suppliers of the products that go into our system and hundreds of discrete parts, hundreds of discrete parts. So it is rather complex to install. What's fantastic about our solution, it is custom designed and engineered. We handle the engineering. The product is built in a controlled factory environment to UL specifications. And it's delivered to the site as you want it and when you need it. And that is a winning value proposition, not only for solar, but for other industries. The other thing that I want to touch on is our sales cycle. A value proposition that's unique as ours takes a while to bake. Oftentimes, we think about the product manufacturing process, the delivery, when a project may power COD? What is often overlooked is our entire sales cycle, that consultative experience that is unmatched between Shoals and our customer. From our initial meeting with the customer, we sometimes do 10 different design changes to get our EBOS system perfect for our customer. No 2 solar fields are alike. We offer a bespoke solution for each individual site. After that product is delivered, we have an excellent after-care program that our customers can leverage. So we are offering a unique experience, a bespoke solution, with unbelievable quality that is built in a factory, and I believe that, that is just an unbelievable customer experience and unmatched value proposition. So last Friday, and you guys were probably all wondering when I -- if I was going to lead with this or not, maybe I should have arguably. But you're probably all aware that we've got some pretty exciting news last Friday. The ITC made an initial determination ruling that voltage was infringing on our BLA product. We have a valid patent, infringement was proven, domestic industry was proven, although we didn't think that, that would be an issue that we've actually invested in the U.S. to build BLA, which is important for our whole portfolio of patents. This is a win. It's a clear win for Shoals. It's a clear win for the solar industry. It's a clear win for American manufacturing, and we're unbelievably excited about the outcome at the ITC. So what's next? We've got that question a lot. Matt has probably spoken to everybody in this room, I'm guessing, over the course of the holiday weekend. We wait for the commission to do its final ruling at the end of December. And then we've got the ability. We've got a district court case that has been stayed until the official ruling of the ITC that we then will pursue. So we are unbelievably excited about this outcome. I know it's been questioned about what was going to happen over the course of the last few quarters and the court dates have been pushed back a couple of times, which is a little bit rare, but we are unbelievably excited about this outcome and how it's going to fuel our business going forward. So we've got a clear strategy for growth. We're going to protect and grow our core market. We've executed on that. We'll continue to do so, and I want to reiterate the growth piece. We're going to continue to diversify our business into some new markets that are near dear to solar and some maybe not so close. So I would like to welcome Jeff Tolnar to come unpack this a little bit further and talk to you about our commercial growth. Thank you.

Everybody, good morning. It's great to see so many faces that I'm used to seeing in a little box on a computer screen. And for those of you I haven't seen, haven't met, haven't talked to, I hope to meet you through today. Thank you, Brandon, for teeing me up. I'm super excited to talk to you about our commercial strategy. Brandon talked to you about growth, about market opportunity, about who Shoals is and was. What I think is important about what we're going to talk about next is how we plan to achieve the growth that all of us expect and clickers helped quite a bit. A little bit about my background before we dive into the detail of this slide. I've been with Shoals for about 3.5 years. I've been in my current role as President for just under 2 years. And when I look at the changes in the company, I'm most excited about the team. The team that we've got, the team that we're going to have up on the stage over the coming hour or so. And when we look at what we've accomplished over in the past year of really unifying and holistically bonding marketing, sales and product, that's the basis of how we intend to execute. It's a tightly aligned strategy. We've made strategic investments in each of these areas, and we structurally realigned every one of these areas. And each of the leaders will talk about this, respectively. And in marketing, led by Lindsey Williams, our VP of Marketing, she'll talk to you about where we're at and where we're going. Everything we do is centered around the customer. And what's important about that is the alignment across the organization. Lindsey's team is tightly aligned with Karen's team and Gary's team and Troy's team from a product standpoint. So that tight alignment is critical, and you'll see part of that. But just as important is her team, over the past year, has delivered upon some very much needed tactical tools that the sales team needs in the marketplace to do what they need to do. From a sales standpoint, we've restructured around the customer. Utility-scale solar markets, that's our core, that's our foundation. It's the biggest parts of our business. Karen Bazela will be talking to you about that and introducing some of our new markets. Gary Uren has taken over as international leader of our international business. He'll talk to you about how we're going to go from a fledgling international business to a scaled business that can grow and remain focused. Another part that we've implemented is what's called a sales pod. So I'm not sure if you're familiar with the sales pod, but when you think about it, think of it in a way that the account executive has a certain set of accounts that they're responsible for. They have then pod team members from each of the functional areas that support them and they support the customer. That pod surrounds and supports the customers that they're responsible for. This provides a breadth of coverage that hadn't existed before. And then if a customer needs a touch point in project management or AR or AP or whatever the case may be, they know who their pod team member is. The goals are aligned. The KPIs are tied together, and everybody knows how we're expected to win and support the customer. Everything we do in sales is now transitioning from reactive to proactive. Our goal is to look ahead in the marketplace rather than being behind. From a product standpoint, that's what I'm most excited about. When I look at product, we've transformed from an engineering group, led by a couple of really smart people into a product line management organization, and Troy Renken will talk to you about that quite a bit. Process-driven. We go from concept to fruition in a regimented way with a gate process and clear decisions and KPIs on each step of the path. But that's not where we stop, it's where we're starting. Going forward, we're going to solidify and scale, not just our products, but the organization. We formed a customer care organization in early 2023. We're expanding that group to improve our touch points and again, being proactive versus reactive. As a part of that, we're establishing a training center of excellence for our customers, but then also for our employees. So all of our customers will be able to send their line crews, their construction crews to Shoals so that they can really get an understanding of how to deploy an EBOS system on a -- the respective trackers and pilings that are deployed. But then our employees can do the same. Every new employee at Shoals will be able to see what we make, how it's deployed and the value proposition of it. And as I mentioned, we're leveraging a data-driven approach in everything we do with the goal of being reactive, transforming to proactive. When we accomplish this, we will protect and grow our core solar business and enable us to diversify into new markets. We'll have a short video, and then I'll be followed by Lindsey Williams, our VP of Marketing. Thank you.

Thank you guys out, there's no video yet. You're going to have to wait after mine, and then you'll hear the video. Okay. Hi, everybody. I'm Lindsey Williams. I'm the VP of Marketing at Shoals. I joined the team earlier this year after having spent most of my career with large global renewable developers in various different marketing roles. So I'm really excited to be here with Shoals now, particularly because of where we are in the energy transition. Brandon talked a lot about the market opportunity and the value that Shoals can bring to that market opportunity. And I believe we are really well positioned to accelerate that as we grow our teams, our capabilities and remain very close to our customer. Our customer is our priority. They are the core of what we do. They're how we built this business. And we need to remain as close to them as possible. You're going to hear me say the word customer, voice of customer, customer experience a lot over this presentation. You're also going to hear from the folks that follow me. Maybe take a tally, and we can see where we land at the end of the day, I don't know. I just -- for the most part, I want you to be grounded in that. I want you to understand why that's important, that it is important and that we really care about it as a company. So here's what I want you to take away from the next few minutes. There are 3 things. We are building a strong customer-centric organization. Now every company aspires to be a customer-centric organization. We are not unique in that fact. But we know that it takes a strong dedicated effort to build the foundation to be able to support that in real earnest. We're creating the processes to understand our voice of the customer more strategically. Instead of relying on one-to-one feedback, we are functionalizing it into a data-driven approach that we can act upon. Finally, we are implementing that data in a different way. We are putting it into our product road map, which you're going to hear from Troy. We're putting it into the sales structure, which you're going to hear from Karen. So make sure you're hearing that in all of these presentations. All right. This is the fun part. What does it mean to be an industry-leading brand? I think all of you are probably loyal to brands. You probably admire brands, whether it's Nike or Amazon for everything that you need or whatever. So I want to take a quick poll. Who in this room has an iPhone. Raise your hand. It is almost all of you, and those who haven't raised their hand, you're the green one in the group chat, right? It's so annoying, right? I will also say I would venture to guess that this isn't your first Apple product, and it won't be your last Apple product. And why is that? Why are we so loyal to Apple, all of us for the most part? It really boils down to 3 things: Apple has the best technology available, right? You want that phone because it is the latest and greatest. You know it's going to be the best. It's exciting. It's innovative, Apple is reliable. All their products are reliable from your phone to your computer to whatever, the watch everything, right, you can count on that. The third thing is Apple has superior customer service. okay? They have dedicated places for you to go and get your problems fixed with an expert. They proactively fix things on the back end and force you into an update so you don't run into some of these problems that they've identified. That makes a big difference. Now Apple is not the only company in the top echelon of brand sentiment, okay? There are plenty of brands that are up there. I've mentioned a couple before, Amazon is one of them, Google. Each of these have a brand archetype or personality, if you will, that speaks very closely to how they operate as a company and what their beliefs are. For example, Google is the sage. They are the lifelong learner, and they enable you to find things that you need. They're inclusive and helpful. At Shoals, we're kind of a mix of 2, okay? We see ourselves as the rebellious hero. The rebel part of our identity really started upon our founding, right? A group of people who wanted to make a change in an industry that needed to change, and they were disruptive and innovative and no holds bar. That's where we started. As we mature, we're leaning more into the hero side of our identity. We are becoming more strategic in solving customer problems, and we are here aligned under our mission to make the world a better place. As I said before, every brand strives to be customer-centric, right? We are not different in that at all. Where we are different though is we are truly embedded in our customers' business model. And I just want that to sink in. So we are truly embedded in our customers' business model. We are an extension of their value proposition. We enable them to work better and harder and more effectively for their customers. That's a gigantic feather in our hat from my perspective. That partnership is the core of how we started this business, it's how we will maintain this business, and it's how we're going to grow this business in the future. We have to stay closely aligned with that customer. We have to stay through that partnership. We are more than a components company. We are the Apple of the solar industry. We are the dependable one. We are the quality. We are reliability. We are customer service. We are the partnership. And every single person at Shoals is oriented on that concept so that our customers can feel that as well. NPS. I just want to do a quick summary. Net Promoter Score is essentially a way to measure customer sentiment. We want to understand how our customers feel about us based on how likely they are to recommend us to someone that they know. Essentially, you send a survey, you get the responses and then you categorize each of those responses into a promoter, a detractor or a passive. To ground you in the basics, anything above zero is generally positive. It means you have more promoters than detractors and passives. We are -- 63 is extremely impressive. I don't know how else to nail that down other than to say that it puts us at the top echelon of the brands that I was mentioning before, right? It is higher than Apple. It is up there with Amazon. It is up there with Tesla, okay? This is really an impressive start. So now how do we go from here? How do we continue to build on this? And from our perspective, our team's perspective is that we need to turn this into a more strategic way to develop feedback loops with our customers and leverage that data to use it for the future. Some key themes from our NPS survey. These are really obvious to us, right? This is what we live and breathe every day. Our quality, our partnership and our customer service, they really align with our value proposition and how we work with our customers. Any brand that is driving to be customer-centric, never settles on their laurels, right? We are always looking for ways to improve our customer experience. We have noticed 3 areas in particular that we are focused on at the moment. We're listening to customers around packaging, flexibility, and we're developing alternative solutions to meet their needs. We're looking at our products and our product road map. We are aggregating into a centralized, huge facility, which you guys will see later before we go to the tour, where we're driving manufacturing efficiencies and we're just bringing people closer together to solve those problems faster for customers. These are my takeaways, and then you're going to see that video Jeff mentioned. So hold on to your seats. But overall, we are really striving to improve that customer experience. We're investing in the commercial team. Jeff already mentioned this before. We've built out a really robust team centered around the customer, what they need, what they want and how we can help them with that? We are focusing on their feedback and putting it into our product road map, which you're going to hear from Troy later. And we are developing this in partnership with our customers, not just in silos, next to our partners. And we're also investing in that development to meet those customer needs, right? We want to solve those problems before they happen. So we're doing things with customers in order to achieve that. Overall, I think we've done a really good job of setting the foundation here, and now that our challenge will be to build on that, and that's something that my team and the broader business are very excited about. So after the short video, you're going to hear Karen expand a bit more on the customer side and what they're doing on the sales team, but until then, enjoy. [Presentation]

Awesome. I love that video. And I love that we have leaders like Lindsey, who are here to build our marketing efforts and speak for our focus on our customer. Good morning, everybody. I am Karen Bazela. I joined Shoals at the beginning of this year. I am tasked to lead our go-to-market efforts. I have 20 years of sales leadership experience, most recently with Siemens. And I am focused on driving our differentiated solutions to our customers and building strategies. What I do know in my 20 years of sales leadership is that while every company is different, there is a proven playbook for success. And so what I am focused on is implementing that playbook for sales excellence at Shoals, so that we can drive our growth and success. Jeff talked to you about protecting and growing our core, and that is what I am thinking about every day. Today, I want to emphasize our targeted strategies for each of the markets that we are focused on. We firmly believe there is a significant opportunity for growth in these markets, and we will dive into those much deeper as we go through today. So there are 3 things that I want to leave you with this morning. First, as you heard from Brandon, our solutions truly are mission-critical. The energy transition is real. And we believe that solar will play a critical part in that transition. Our success in the domestic solar market, it hinges on our ability to foster deep customer relationships and proactively address our customer needs. Second, we are committed to enhancing our leadership position in the utility-scale solar market. We are still very much on the offense when it comes to our go-to-market strategy. And finally, we will do this by strategically expanding into the community, commercial and industrial, or CCI, as well as the OEM sectors. And I can't wait to tell you more about the growth opportunities we see in those 2 markets. Our dedicated team is focused on delivering tailored differentiated solutions that align with our customers' needs and their evolving requirements. So let's jump in and take a look at how we're going to do just that? For those of you that have followed us for a while now, you -- this slide is going to represent a slightly different way of thinking about our business. As you know, we have historically talked about being an EBOS provider to utility scale owners as well as EPCs. However, as we think about where we are and where we are going, Shoals has developed specific strategies to operate in 3 distinct go-to-market areas; utility, OEM, and most recently, a new focus on CCI. As you probably know, our utility scale market is our backbone of our business, where we currently hold a significant market share. But you may not know is that our journey into the solar industry started by producing junction boxes for First Solar, just as we continue to do today. We are now leveraging this experience to expand our OEM business, which has significant growth potential. We see substantial demand for solar in the rapidly growing CCI market. You have heard us talk about the growth potential in this market, most recently on our last earnings call. This sector is characterized by an increasing focus on sustainability and energy independence. We consider this an adjacency to our core. It's obviously in solar, and it's the same product with just a little slight variation to it. So while this might be a little bit of a different way of thinking about our business being focused on these 3 segments, here is the thing I want you to remember. There is significant opportunities in each of these areas that we can continue to drive growth as we pursue these areas more intentionally. All right. So before we jump into the specific areas, I want to talk for just a moment to remind you why our solutions truly are mission-critical. You heard this a little bit from Brandon. We provide a comprehensive suite of products that are designed to simplify the procurement and installation processes for our customers. That's why we say inventing simple. Our plug-and-play solutions include those innovative products that are designed for ease of use. They significantly reduce installation up to 30% and they minimize the risk associated with project execution. Our standardized products, like our BLA cables, our wire harnesses, and our plug-and-play connectors, they are customized to meet our customers' specific needs. This provides flexibility while maintaining operational efficiencies for us. In addition, we offer that ongoing customer support that you've started to hear about some, and this is ensuring a seamless integration and performance of our products, further reinforcing our commitment to the customer satisfaction. By delivering these solutions effectively, we empower our customers to achieve their goals efficiently and effectively. That's what makes us an indispensable partner to them. I'm eager for you to hear from some of them in just a little bit in the program. Okay. So to capture a larger share in what we believe is truly an attractive market, we have set clear priorities. As I mentioned a moment ago, and as Brandon described earlier, we are pursuing growth in previously untapped markets. And the good news here is that these are markets where customers have historically wanted Shoals' products. So we are very comfortable and confident in our ability to compete and win in these spaces. We are also deepening existing customer relationships through our account executives that are being trained on consultative selling techniques, and additionally, we're investing in our customer care organization, you've heard a little bit about. That's specific to our field support. This is enhancing our overall support infrastructure. So we are driving customer excellence by developing the basic processes and tools that enable our account management processes like implementing CRM system enhancements, and they'll allow us to track customer interactions more efficiently. And then you've heard from Lindsey about the focus on the voice of customer. And these are data-driven approaches that will assist us in refining our account planning and performance-tracking metrics. These are all very simple foundational things, but what we're executing on diligently in these 4 areas, and here's the best part to this is Shoals has had enormous success up to this point with very few system enhancements in place and, frankly, a much smaller sales organization than what we have today. So I couldn't be more optimistic about where we're able to go when we focused on the basic blocking and tackling of building a world-class commercial organization. So let's dig into each of these areas one at a time, and of course, we'll start with the utility scale market. The utility scale market presents both opportunities and challenges. The electricity demand is expected to grow by 40% over the next decade. With our unique value proposition, our ability to address the industry challenges head on, we simply put the U.S. needs more electricity. And we believe that solar must be part of that solution. But the challenges of building new solar installations are well documented from supply chain disruptions to an increasing need for expensive, highly skilled labor. Let me be very clear that our solutions address these challenges head on. And we believe that they do so in a way that makes it very difficult for our competition to replicate. We have invested significant engineering capabilities, which have allowed us to develop those plug-and-play solutions that reduce installation costs. So despite the supply chain dynamics, we have maintained a healthy on-time delivery rate. This is a key metric that underscores our commitment to customer satisfaction. This reliability, it strengthens our existing relationships, but it also opens up opportunities to attract new customers. So as I mentioned a few minutes ago, we are still very much on the offense when it comes to investing in the utility scale business. We recently doubled the size of our sales organization. We have elevated our go-to-market strategy, and we are now more engaged than ever with our customers. And we are seeing the broader range of solutions and increasing those touch points with our customers all along the way. All of this has already led to a 50% increase in quotes in the past year. So we are extremely pleased with the results we have seen so far. There is a clear path to continued growth. As we further penetrate the utility scale solar market, it is important to highlight what truly sets Shoals apart, our unwavering commitment to certainty of execution. Our customers choose to partner with us because they can rely on our proven track record. We understand that when it comes to large-scale projects, uncertainty is a significant risk. So let's spend a minute and explain why I'm so optimistic about the growth outlook for Shoals. You've heard us reference this before, and Brandon touched on this in his opener. Organic solutions have historically only targeted about 70% of the domestic solar market. And with these changes that we are making to our product solutions and our go-to-market model, we believe that much of the remaining 30% is now open to us. And just to be clear, we see opportunities in the 70% as well as the 30%. So let me give you a few examples. The 70%, it represents the part of the market that we have historically served. But with that 70%, we actually ceded some market share last year from about 1/3 of our top 20 customers. So in fact, those customers with who we lost share to, we only had revenue of about $40 million from them. Today, we are capturing that market share back, and those same customers represent more than $160 million in backlog and awarded orders. That is more than 4x in all of the revenue from those same customers in 2023. In addition, we have signed a new MSA with Blattner as well as a new MSA with another top 10 EPC, both of which have the potential to significantly increase our business in this very large and important segment for us. These examples highlight the significant untapped potential and opportunities in the utility scale market. But let's not forget about that other 30%. This represents the opportunities that we previously chose not to pursue for a variety of reasons. We are already tapping into that 30% in a meaningful way. We are newly partnered with a key top EPC that plays a significant role in the market, and with who we have not done business with before. We have 4 new customers represented in our backlog and awarded orders and we are continuing to quote new customers regularly. Part of the success comes from evolving towards more of a strategic business development model, where we are identifying the owners and the developers. We're looking at where the sites are going in, we're getting involved in the sales process much earlier than we ever have before. And as a result, we are already seeing meaningful strides in capturing that additional 30% opportunity. So the bottom line is this. We still see utility scale solar as a growth market for Shoals and we are attacking this market aggressively. Okay. So as we shift our focus to the CCI markets, you might wonder why are you focusing on what seems like a relatively small segment of the market. So we believe that this area holds a significant growth potential, particularly driven by the data center and AI drive. Engaging in these markets, it is a logical step for us. Many of our long-established EPC customers, they are active in this space as well. We're applying the same products with a fresh approach, and we're positioning ourselves for long-term growth here. The trend towards microgrids, it aligns perfectly with our capabilities. And we believe the CCI sector, it's an ideal area for us to engage, especially given many customers, sustainability objectives. This -- it also complements the products that Jeff is going to talk about some of the new stuff that you'll see just a little bit later on. So what's important to remember is this that our value proposition remains consistent. We are leveraging that proven playbook from the utility scale sector to guide our efforts in CCI. One challenge that we are tackling are the long lengthy lead times that are caused by the lack of standardized products. So our solution to this is our new standardized initiative, which aims to reduce those lead times up to 50% by streamlining our offerings. By building on our strong reputation in the utility market, we are confident in our ability to grow in CCI. We are actively targeting customers and exploring previously untapped areas. One point that I wanted to make sure and highlight is we are currently in final stages, actually just got one of the [ DocuSigns ] this morning on 2 major electrical distributors agreements with them. So we are setting the stage already for significant market share growth over the next few years. So again, the thing to remember in the CCI market is at this allows us to leverage our existing value prop and our deep expertise so that we can pursue growth here. I want to talk for just a minute about the sales organization too, within the CCI space because it is 2 separate focused areas. We are maturing the sales group here. It's a new sales team, but they are not new to the solar industry. They have over 15 years of solar experience, and they're adopting that same focused, relationship-oriented approach as well as that data-driven approach as well. We've implemented that same robust training program, and we're focused on those consultative selling techniques and the relationship-building aspect. All of this, we have already seen a 40% increase in customer engagement metrics in the past 6 months. So by applying these proven methodologies and focusing on those data analytics, we are confident in our ability to accelerate growth in the CCI space. Okay. Finally, let me take a minute and talk about that third leg of the domestic solar strategy, the OEM market. While we've been involved in OEM for a while, we are excited to share that we are actively pursuing additional OEM opportunities here. It's a renewed emphasis to the OEM space that allows us to grow alongside our existing customers while we're also seeking new partnerships as well. We recognize that there is an immense potential within the OEM space and our strategy to provide customized solutions that align with our specific customers, our specific potential partners' needs. I want to be really clear about this, the OEM space is not new for Shoals. We have been in this space for a very long time. It is a natural extension for us to focus on this given our traditional EBOS offering. We are simply choosing to now go after this market with a renewed focus and intensity going forward. And we look forward to keeping you updated on our success in this space in the near future. And speaking about some of the success, let's talk about, for a minute, on some of the key players that are in the OEM market and what's going on with them today. So First Solar, they're experiencing significant domestic capacity backlog. And then Q Cells, they've recently built 1 million square foot plus manufacturing facility in North Georgia. So the domestic panel capacity, it is on the rise. And the demand for the domestic content is going to be a critical driver. So this positions us perfectly to capture and grow our share in this segment. As we engage with these new and existing OEM customers, their growth will be our growth and their success, our success. As we establish these new partnerships, we anticipate substantial growth opportunities that will further drive our potential partners and market presence in OEM. Okay. So let's wrap this up because clearly, I can talk about this stuff all day. Shoals is poised for significant growth in the domestic solar market. Our multipronged approach that is focusing on utility, CCI and OEM strategies, it allows us to leverage our strengths while addressing market challenges. As I said in the onset, we truly believe that our solutions are mission-critical. So by investing in our sales organization and committing to providing that best customer experience, we are confident in our ability to capture those new opportunities, drive sustainable growth and continue to expand on our market leadership position. Our focus is on certainty of execution, transparent customer relationships and those innovative plug-and-play solutions, all of that sets us apart. But just as importantly, the value proposition, it's opening up new opportunities for us to serve more customers and pursue that CCI market. And then additionally, our renewed commitment to OEM, it's allowing us to leverage our foundational strength while capturing new market segments. So thank you for the time today. I am excited about the future and our ability to drive exceptional growth and value to our customers and our investors alike as we protect and grow our leading market domestic solar business. I know that was a lot. The fun doesn't stop there, and neither does our growth story. I am excited for you to hear about our growth potential outside of our domestic borders. And with that, I will pass it over to my friend and colleague, Gary Uren.

Good morning, everybody. I really appreciate you traveling in here, and I know there's a lot of other people online. So thank you very much. You can see Matt looking at his watch over there. We've agreed on an hour for me, right? So thank you. My story with Shoals, my Shoals' story, if you like. I've been around about 12 months now. Brandon and Jeff asked me to come in and have a look at the international strategy. You can probably tell, I have an international accent. So that's my only skill, by the way. I've lived in Australia, I have lived in the U.K. and Europe for a number of years and I've been in the U.S. for about 14 years. I'm a resident of San Francisco, that horribly damaged city, apparently. So that's kind of where I've been. Company-wise, where I've been, I've worked through a number of multinationals, including Atkore in this market, which some of you might know, I was part of the original team at Atkore that took that company private and later on took it public. So that's where I've been and that's what I've done. If I talk a little bit about what we're doing here, I'll start with just some guiding principles of mine. When I first came on as a consultant and later March this year, I joined the company as a full-time employee and delighted to be part of the leadership team, the things that I always look for is do we have the right strategy? Do we have the right people? And do we have the right processes? Strategy people and processes. And I'm going to answer that question on a slightly later slide. But I think it's just that's that advantage of coming in as a new guy to it and looking at a business, you can kind of go, these things need some tweaking and that's kind of what we've been doing. And I'd like to think of that as what we've done as tweaking rather than, and I'm talking international business, of course. What we're doing is tweaking rather than transforming, if I can put it into those terms. So we are going to do some transformational stuff as well. Some of the things we've looked at and we've made changes to, I'd go in greater depth on in later slides, is the way we think about markets. It's very tempting when you're in 1 market and there's 199 others globally that you could go to. There's always a good reason to go somewhere to look at something. I'm much more about trying to have a concentrated energy on a market where there should be some opportunity and have a good strategic mindset around deciding to be in those places. Getting -- making sure the product fits, important factor, driving accountability from teams and driving accountability from myself and also from Shoals, frankly, Shoals in the U.S. Localizing in attractive markets, I think, is another thing that's really important and worth talking to. And I have to remember to turn the slide. So jumping across to here, there's -- you'll see across the top, some of the areas that I would say we needed to do work on. Starting with product fit and market gaps for the different international markets that we wanted to play in. I think there was a earlier view that, hey, BLA, for example, can just move anywhere in the world, and it's going to fit perfectly in those markets. I've never seen that in all my life has been true, and I don't think it is exactly true. Cost of doing business. Challenging to sell products in different international markets when all of your product is made in 1 country, and you have to pull the products -- the materials for those products for a different part of the world and bring them over. Talent was good, but we needed to build some additional talent in those local markets to be closer to the customer. I'm a great believer that to be successful, you got to bring as much of the business as you possibly can as close to the customer as you possibly can. That's where you get your voice of customer from. That's where you get a deeper understanding of what you're doing, what you need to do in the markets. And as I touched on the market focus. So what are we doing about all these things? We launched 5 new product groups, added to solar this year, extremely well received. Year-over-year comparisons on quotes, 4x greater quotes in the same period with these new products than the prior year. In terms of localization of Shoals and businesses have to be local to their customers, right? So in terms of that, looking at it at several different tiers and several different ways. One part we've already done, which was localizing through third-party manufacturing in Spain and Australia, the very low, let's call it, 0 IP products, the combiner boxes, so we've already done that. We are launching or creating subsidiaries where we currently have just people in Spain and in Australia. And you might say, well, why do you want to do that? And we're doing that in the first quarter next year. Why would you want to do that? That sounds like a lot of work. Well, think of it this way. Currently, we ask a customer in Europe or in Australia to be the importer of record for the product, to pay for it in U.S. dollars, to probably have the contract in subway that isn't their own country. So product in metric, all of the sort of obstacles that you hit by not being a localized business. And I guess the part that we're evaluating at the moment and timing is, I'm not here to announce when we're going to do this. But we are, very seriously, looking at putting down more deeper roots in the markets that we think will make sense for us to grow our business in. I can see I'm running late, so I'm late on time, so I'm going to move through this next slide fairly quickly. This is a slide on the products. I think the main thing that -- the main message that I would like you to take away from this slide is previously, we had a toolbox with one really, really, really good tool in it called BLA for the international markets. We now have a toolbox with 5 different solutions that are adapted to suit the markets. The product ideas, the product concepts have come out of the market. They come from voice of customer. And the validation of that, I think, was launching the products and people coming on to our stand in record numbers in Germany and going, wow, this is great. You listened. God, you listened. Hence, when people feel involved, they actually want to use your product. Again, I won't spend very much time on this next slide. It talks to localization. It talks to eliminating some of the incumbents to growth by being more in the market. And as I said, the approach we're taking with that is, first, low IP products, then creating entities to make -- to improve the ease of doing business, right? Very simple principle in business. You want to make it easy for your customers to do business with you. We didn't do that in the past. It was damn hard for a customer. In fact, frankly, it was damn hard for our, I'll say, our organization, our sales team. And we've got a team of people in Spain and a team in Australia. Great people. I love them. But we've made life hard for them. We're now trying to make their life easier for them, which, of course, allows me to do something that I like to do, which is to hold people accountable. And I cannot hold someone accountable if we don't give them the tools that they need to be successful in the market, simple as that. Talking very quickly about team. Look, as I said, I've got a great team. I really love the team that we've got. I love the additions that we've made this year to this team. And 2 critical adds that we made this year. Well, 3, really but 2 are people and 1 is a process change. We now do the design for our systems in the markets that we're in, right, which is a big change. I mean, the U.S. is a very busy business. So we now do that work in the markets where we're close to the customer and we're understanding what they actually want us to deliver. The other thing we've done is added a really great product manager that's based in our international markets. He's been vital in getting the voice of customer. He's been vital in helping us develop the products we needed to develop. And he's just a really good guy as well, led by a really good [indiscernible]. Hi, Joseph. I think you're probably online. So moving past people, I want to quickly touch on with just 3.5 minutes left to go. This is the process when I talked about how we think about markets. So there's the markets that I referred to as, we refer to as a company now, our focused markets. So that's kind of the markets that we're in, right? So for us, that really means Southern Europe and it means Australia. They are markets that we will invest in. When we localize, that's where we start with the localization. We will think about anything that we want to do in Shoals, we'll think about it in those markets. The middle silo there, if you like, is what I call development markets. So they are markets where we have a strategic belief that there's a reason to want to do something in that market. And we're going to be curious and we're going to get out to those countries and understand what the needs of those markets are. And the other is export markets. A lot of our international developers and EPCs working in lots of different parts of the world. I mean some that, frankly, even I have -- having been to like, I think, 50 countries for business over my life, there's a bunch of countries that I won't go to, and some of them are developing solar in those places. So we want to support them by exporting into those countries for them. So in other words, a customer-focused approach, not market-focused approach, which is different to the strategies that we have on those other 2. So now I'd like to just talk about really 2 kind of examples of some of the things we're working on, but they're real things and they are real things that we're working on in real time, if I can put it that way. One is in Australia, and it's really 2 aspects. There's been a change in government legislation. In fact, it's in front of the parliament right at this moment in time. Moment in time, it's creation of a policy that a headline is called Future Made in Australia, FMIA, Future Made in Australia. So what is that? Think of it as like an IRA type program. It's the Australian government trying to encourage renewable manufacturing in the country. And probably unlike the U.S., there isn't much of that capability in the Australian market, which is why they want to develop it. Australia is very, very tied to it's commitments that it's made and take them very seriously. So we're investigating what does that mean for us in terms of opportunity, and I think it means a lot for us in terms of opportunity. And that's one of the things we're thinking about when we're thinking about where we might want to stand up manufacturing in the future. The other thing that's really interesting in the market as well, and that's the behind the meter, and it's linked and not linked, in a sense. So generally, what Shoals does is, we provide the EBOS that goes into utility fields that typically connect to the grid. The alternative to that with the spread of resource companies across Australia, and you just got to fly over Australia and you can see it's red. So that's iron ore rusting around the ground. There's plenty of resource companies who are also under a lot of pressure, both from the government, but also from their lenders to comply. So we think we just actually had one of the engineer from one of the mining companies with us yesterday on a site visit and the day before at our plant. There is a need to move away from diesel and gas generation in Australia in those resource markets. The other one that I'll touch on fairly briefly, and maybe some of you saw the announcement that we made yesterday in respect to the Kingdom of Saudi Arabia. It's a really fascinating market. Vision2030 proposes some enormous growth in renewable energy in that country over a very short amount of time. And a substantial amount of that renewable power is going to come from solar. In the past, products have come, low-cost products have come into the country. And in the environment that solar needs to work and that EBOS needs to be installed, in places like Saudi Arabia, they're really tough environments. I mean you're talking summers that are in the 120s, 130 degrees. And the question that I kept getting when I was down in Saudi Arabia a couple of months ago and over in UAE is, is your product actually sandstorm proof because we've had problems with that. So it's not hard to imagine that it plays to our strong suits. The other strong suit, that it really plays to, is like we talk differently in this market, a mature market, we talk about saving money by eliminating additional unneeded labor o a job site. Over there, they just can't get the people to do the work. I mean like you go to Saudi Arabia, they're going through a program of what they call Saudization, which really means trying to get people that have never worked before in their life to go out and work. So we play to the ability to engineer, prefabricate and make our products plugged and play, which makes it easy for people to install in that market. So look, at this point, we've signed an MOU, and we're working through the process of evaluating the opportunity of standing up more capability in that marketplace. First step is we're hiring a sales guy to get us moving with virtual certifications that we need to get with groups like [indiscernible] and others in Saudi Arabia. So this is my final slide and I'll make it super fast. So look, as I said, what I care about is strategy, people and processes and that's what I asked from my team and that's what I ask of Shoals as well. We're driving a focused approach. We're not shotgunning it. We've got a very narrow rifle view on the markets that we want to participate in, and we understand our value proposition for those and the customers that we want to try and meet there. We've aligned largely our products with the markets that we want to participate in, with voice of customer and with a very good process, a phase gate process that we've delivered through. We're driving accountability and I can drive that accountability better when I have everything that I need for the team to have to be successful in the market, which is what we're getting towards. And finally, ultimately, it's about localizing Shoals to win with product that's from the market, in the market, for the region, made in the region. Thank you very much. And I'm sorry, I ran over by a little bit. I'm going to bring -- ask Troy to come up. Troy is a great friend. And Troy, take over.

Thank you, Gary. Thank you for that introduction. So my name is Troy Renken, Vice President, Product and Engineering. I'm going to talk today about reigniting or reinvigorating innovation at Shoals. And first thing I'd like to do is reinvigorate you. So while I do my introduction, maybe just stand up, stretch your legs out, let's get everybody kind of blood flow in here. I think that will help. Online, you're absolutely welcome to stand up in front of your computer screen, too. So yes. So just a little bit about myself. Actually today is my 1-year anniversary with Shoals, so 1 year. Thank you. Excited to be here. What really drove -- one of the things that really excited me about joining Shoals as an innovator is enforcing patents. So really, that news on Friday hit home for me. And that's a great motivator when it comes to creativity and innovation. So my background, about 25 years in product development across start-ups and publicly traded companies. And so that's something that really translates well for Shoals. I think one of the things as we look at, as Brandon mentioned earlier, innovation is going to be really key for us promoting solar. So how do we do that? There's key areas on that. It's elevating the construction quality. I'll talk about that. It's also improving the production performance. And look, all of this really rolls into lowering the LCOE for the site. And that's really what's key. So what's great here. I mean, results are coming. I'll talk about some of those in terms of what we're doing on the new products and innovation. It's really an exciting time to be at Shoals. So again, we look at the Shoals history, long history of innovation, crown jewel, BLA. That's what you hear a lot about. I'm going to talk about some things that are not BLA. And in fact, when we look at outside the meeting area, we've got some examples of some of those things as well that we can talk about. So as we look at the keys to the strategy for really moving forward on that, it's really the people, it's the process and it's the product. That really is the output, is the product side. And so those are the 3 areas that we focus on. One of the keys to this is really making sure that we're close to the customer, as Lindsey and as Jeff mentioned earlier about being the voice of customer, really being close to the customer. That means being in person, on site. On site is really key. You really have to see how the product is deployed and how it's used in the field to really get a good understanding of what it is that the market needs and what the market wants. So those are key. We look at those customers, it's EPCs, it's owners, it's installers. It's a fairly broad base. And we're looking at this both domestically as well as Gary, who's up here before, internationally. Because it can be -- oftentimes, it is a different solution. It's a different market, different implementation, different regulatory standards. So we have to look at that as we look to innovate. Now it's critical to understand, as we talk about innovation, some of it is new products that deliver something new, a new feature, a new capability, but we will also focus on reducing cost. Cost is critically important as well. So we have to keep that in mind, what is our competitive profile look like from a cost perspective. So we focus on people. Look, that's the foundation of innovation. One of the things that we've done is we've aligned ourselves organizationally into solar and new markets on the solar side. This is where we have our sales, our product line management and our engineering organized in that way. New markets. Jeff is going to talk about that after myself and some of the innovative markets that we're reaching into there. And what's really key is by organizing ourselves in that fashion, this is where we really can generate the creativity, the IP that really goes into propelling us forward. And I think, again, turning out some numbers here. From a patent perspective, last 12 months, we've doubled the number of patent applications that we've had versus the prior 12 months. We're going to be doubling the engineering capacity by the end of the year, combining both our in-house teams as well as looking at some outside engineering to supplement and enable us to meet those targets. And really, what that's resulted in, 6 new products that we've launched so far this year. And I'm going to go through 3 of those with you today, give you a little bit more definition where we've got the voice of customer insights into those products and how they're going to win. So secondly, process. We can't get away from that. We've got the people part. We've got the process. It's important to have discipline. It's important to have structure. We start at the top of this funnel, where we talk -- we have voice of customer integrated throughout. But starting at the top of the funnel, this is where those ideas, where the IP, all of that gets generated. And this is where we really want to fail fast. That's the cheapest, and that's why it's a funnel. Some things don't make it. And so as we go through each one of these steps, each one of these requires an executive review. We look at the business case. We look at the product performance, and we look at the update from the voice of customer. Is this something that we still want to proceed with? And so we go through each of these stages. And ultimately, we get to the point where we get to a launch. And then after we get the launch, we also go back and look for continuous improvement. What did we do well? And what can -- what are areas that we can use to improve? And so really, that process is really what's key and that drives us both internationally as well as domestic. If we look at the focus areas for new product development, these are really 4 of the key areas that we look at for Shoals. You hear a lot about field to factory. And we talk about that, consider the fact you've got heat, cold, humidity, snow, rain, dust, sand, as Gary was talking about, all those factors. That's the complete opposite of an air-conditioned, clean, world-class manufacturing factory. So that's really one of the things that separates us. And as you may have heard some talk in terms of other competitors like IPCs, again, that's really where their weakness is, is they're exposed to all of those elements, and that introduces variability and ultimately results in failures, which costs money. And again, that all ties back to LCOE. So as we look at the next one, plug-and-play, Again, this is really where, on the Shoals side, we always like to say we've got 2 tools you need, your right hand and your left-hand, that's what it takes. All those connection points, they're made before it arrives even on the field. So this allows you to get by with less labor, less skilled labor, really speeds up the entire process. As we look at sustainable materials, again, a key part of our strategy. We're always looking to see where can we substitute aluminum for copper. Copper is 4x as expensive as aluminum. So when you look at BLA, you've got aluminum trunk. As you look at some of the other technologies, I'll talk about a product here in a minute called SuperJumper. Again, substituting aluminum for copper, gives us a great cost position, particularly in those markets of that 30% that we're trying to target, that Brandon mentioned earlier. And then lastly, is solutions orientation. That's where the value. The value comes from providing a solution, not just a component. And so as we look at this in terms of the solutions that we come up with, this is a big driver that we have on our side. So one -- first product, I'm going to talk about SuperJumper. I mentioned that earlier. You'll actually see it out there on the Board. Background here; owners, EPCs always looking for cost reductions and cost savings, I should say, not reductions, but cost savings. And so this is really how we use VoC to drive that innovation. And I mentioned, again, that 30%, driving into that 30% to gain some market share. You hear a lot about BLA. Sometimes you don't hear us talk as much about combiners. There's a combiner box out there. It's the bigger box. It's part of what Shoals sells. It is part of our product portfolio. We make a lot of combiners every year. And we talk about SuperJumper. It's something that fits into that combiner, home run harness, SuperJumper solution. It allows Shoals to be even more competitive in that particular market. Now again, one of the things that we found as we went through this. Well, let me back up for a second, just to describe the solution, again, if you look on the right side there where it says solution, you've got a long copper wire. And what we're doing is for these longer length runs, we're substituting the middle section with aluminum. So we're keeping copper on the ends for our connections, putting aluminum in the middle and that gives us a great a great cost position as we compete in those particular markets. One of the other -- one of the insights that we got through our voice of customer was that some customers might choose to actually go with a larger size cable and choose to use this design to lower the voltage drop in their system. And again, voltage drop means efficiency. And so that drives a lot of the savings that we have in place. So a great -- good example of innovation driving either lower cost or improving that LCOE. Next one, Cluster Load Break Disconnect. Again, this was very much driven by feedback from the field. A lot of owners are constantly looking for productivity gains on the maintenance side. And so this is really where you're combining those disconnects, that are normally scattered throughout a site, into a centralized location, and that allows you to get some efficiencies for installation for the EPCs. Now again, one of the insights that we got as we went through this was also safety. Safety is important for Shoals. And so we looked at this, this gives you better visibility for lockout, tag-outs and for some of those things on the safety side. All right. The last I'm going to go through is 2,000 volts EBOS or 2KV. The solar industry has got a history. We've gone from 600 to 1,000 to today's 1,500-volt, string voltages, 2,000 volts is what's coming next. And so this is really an opportunity for Shoals to demonstrate its leadership position. We're working with inverter manufacturers. We're working with solar module manufacturers because it takes all 3 to work together to deliver a 2,000 volt system, and that's important to understand. Why 2k? Sorry about kind of bad joke here for those who remember 1999. But why 2k? Why is 2k relevant? Well, look, as you drive the efficiencies and you drive the power of the solar modules up, with 2,000 volts, you can actually keep your wire size the same. So you don't pay a price penalty on the wire side. And so that's really what's key. So this is something that really requires the industry to work together, and this is really where Shoals has demonstrated its leadership in the industry in bringing together the very first -- industry's first 2,000 volt EBOS system. So it's a big deal. Come to us at RE Plus next week. We'll show you more about it. If you look on the board, you'll see some little purple colors and that's how we're denoting a product that's 2kV compliant. And the big takeaway on that is the Shoals BLA design made this a fairly minor change to be 2Kv compliant. We look at competitors, they are going to have to go through a complete redesign. It's a big deal. It's a big deal, and it gives us a head start really on this key trend in the market. So just to wrap things up. As I mentioned at the start, we've got a focus on people, on process, on product. We have to be close to the customer in person, on site. Innovation is back stronger than ever. And again, we're looking to really elevate quality. We're looking to improve the production performance and lower the LCOE in Shoals' efforts to really promote solar. So as we look at that, all of the things I've talked about here are directly translate into new markets. And so I'm going to hand off to Jeff, and Jeff is going to get a chance to talk about some of the diversification into new markets, and we'll go from there. Thank you.

Thank you to the team. We've got a great commercial team, so excited about it. I'm going to talk to you about an area of passion for me, which is development of new innovations. We'll share with you a pivot from 1 and an introduction into 2. So first, whenever you're looking to innovate or starting a new business, going on a new adventure, you have to first identify your anchor points. For Shoals, the anchor points are to leverage our existing technology and expertise. You'll hear those throughout the presentation. We're in early innings of this diversification strategy. The one thing that I'll call out and it may be a surprise to you, is we are pivoting away from e-mobility. That market, we had some early wins, really exciting. We're excited about the products that were launched in 2022. However, that market has not materialized in a significant manner, in a predictable manner, and we are pivoting resources away from eMobility and into 2 exciting new markets that we feel are more predictable, and we've seen some early success in one and new introduction into another. Those are best in data center, and I'll talk to you a bit about each. With everything, we want to make sure we have clear goals in place. Talked a lot about accountability, alignment. We have to make sure that all of the teams are aligned around common KPIs, common goals and are accountable to each other and ultimately aligned with what the customer wants and needs. First, for battery energy storage, BESS. We've been in that market for a couple of years now since IPO, our early acquisition of Connect PV. And what we've learned is our place. We know where we fit in the products that the market needs from Shoals. Those are our recombiners and our disconnects. We've got strong anchor points in our expertise and our base technology, and they fit multiple use cases across multiple segments that Karen talked to you about, and they are global that Gary talked to you about. That enables us to be flexible and scalable using a standards-driven approach. I'll talk more about that in a bit. Data center, how many of you in here are saying, what's Shoals going to do in data center? Am I the only one? Okay. All right. So I'll cover quite a bit about that. It actually makes much more sense than you might imagine on the surface. So I'll dive into that. It's a rapidly growing segment. Brandon talked to you earlier about how the world's insatiable need for power. Fundamentally, Shoals delivers electrons, data centers use electrons. We're transitioning from a molecules-based economy to an electron-based economy. So that's what Shoals does incredibly well. We are leveraging our power systems expertise and our protection systems. That's our anchor points for data centers. And we believe we can launch a disruptive product in data centers, just like Shoals did many years ago in solar. First for battery energy storage. It's a significant CAGR over a 4-year period that is expected to double in size by 2028. Our total addressable market that's on this chart is driven by the 2 products I just mentioned: our recombiners and our disconnects. I'll do a little bit of that math for you on the next slide. Over $210 million by 2028. We entered the market in 2021 with our acquisition of ConnectPV. We were a part of the Gemini project for both the solar aspect and the battery energy storage aspect. We built custom BESS cabinets for that project, one of the largest solar plus storage deployments in the country. Based on experience from that project, plus voice of the customer that you've heard many, many times, we've learned that the market needs a standard-based solution for BESS that is predesigned, readily available and is certified by a nationally recognized test laboratory, which Shoals is one. So we're creating these recombiners and disconnects now, and we are quoting them now. The solution is standard, which makes it simple. It's economical. It's flexible. It's designed for multiple battery configurations on a site. And just like Shoals, everything that Shoals does, it's designed to be simple. But what's inside of it is not necessarily simple to do. As I mentioned, we're taking our learnings from custom cabinet design and moving that to a standard format so that we can drive scale. What Brandon mentioned earlier is we're migrating from more of a bespoke company to a scaled organization. The best solutions we're creating cover multiple segments, cover multiple segments globally. And the offering increases project wallet share. So the customers we're already working with will now have a different offering from Shoals for their stored energy as well as the solar part of the business. So a couple of numbers. I know a lot of you are responsible for building models about Shoals. So I'll throw some numbers at you. Disconnects about $4,000 per megawatt hour. That's what's measured in -- for the battery energy storage world, $14,000 per megawatt hour for recombiners. And that's a blend across multiple SKUs. So it's an average mix. To give you an idea of 100 megawatts of storage, 4 hours of storage capacity, 400-megawatt hours, $14,000 per megawatt hour. That's between $5 million to $6 million for that one opportunity. That moves the needle for us. When you look at data centers, the first part of this slide, I'll drive your attention to, is the picture. So when you look at this picture, envision multiple server racks, 10, 20, 30 server racks in a row. Every one of the server racks consumes 30, 60 amps of power. So when you think of what's happening in a solar field, you have multiple modules put together in a string. Those strings are aggregated along a tracker that are producing energy that then we -- Shoals takes to the inverter. In the case of a data center, those multiple racks are fed from a power center that's in another place in the data center itself. Today, from the power center to these racks are what's called copper bus bars that run along the ceiling. They're expensive. They're cumbersome. They're difficult to deploy. That sounds familiar with some of the challenges in the solar industry a few years back. When we look at the growth of this segment, it's significant. These are the FERC numbers, which I believe are more on the conservative side. And when we look at the 3 offerings that Shoals will be introducing initially, the TAM exceeds $400 million by 2030. So that's substantial, and that's with the products that we've identified as potential for this market out of the gate. The initial offerings are threefold. First, the power distribution cabinets and there's a primary and a redundant. Those were actually developed for the eMobility market. We've repurposed them, modified slightly and they fit perfectly as a power distribution cabinet in a data center. The BLAs that will connect the power distribution cabinet and be run above ground in a racking system, feeding then the servers are the very same alternating current BLAs that were developed and tested and certified for eMobility just slightly modified for a data center. The new offering for Shoals in this setup is the tap-off unit. The tap-off unit comes from the BLA and it transitions to the cord that then goes to the server racks. That tap-off unit, you'll be able to see that plant for this afternoon. So those 3 offerings alone and then the racking and cable management system that goes along with it, will be the initial product suite that we will offer and we have the prototype set up at plant for. It was completed using voice a customer, and we're in our technical evaluation now. Early feedback from the hyperscalers and the [indiscernible] providers have been very, very encouraging. We're leveraging existing technology for the most part, developing offerings that are across multiple segments and global in nature that provide a plug-and-play approach that doesn't exist in the data center market today. Big, cumbersome copper bus bars are deployed today to deliver power and energy. What Shoals will do is deliver a plug-and-play cable solution that is flexible, low cost and can be done by non-skilled labor much more easily. We're finalizing our sales channels to market. We'll use the sales channels that Karen talked about earlier, but then also aligning with external sales channels that are already well entrenched into the data center market. And what I'm really excited about is we start to glue everything together now. We've got the products that I just talked about, plus attached solar that Karen talked about earlier, plus the best solutions that could be attached to a data center. All 3 of those combined allow a data center operator to fulfill their renewability and sustainability goals. Shoals has been an incredibly successful company since its IPO and even well before its IPO, but we are fundamentally a company that had 1 market serving 1 geography with 1 product set. What we've talked to you about this morning is where we're going. The alternative and accelerating investment in new product offerings that Karen talked about, how we will execute now in the international markets where we -- I had not accelerated and took advantage of the international markets in the way we could have in the past that Gary talked about, adapting our solution set, expanding our solution set through a process-driven approach that Troy talked to you about. Tying it all together with a marketing approach that really is unprecedented for Shoals, and we're super excited about that Lindsey spoke about. When we glue all of this together, that's when I get really excited about the commercial approach that Shoals has of where we work versus where we're going and the opportunity that we have with such a fantastic team, fantastic organization now using a strategic and focused approach. Thank you very much for this morning. After a short video, Stephen LaFleur will be up for a customer panel. Thank you. [Presentation]

Excellent. Excellent. That was a wonderful video. Thank you so much to our marketing team for continuing to reimagine what it's like to be Shoals. Good morning, everybody. I'm Stephen LaFleur, and I appreciate you all joining today. I'm a Senior Director of Sales here at Shoals, and I will be your moderator for the session. We're fortunate enough to have 2 distinguished leaders with us here today and whom bring a wealth of knowledge and experience. First, I want to introduce Bru Weber, who is the Chief Operating Officer of Blue Ridge Power, where Blue Ridge has led a significant innovation of utility scale solar in deployment. They've been instrumental in bringing, I don't know the total number. I think it's close to 20 gigawatts or so to the market. They've been instrumental in coming online across the U.S., generating renewable energy for local communities, helping continue to drive and achieve the commitment for a cleaner renewable energy future. Next, I want to introduce Steve Newby. Steve Newby is the Chief Executive Officer for Radiance with a proven track record of delivering exceptional solar services and values to clients, stakeholders and employees. Steve has been instrumental in leading a turnkey distributed generation projects. His leadership has been -- has placed Radiance at the forefront of the commercial community and industrial solar market. So thank you both for being here with us today. Our conversation today is going to focus on a few areas. We're going to talk about the current landscape of the solar market, what it means for future growth, the importance of strategic partnerships and in driving innovation and scale and impact. Finally, we'll discuss what truly differentiates our organization from others in the industry in both in terms of vision and execution. So let's get it started. So Bru, I'm going to turn to you first. Please introduce yourself, highlight your background and the background of Blue Ridge Power.

Sure. Thanks, Steve. Can you guys hear me? I'm actually the Chief Commercial Officer, but I will tell my colleague, Rick Ortiz, that I'm buying for his job. So I'm based out of Asheville, North Carolina, that's where BRP is headquartered. We were founded in 2021 when Pine Gate Renewables spun off its EPC division, also through an acquisition of Horne Brothers Construction, which some of you may be familiar with. They were one of the largest civil and mechanical subcontractors in the Southeast. And now we currently have about 2 gigawatts under construction currently and about 750 employees. We self-perform civil, mechanical and electrical scopes, but we also have strategic partnerships with subcontractors that help us scale up when needed. We build across the U.S., but we consider the Southeast our home market with a growing portfolio in the Midwest. And as far as my background, I've been in solar a little over 10 years. And all that time has been working for an EPC in the procurement space. So whether that was directly as the buyer or indirectly leading the group of buyers. So I'm excited to share my experience today.

Thanks for having us today. So I'm Steve Newby. I'm CEO of Radiance Solar. Radiance has been around 16 years. We're based in Atlanta. We are an EPC in what we call Distributed Generation market or the DG market. So we don't really compete with Blue Ridge. We actually deal in the sub-utility scale market up to about 30 watts or so. So -- and we do projects also all across the country. We're doing projects now in Illinois, New York, Virginia, Texas. So we do get to see various different state regulations in different markets as well, too. My background is a little unique. I spent 25 years in the oil and gas business. In the last 10, I was the CEO of a public company. So I've been to these things and they're nerve-racking. Good to be on the private side now, as what I have told the guys earlier. So I bought a small mechanical installation firm in 2020, beginning in 2020, merged that with Radiance in '22 and have grown that to be one of the leaders in the DG space. So after hearing the presentation this morning, I know why I'm up here because we've been working with Shoals for now 6 or 9 months on getting them further into the what we call the Distributed Generation space that refers to as the CCI space.

Terrific. And so with that, Steve, talk to us a little bit about the next 3 years versus the past 5 years in terms of the market, where we've gone, where we come from and where we're going?

Yes, I'll take it, and then give it to Bru, I'd love to hear her comments, too. So I have a little bit unique perspective, right, because I'm coming from outside the industry. I think we've got to realize that solar industry is still very immature, very early stage as far as the industry goes. My view is people always tell me, well, when I meet them, and I tell them my background a little bit there like I've been in solar for 15 years. And my comment always is, well, what did you do for the first 10? Only because the industry was really projects at that point in time, not really an industry, right? Everybody was competing and beating the heck out of each other for a project. And in the last 5 years, obviously, we've become an industry. And I say that because in the -- if you want to think about the industry as a child, I have 2 of them. We're really in the toddler stage, frankly, in my opinion, I think there's an enormous amount of growth that's going to come. It was driven over the last 5 years by States. And then the federal legislation, obviously, put a lot of tailwind there, but the RPS standards really drove that. And really taking market share, from hydrocarbon electric generation. I think the next 5 years is going to be different. I think you are still going to have that, right, RPS standards. The States are catching up. A lot of those standards have to be put in place by 2030, we all know that. And so the States are going to still be replacing hydrocarbon generation. But you heard it today, I think it's going to be much different in that you're seeing for the first time in 25 years, as one of the older guys in the group, I answered the Lehman question, by the way. The first time in 25 years, you're seeing actual growth in electric generation. We have not had that in 25 years in the U.S., so everybody. So we're now seeing actual demand growth in electric generation. And that's going to be filled 3 different ways. It's going to be filled by gas fire. We are going to build a lot of gas-fired plants in this country. We're going to have to. It's going to be filled by solar. And those of us in this space, at least I really hope it's going to be filled by modular and nuclear. So I think you're going to see different growth going forward in a market that is much more dynamic now, power market in a growth market and being driven a lot of ways by not utilities, but by big tech companies. So I think that's -- and then finally, and then I'll shut up and let Bru go, I think battery storage is tremendous for the solar market, for the market overall but it's going to be a huge advantage for the solar market. The battery market is even much younger than the solar market. I think those of us that have installed batteries will tell you they are not plug-and-play. They're sold that way, but they are not. They're still in their infancy, technology is rapidly advancing, and that technology is going to tremendously help solar become more baseline power generation, which will help the solar market and help installation.

Fantastic. Bru, if you like to share, [indiscernible].

Yes. I could answer that question from more of a procurement lens. I was just thinking, I think that headshot was from 5 years ago, youthful, happy. That was before COVID, UFLPA, Auxin. So I think we've learned a ton in the last 5 years working through the challenges that have come our way in solar. And I think two of the big takeaways is supply chain resiliency and also risk management. Risk management, of course, as a the business, you're always thinking about that. But thinking about it in new ways and thinking about traceability studies and understanding things, where your product is coming from, not just the final product, but where a sustainable sourcing from our suppliers. So it's been a lot of lessons learned, but I think we're poised for tremendous growth in the next 3 years for sure. I think there's a backlog of projects that weren't feasible in the last couple of years that are -- now have the opportunity to move forward with the IRA and a lot of those incentives that help fuel a lot of the growth that we've seen, a lot of the reshoring that we've seen, that again speaks to that supply chain resiliency and risk management that we're all keenly focused on now.

Absolutely. Yes, absolutely. There's a lot going on, a very dynamic market right now, and we all have to stay hyperfocused and align our strategic partnership. So talk to me a little bit, Bru, about when you first started working with Shoals. What was the problem that Shoals helped you solve? And ultimately, what aspects of Shoals' value proposition resonated with you the most?

Sure. This was back in probably 2019, we were getting ready to build our biggest project to date. It was a 100-megawatt project at the time. And back then, we were building projects that were 20 megawatts or smaller. So as the project scope grew, so did our needs for the equipment. And we were looking for more efficiencies and landed on the BLA because of Shoals' reputation in the market, and we knew that they were going to be able to deliver a reliable product. We also -- inventing simple really resonates with us. We're a construction company. We like boring. And it created efficiencies and we also had the benefit of quality because as some of the speakers were saying earlier, a lot of the assembly happens off-site in a controlled environment. So when you're going to the job site, it is plug-and-play and a lot easier for just any person can just kind of plug it in, and we can trust the quality and, of course, it creates efficiencies.

Absolutely. We like to show Troy's Mr. Left and Mr. Right, right, our 2 tools that have been given to us. Excellent. And so Steve, I'm going to move to a new question. Since starting -- since you've started working with Shoals, how has the relationship evolved? And what have you seen us do differently than what we may have not done in the past?

Yes, I think the easy answer is, they're now getting into DG, I think you heard it earlier. Shoals historically has not been in that market and just wouldn't really return calls they are focused on, frankly, for good reason, I'm sure. But we've been working with Shoals for about 9 months now. And Brandon and I have had a lot of conversations about the DG market, how to get into it, why to get into it. It's not anything that Shoals is inventing differently, frankly. Their product works for a 5-megawatt site as well as it works for 500 megawatts site. So this isn't anything new from that standpoint. It's new customers. It's a little bit different. Our designs are a little more bespoke. But Shoals honestly can add as much if not more value to our market, than the utility scale market just because of their -- what's -- what I call value-added service. And that's really their engineering expertise and help. That adds a value to a firm like ours on the design side. And just to put in perspective on EBOS for us, it's not a free [indiscernible] factor on the DG side, it's more like $0.05 to $0.07. So it's a higher piece of our cost. And I told Brandon this and this has become weird coming from somebody who purchases from him. But I would expect their margins to be better in our business. And I think there will be -- our margins should be better than her's business because of one project is her whole -- is our whole year. So it's just a different market, right? So -- but it's not really that different from Shoals. So I would say we're working hand in glove with Shoals on the nuances of the DG market, and I think some exciting things to come there.

Yes. Absolutely. And Bru, for you as you continue to grow within Blue Ridge and you expand the opportunity that's in front of Blue Ridge. What are your -- I mean, what are your growth aspirations? What does -- what does a partner or how can Shoals partner to help you reach those aspirations?

Sure. So we are targeting to hit 1.2 to 1.5 gigs over the next 2 years. We are -- that's the logical progression of where we are today and where we have been in recent years. As far as what Shoals can do is keep being Shoals, keep being reliable. And it's not just about the certainty of delivery, which we know we can count on, but we've had a lot of challenges over the years, and you guys always lean in and help us resolve those. Solar is plenty exciting with a lot of new things coming our way, but having reliable strategic partners like Shoals and just cranking out the BLA like you do is really what we're looking for. I mean it's the easy button. We don't have to worry about whether Shoals is going to be on the approved vendor list for a customer. We don't have to worry about delivery. So it's really all of that.

Yes. So talk to me a little bit more about the onboarding of a new potential partner and what that may look like and who has -- what the reach looks like and who has to speak to and all the sign-off? I mean they can go to both questions and happy to listen to both.

I'll take it first. I don't think it's that much different probably between us in this aspect. I mean, it's significant, right? We deal with both, of us deal with people or building for people who own the projects, right? And they have their own approval processes and approved vendor lists. And to put it bluntly, it's not like we can just come in there and dictate something different than that. So Shoals being a teenager in the industry, not a toddler, really, really helps it. I mean Shoals has a unique market-leading advantage in that respect, right? They're already like Bruce said, they're already on the approved list. We have enough challenges to fight through our own projects than to try to fight that battle to get somebody approved on the front end. So that would be my take.

Absolutely.

Yes. We -- at this point, we lead with the BLA design in mind on a lot of our projects because we know that Shoals is going to be on the approved vendor list, so it allows us to advance drawings so that we have that reliability going forward. And it's not easy. To Steve's point, we can't just say, "Hey, we want to use this instead." We've got to do our due diligence. They've got to do their due diligence. And if at some point, we make a different selection, then there's the redesign time. So all of that combined makes it challenging to really switch technologies. So there's a lot of due diligence on both sides on our side, on our customer side before we can do that. And yes, because Shoals is a teenager in the industry, it's easier to know they're going to be approved and know that technology is going to be reliable.

Fantastic. And -- so great. This is coming to a conclusion of our panel. We've 15 minutes, pretty tight segment, but I appreciate you both spending some time with us up here. And as we come to the end of the discussion, I want to take a moment just to really thank our incredible panelists and Steve Newby, thank you so much for joining us. Bru Weber, thank you again as well. It's clear that the solar market continues to evolve rapidly, right? We're -- the most important strategic partnerships, understanding that what sets organizations apart like ours is going to be playing a critical role in shaping the future. So I hope this conversation has provided some new ideas, provided valuable insight and perspectives that you can take with you as we all work towards a more sustainable and innovative future. With that, I'm officially going to close our session and hand it over to Matt, and I'm finishing right on time. So thank you again, and have a great rest of your day. Thank you.

Okay. So we're going to take about 15 minutes, and we're going to go through Q&A for the first half of our day. And we'll run through the audience with a microphone. Okay. I'll take the first one over here. Joe?

Joe Osha from Guggenheim. Jeff, I was kind of struck by your comments that you're going from a one product, one geography company to a much more diversified company, and that's cool. If I look at other big companies that I might think of as comparable like say Amphenol or TE Connectivity or something like that. They all tend to earn between 30% and 35% gross margins. You guys earn more. So I guess this is a question for all of you. But if this becomes a bigger, more diversified company, can you continue to be as profitable as you are? That's my question.

Yes, Joe, I'll take that. Look, I'm very familiar with large multinational electrical companies. That's kind of the world I've come from. I think the difference between what we do at Shoals and those companies, and they're fantastic companies, is engineered-to-order solutions. If you look at those companies and you look at individual business segments, if you look at the individual segments, I can guarantee you their margin profile for their engineered-to-order solutions are not very different than what we would command as our margin. So that's the thought process. I think on the aggregate, their margins are a little bit lower, but they've got some specific businesses that are probably higher margins because they're driving higher-value engineered solutions. And that's where we'll continue to play. Great question.

Mark Strouse, JPMorgan. I would love to sneak in a question to Bru, if that's possible. But can I start maybe since she's not up there. Can I start with, you talked about the ITC case with voltage. Are you able to kind of talk about kind of the hole in the market that, that might provide? I mean how big do you think voltage is today if they are unable to import? I mean what kind of addressable market would that add for you guys?

Yes. I can't speak specifically about their numbers, number one, because I don't know them. They're a private company, right? Obviously, for all our competitors, we make competitive estimates and try to figure out our share versus theirs. But I don't know their numbers. The biggest thing that I would lean on there, Mark, in thinking about that and just maybe to go back to what Bru was saying is changing products and utility scale solar is difficult, right? Whether that's us coming out with a new product or somebody else coming out with a new product, there's a natural adoption time. Products got to get through engineering. They got to be put on approved vendor lists. They got to be tested. They typically will go into one site or even maybe one block before they'd be deployed on a full solar field. So do I think there's going to be opportunities for us? Sure. And we look forward to this.

If it's possible, could I ask Bru? I mean the slide that Brandon showed earlier with the divergence of Wood Mac versus B&F just love to get per tick on what they are expecting. And then also, everything that we're -- the industry is dealing with right now with permitting and interconnects. I mean, just your view on when some of these things might start to ease?

Bru, you're allowed to find Mark at the bar later. Mark can buy your cocktail for this.

That's more on the owner side as far as the permitting issues. Certainly, it impacts what we do. A lot of the interconnection delays and some of those challenges. We're kind of on the tail end of that. We are aware of where there are like civil permitting issues in certain states where it takes -- there's a longer runway. So I actually don't think that those challenges are going to ease up. It's our ability to navigate those challenges. That's going to change. I think we are the ones that are going to have to adapt and learn how to work in these challenging environments versus that easing up, like supply chain disruptions are going to continue to happen, and policy changes are going to continue to happen and disrupt what we do. So it's how we choose to navigate and learn from that. That's going to ease up. But again, I do still think we're poised for growth over the next several years. We've got a lot of tailwinds on our side.

You got a tough job, Matt.

He's coming.

We could just toss this one down.

Phil Shen with ROTH Capital Partners. A couple of topics. The first one is on the 12 gigawatts that you guys highlighted that historically, you guys didn't address. I think Steve mentioned for CC&I, you guys just didn't, simply didn't -- you would ignore them and not even get back to them. So historically, why did you guys not pursue these markets? Can you talk about the economics? Was it just a matter of time? Now they've built out the sales team, you can pursue it. But what's the return on time and money you think for these markets, perhaps it was ignored in the past because the return wasn't there. So what makes it different now? And can you talk about the margins for these segments? Steve mentioned that you could have better than corporate average for CC&I specifically. And then shifting gears. The second topic here is, I think, Karen, you mentioned then you guys lost maybe 30% share in '22 and '23. Why did you guys lose that share? And then how do you expect to win that back?

Let me start and then maybe I'll kick it to Jeff and to Karen to fill. So the CC&I market, it was simple. Shoals just had a fee that they were going to target projects that were 75 megawatts and up, and primarily that was done because the company has been capacity, capacity constrained. Virtually it's, I don't know, call it the last 3 or 4 years, right? So what's the better choice of your time to go work on something that's a 300-megawatt site, 400-megawatt site or work on something that's a 20-megawatt site? So I think there's some advancements in our engineering capability, and obviously, we've got the capacity to do that. So that's really it on the CC&I, I'll touch on the hyperscale, just to clarify something. And before I kick it to Jeff or Karen, we didn't lose 30% share. We lost 30% share potentially with some customers. So as I've stated a number of times the last couple of quarters, on the aggregate, I feel like our share is fantastic because we have been partnered with EPCs that have grown dramatically and continue to be partnered with those EPCs. So we have continued to maintain and grow our share over the course of the last few years. And we have had some wallet share decreases with some customers. And Jeff, Karen, maybe I'll let you touch on those?

Yes. I can touch on the CC&I and then I'll pass the wallet share to you. Phil good to see you. Thank you. Shoals actually started off in CC&I. We did in early on a number of C&I projects. So we knew the technology would work as it wasn't a technology issue. It really was where do you get your bang for your buck. As Shoals were starting to scale as a company and scale as an organization, as Brandon said, it's just cost effective to run a 100-megawatt, 200-megawatt project than it is to parse out 10, 20 megawatts. So it starts with the application design. You have to design a C&I project, and you get block consistency for the larger projects. So design time had to be considered. Line changeovers had to be considered. So all those considerations came in and Shoals made the right approach at that point in our history and scale to focus on the large utility scale projects. What's different now is we've got scale processes in place and systems in place that allow us to take on that transaction volume where we really couldn't have taken on in the past.

And then I'll just touch on the market share piece. I think that the reason why we lost some of the market share was simply because, as we were growing with other customers, the focus was shifted on those that were growing and we're going to wait for those that didn't have as much growth potential. But as we've increased the sales organization, which is one of the reasons why we have done that is so that we can reach them, broaden our reach of our customer base as a whole.

Brian Lee with Goldman Sachs. I appreciate you taking the questions. Maybe zooming out a little bit, if I look at all the slides you presented this morning, you're painting a pretty bullish picture of above market growth, maybe able to find it for us in the afternoon session without make presents. But then you also lead with the Wood Mac basis, which shows no or negative growth for like 4 years. And so I guess a big picture question would be just you welcome through all these new growth opportunities, CC&I, BESS data centers, I think the TAM, if I tally it up, you're more than double versus your single product, single end market focus from before. So how do you kind of change that narrative? How quickly does it change? And can you maybe force rank which one of those start to kind of turn on faster than others?

Yes. So just maybe to speak to Wood Mac, and I don't want to get into too much detail now because Dominic is going to cover a lot of this later, and we'll have a Q&A in our afternoon session. But there's no question that Wood Mac data is more conservative. And look, we've had a challenging environment this year where we've pushed out $100 million of projects in the first half of the year, right? And there's some folks in the room that can probably corroborate project pushouts and the challenges. Bru just talked about permitting. So we want to take the conservative view. The Wood Mac view is obviously the more conservative view on things. And so we'll dig into specific growth rates around Wood Mac and how we are going to outgrow the market and you're correct. In fact, we will do that. We'll talk about that later, even in the utility scale space. As far as which of our, call it, other businesses will stand up the fastest. The reason that I like aside from data center maybe these other businesses that we're focusing on and the pivot away from EV, it's because they're shorter pots for us. I mean like Jeff touched on, and Steve talked to, what we're doing in utility scale is 100% applicable to community, commercial and industrial. We don't have to -- I mean, we may make smaller lengths of a product, but our production process doesn't change. Wire gauge sizes don't really change. I mean they're, in fact, the same products. So it's something that we can move to quickly. And maybe something to chat with Steve. Steve about even later as you guys can connect with him, but the permitting cycle times for these smaller community projects are significantly shorter than utility scale. So that's another way for us to sort of scale up the business a bit quicker in that space. As it relates to the OEM side of the business, obviously, you guys -- most of you guys in the room that our sell-side guys follow the panel guys. You know their growth rates, you know their investment in domestic manufacturing. It's a really exciting thing for us because we're partnering there already. So I think that there's upside for us there as well. Not to steal Gary's cylinder, but look, I love our opportunity internationally. As Gary called out, we've had a really good team historically internationally. We just have not given them the tools to be successful. They have been fighting an uphill battle not having the products, not necessarily having the infrastructure system to go be successful in. Troy's team has done a great job giving Gary, the products, Dominic's team, our legal team, everybody is coming together to really support Gary and make our international endeavors become more realistic for us. So I think of those businesses as being really strong near-term possibilities. The data center saw an exciting, exciting product for us. But just like we talked about, I just mentioned on the utility scale side, new product adoption in data centers, it's a mission-critical site, it's slow. It's not going to be an overnight. Hey, we came up with a new innovation and everybody adopts it right away. It's going to be slow, much like BLA was on the utility scale side of things when we first launched it. So yes, I think the prospects for growth outside of utility scale, some could be quicker hitters.

Yes, I would just add and I want to summarize part of that OEM right now. CC&I right now, Best right now, data centers further off, international right now. So those, as Brandon mentioned, much easier pots than entering a new market segment where we don't have a basis.

We're going to -- sorry, we're going to try and get back on track in terms of timing. So I apologize. We'll run a little bit over, but we're going to take a 5-minute break. We're going to come back. We're going to finish the second half of our prepared remarks, and then we have a half an hour of Q&A additional. Okay? [Presentation]

Okay folks, we're going to try and get started again. If you can hear me in the lobby, come and join us again, please? I know a 4-minute break is not fun, but thank you. [Presentation]

All right. Well, thank you, everybody. Bru, Steve, thank you. Steve is not in here, but -- there he is. Thank you. Great to hear from our customers always. Again, these guys are around if you want to chat with them a bit later as well. So we've divided this day up. We've spent the first part of our day talking about value proposition, talking about customers, talking about innovation and products. What a lot of people would call the fun stuff. I actually think the second part of the day is the most fun. We're going to talk about execution and building our foundation for growth. And that's probably a subject that if you've been following Shoals for years now, you've not heard us talk about much that execution piece. It's been a lot of sizzle, if you will, but maybe not as much about how we're going to get there. So I want to spend some time on that today. Centering us back on our big 5. We're going to talk about the bottom. We're going to talk about the foundation. And I want everybody in the room to know there is as much focus on the bottom of this as there is at the top on the growth piece. We are going to continue to get better as an organization. So we can do the things that we've talked about growing and diversifying. And we're going to do that very simply. We're going to do it through driving operational excellence, building organizational capability or capacity and really driving and solidifying an operating model. We want to standardize everything we do. So three messages for you today. As you think about the afternoon and even as you think about our tours, we are in the early, early stages of operational excellence. I am excited about where we're going, and you're going to hear more about it today, but we're in the early innings. We've got a long way to go. Second, throughout the rest of the day, and I hope you can see through the first part of the day, the level of talent we're bringing into the organization. Most of the folks that were on the stage so far today, and we'll see this afternoon, have been at Shoals around a year, me included, right? Assuming you think I'm talented, I guess I'm taking a leap there. So we brought in an exceptional amount of talent to match the legacy or ship and talent that we've had in the organization. Lastly, our operating model is taking shape. We are driving an unbelievable amount of alignment through our organization to our strategy. There's a lot of clarity around metrics and KPIs, which is fantastic. And there is a heightened sense of accountability through our organization because there's more empowerment and ownership than ever before. So let's talk real quick. Operational excellence. We are in the early innings. A couple of things that I want you to know. We are trying to take variability out of the organization. Variability does not scale well. So we are keenly focused on that. We're keenly focused on data. There is a thirst for data in this organization. We spend far too much time looking for numbers, not enough time analyzing them and making quick decisions, and that will change. We are accelerating our plant automation. Dana is going to talk about some of this, and you're going to see it in our plant. But again, early days, we've got a long way to go. And lastly, again, we are measuring, measuring, measuring all facets of our business are being measured and driven now. Let's talk about our footprint. In order to become more operationally efficient, you need to have the space to do it. As Shoals has grown rapidly over the last few years, we have acquired space almost out of necessity. A lot of the sites that we have don't have proper space that do not have proper material flow. That all changes with 1500 Shoals Way, which you'll see today. Quite literally, in the Portland area, we are moving raw material around because we don't have the space in our operating sites to store enough raw material to feed our operations. And again, that changed with 1500 Shoals Way. We will consolidate our three manufacturing sites in Portland into one, and we've already rolled in our two California sites into Portland this year. So I'm very excited about the operational efficiency, and I'm very excited to offer our employees in the Portland area, a fantastic place to come to work each day. So we continue to be the employer of choice in Portland. We've talked about the team. We have hit on this a number of times. We've brought in a diverse set of skills in the organization, proven leadership to augment the leadership that we already have here. And the really cool thing about this is I am starting to see dramatic changes in the organization because a lot of these folks are just now reaching or have reached the 1-year mark. So significant improvement and change in our organization. Lastly, our operating model. I have been intensely focused on not only the work we do at Shoals, but how we work. I want to standardize our work processes and I want to standardize the way that we communicate with each other. And I think if you talk to anybody on the leadership team, they would reiterate the fact that I'm really focused on this. We are empowering our organization. We're aligning it. We're driving metrics. We're driving accountability throughout the company. And what's really cool is everybody's gravitating to this, right? I get asked a lot about the cultural change. We're having a lot of success with the Shoals Way operating model, which is fantastic to see. So look, we've executed. We're going to continue to execute. We've got the facility. We're deploying capital in the right places. We've got the team to do it. We've got the operating model. So we're not only going to continue to grow. We're going to do so profitably because we can continue to drive operational excellence. And I'm going to turn it over to Dana to tell you more about this. But before we do we'll see a short video on our operations. [Presentation]

Well, good morning. My name is Dana Wooters. I joined Shoals this year as the Director of Operations. And I agree with Brandon, I get to talk about the fun stuff today. In fact, I spent my entire career doing the fun stuff, making things. I've been in manufacturing for 32 years. I started my career in engineering moved on into quality and production. The last 18 years, I've spent leading providing leadership for single and multi-site manufacturing operations to help companies support top line growth while maintaining or improving bottom line growth. So that's a nice way of saying I enjoy doing every day is delivering high-quality products on time and finding better ways to do it in a measurable manner. That's another way of saying we're -- I'm interested in operational excellence. That's what I enjoy doing every day. So I'm really excited to share with you some of the cool things that we're doing at Shoals along this path toward operational excellence. So to be clear, I mean, Shoals, as Lindsey shared earlier this morning, Shoals has a reputation for delivering high-quality products on time to customers. That's what we do. That's how Shoals has been successful. So that's nothing new to us. What is new is that we're pursuing this operational excellence with renewed vigor because if we're going to scale, we have to get better. If we're going to achieve that top line scale that we've been talking about, we have to find better ways of doing things so that we can do that and be able to maintain and achieve the margins that we've enjoyed in the past. So real quick, the material I'm going to share with you here today, operational excellence. I'm going to break it down to three buckets. The first is driving manufacturing excellence; the second is achieving world-class quality; and the third would be implementing a robust supplier management program. So let's talk about driving manufacturing excellence. I would break that down into three main areas. The first is really utilizing data to drive excellence. For example, taking a more data-driven approach to capacity planning. As we have grown in the past, of course, we've added capital assets, and we've added people. But now we're using data to do so in a more thoughtful and efficient manner. So that would be an example of how we're using data to drive excellence. We also -- we're also on the verge of deploying a manufacturing execution system or an MES to give us data from the process to drive further efficiency and improved quality. We also have what's known as the Amper process, continuous process monitoring system that's already in place that we're completing the deployment of that. So we're able to utilize that data to drive efficiency. Secondly, we're rolling out lean philosophies to Shoals. And we've already executed Kaizen or small group activities to drive continuous improvement. This is a way of creating capacity in a more low-cost, no-cost manner. So as we incrementally increase output, we don't need to increase the use of equipment and people as much as we would otherwise. The third that's been mentioned earlier, we're going to talk about more here in a moment is increasing the use of automation. Our main focus, of course, is to utilize automation to apply it to labor-intensive processes, but it's not just about driving out cost. As you'll see here in a moment, we're also utilizing automation to improve quality and in some cases, actually improve safety for our team members. So the key takeaway from all this is we're utilizing data. We're utilizing lean, and we're utilizing automation to more thoughtfully apply additional capital assets, additional labor to capitalize on that incremental revenue gain. So here's an example of automation that we've already implemented. For those who are lucky enough to attend the tour today, you'll get to see this. So here's the background on this particular challenge. We have a manual process to create what we call windows at specific locations along the length of the wire. So the machine at our wire cutting process would create a perforation in the wire. If you look at the picture and the lower center, but on the left, you'll see the wire where it's been perforated by the machine. The operator has to physically identify this perforation in mark it with an ink marker. Downstream that wire a process called separation, the operator has to find that ink mark and then physically cut the insulation away, remove the window. So there's a few issues with this that we want to resolve. One is from a quality perspective, there are two opportunities to miss that window. I could fail to put the ink on it or I can fail to detect it downstream. And if I do that, potentially ship an effective harness to the customer. It's also labor-intensive, cutting that insulation away for every single window and every single harness that has one, and we're doing it with cutters. So it's not ergonomically the best operation in the world. The solution is to implement in-line window cutting machine at the wire cutting process. So we actually, instead of perforating the insulation, remove it entirely. And if you look at the picture on the right, you'll see that there is no insulation. So what's the outcome of this? Well, I remove -- make it a whole is easier to find the window. I don't have to market, so I can't make a mistake there. And then downstream, it's a whole lot easier to find because I'm not looking for a paint mark. I'm looking for removed wire or removed insulation. I've eliminated the labor to remove the window downstream, and I've reduced the ergonomic risk associated with cutting that stuff away with clippers. So the bottom line is this removes 20% of the labor required to deal with each window on our process leading to over $700,000 worth of savings just over the first 12 months. So this would be an example of takeaway. This is an example of how we're utilizing automation to remove labor cost. So I want to switch gears a little bit. If you go back to the beginning, I said there were three pillars to this optimizing our -- enhancing our efficiency. The first was maximizing manufacturing efficiency. The second really relates to quality. Now as Lindsey shared earlier, Shoals has been recognized as a leader in terms of delivered quality. We deliver factory quality to the solar field. That hasn't changed. But world-class quality expectations are not static. Customers are always demanding higher level of equality. If we're not moving forward, then we're falling backwards. So we look at world-class quality as something that we're continuously pursuing. And what we're discussing here is a process of continuous improvement forever improving quality. And we're doing so in one main way, and it's -- involves shifting from what we call a quality control approach towards a quality assurance approach. And for those of you who are unfamiliar with the term, let me explain that briefly. A quality control approach is more focused on the identification of defects that are already created through inspection. It is by nature reactive and it's more product focused. A quality assurance approach is more focused on the prevention of those defects before they are manufactured. It is more proactive in nature, and it is more focused on inspecting the process than inspecting the quality of the product itself. This doesn't mean we're going to stop inspecting product. Of course, we're going to continue to inspecting product, but we're shifting our focus away a little bit more toward a more proactive approach that's process focused. And we're developing the tools we need to do this. First, we're developing our people. We've got training involved with our quality resources to enable them to support this transition toward quality assurance approach. And we're elevating our quality management processes to make them ISO9001 compliant to be able to support this approach toward QA. And we're implementing clear metrics, so we can measure our performance. We have a number of indicators that we look at, one of which is reducing cost of poor quality. And we have a goal of reducing that by 35% this year. For those of you who are unfamiliar with this term, cost of poor quality within cost things like -- include things like the cost of scrap, the cost of rework, cost of customer complaints, et cetera. So our key takeaway here is that our transition, our pursuit of world-class quality really involves a shifting from reactive, product-focused, quality control toward a more process-focused proactive quality assurance approach. Here's an example where we've applied automation not only to reduce labor costs, but actually to improve quality. And in this example, actually improved to a safety for our team members. So here's the background. We had a manual process to measure the length of the wire and the location of the window. So we would cut the wire, and we actually had to lay the wire out on the floor next to basically a very long tape measure. And because you have to have the wire tight to measure it, it took 2 people to do it, and we had to do it on a main aisle where people are walking through the plant. So you've got people stooped over, somebody could trip over that person, fall down, trip over the wire. So a little bit of a safety hazard. It took 2 people to do it. And because it's a manual process, it's inherently a little -- there's an error associated with doing that. So a number of problems bound up in this manual process. The solution was to implement automated wire measurement system. And for those of you who do the tour today, you'll be able to see this during the tour. What it does is it automatically using cameras measures the length of wire, verifies length of a window and the result is that we eliminate that risk of error. So we're not measuring on a tape measure. We're letting the machine do it, so it's more accurate, more repeatable. Secondly, eliminates the trip hazard because we're doing it on a machine. It's not on the floor. It's not on the main aisle. And we're only doing it with one person for a short period of time as opposed to two people stopped over on the floor. So huge return on investment. I mean, we're 3x ROI in the first 12 months, and we're looking over $200,000 annual efficiency and productivity savings. But the key point here is not only did we save money by implementing this automation, we've eliminated the safety risk for our team members, and we've reduced the variability associated with wire measurement in our process. So the third pillar to this operational excellence. I want to talk about today is implementation of a robust supplier management program. So if Shoals is going to maintain and supply world-class quality to our customers, we need world-class quality from our suppliers. And there's really three aspects of that. We're in the beginning phases of this. So firstly we -- the first we defined our critical suppliers, who are the people that we really have to engage with to make sure that we're aligned on quality expectations. We executed master supply agreements with them. So we have a common understanding of how we want to do business and how we're going to engage with one another, including Shoals' quality expectations. And that brings control of supplier process changes, which is really key. We want to make sure that we understand and approve changes that they make on their process, so that doesn't negatively impact our process. Secondly, we focused on validating incoming material quality. We've got to make sure that the stuff that we're receiving meets our specification. But we've done so in a thoughtful way. We focused our resources on the products that are critical. For example, looking at wire itself and the supply enclosures for our combiner boxes, as well as other things. And we're seeking alignment with our suppliers on the certificate of compliance. In other words, this is what we want you to measure. This is the data that we want you to provide us to know that these products meet our specifications. And thirdly, we're actively and collaboratively managing supplier performance. So we've established scorecards to have a uniform means of measuring performance. So we all have a common understanding of how that supplier is performing. We have periodic reviews where we sit down collaboratively with the supplier that to review that performance. And then on a risk basis, we conduct scheduled audits to verify that what we're being told what we're being shown is, in fact, accurate. So the key point here again is that if we're -- if Shoals is going to maintain world-class quality, we need that kind of -- we need that kind of quality coming from our suppliers and we do that in a collaborative manner with our suppliers through a robust supplier management process. So just to summarize, we're pursuing operational excellence in three ways. We're advancing our goal manufacturing strategy. We're applying the things that we've talked about today across our sites, including the new mega site that Brandon mentioned earlier. We're continuing to deliver best-in-class quality, but pursuing ever-improving quality and a continual improvement process. And we're implementing a robust supplier management program with our suppliers so they can partner with us to supply that world-class quality. We're going to see a short video here in a second, and then we'll be joined by James Hart, our Chief People Officer, to talk about building organizational incapacity. [Presentation]

Good morning. As Dana said, my name is James Hart, Chief People Officer here at Shoals, and I've been on Board for about 10 months now. But previous to that and it sounds kind of funny to say it's over 20 years of experience because I don't think that I'm that old. So I'm struggling with that, and I'm soon to be approaching 25 years plus of experience, but we may modify that at some point down. But previous to Shoals, I spent some time in the United States Air Force, also worked quite a bit of time in a large private manufacturing organization, spent some time in a fintech organization, building out their HR function as we were going from start-up to what I'd like to say is grown up. So I do feel like I'm uniquely qualified to be a catalyst as Shoals on our journey to build organizational capacity to support growth. Brandon and I were having a conversation this morning. We're both pretty big college football fans. He cheers on the team that's trying to figure out how to beat Michigan right now and I cheer for team, who's won 2 of the last 3 national championships. So you can kind of go figure that out. But we were trying to get pumped up, trying to show some excitement. And I was like, we got to find that Tim Tebow's halftime speech from the -- I think it's 2018 BCS championship when he's screaming. He said, you got 30 minutes for the rest of your life, you have 30 minutes for the rest of your life. And let me tell you what we're going to do. Well, I'll challenge you all the same way, probably not as much as 30 minutes for the rest of your life, but you have about 60 minutes before we go to get stuff in to eat, and I know that's very, very important. So stay with me here. We want to spend some time talking about our organization and how we're supporting growth, and that's something extremely exciting here. So if you think about the key messages for today, we want to leverage our cultural, the entrepreneurial zest as we focus on that customer experience and Lindsey, you can mark down another mark for customer experience. We want to utilize our knowledge and expertise, which is ingrained in our DNA. But then as we've talked about quite a bit today, think about not only do we have that expertise in our DNA but some of the talent that we've added. I even have to write it down now. I've been thinking about it, it's the Matt, Lindsey, Gary, Troy, Dana, even myself, and there are tons of people through our organization where we're combining that expertise that is in our DNA with new talent. And we are growing and creating a lot of momentum inside of our organization. We're in the early innings of this transformation. If you think about it, Brandon arrived about a year ago, there's a lot of new talent that's been here less than a year. And as I said earlier, you're starting to see that huge snowball start to roll and build steam, and it's exciting to see. And then just having a clear strategy to retain in the tech -- or excuse me, retain and attract talent because we all know, whoever has the best talent wins. And the great thing it shows is we have a strategy to win. So just by the numbers, about 1,250 employees, 85% of those in our hourly workforce, and it's an extremely diversed workforce, especially when you look at our production and hourly workforce. Some of the -- we have 5 different dialects and languages spoken in our facilities. You're talking about English, Spanish, Swahili, Burmese and Pashto in the facility. And that -- we've found ways to leverage that and make it even stronger inside of our facility, but then even attract more talent to the Portland area to fill those roles. So you see these four tenants and probably every single presentation like this that a Chief People Officer will give or CHR will give. We always talk about retain and attract talent. We always talk about high-performing culture. There's always an investment in talent development. And then, of course, we want to reward our employees for strong performance, where Shoals is making a difference is we're committed to build an agile strategy that empowers our employees, creates accountability and creates an environment where employees can thrive. So we use those four tenants. We adjust those throughout the process to create an environment where our employees thrive. So retaining and attracting top talent. I listed off 4 or 5, 6 names earlier. We're tracking some of the most talented individuals to Shoals right now. And that's an exciting period of time, both in the salary ranks, but then also in the hourly ranks. One example side of our hourly ranks as we all know manufacturing and then also skilled labor and manufacturing and maintenance is one of the most sought-after positions and very, very hard to find across the U.S. and even the globe. So we've created strong partnerships with area, technical schools to start a co-op program. And I'm excited to say now we have 4 or 5 students that now in the second half of the year will be part of a co-op program. So in areas that we can't find talent, we're even creating it internally to make sure we have strong pipelines for talent. Next, nurturing a high-performance culture. One of the things when I was through the interview process, one thing the Brandon challenged for me really, really early on, is we have to find a way to start getting people back together. As we talked about earlier, we brought on a lot of people, how do we connect all those people? How do we get collaboration, spur collaboration across departments and across functions? Giga week, as we call it, is something that we deployed earlier this year to create that connection point for all our employees. 3 days or 1 week a month, we have a focused curated schedules where all of our leaders are inbound in Portland, where they're having the cross-functional meetings. We're having a lot of our operating model meetings, whether it's our monthly business reviews, our one-on-ones, CapEx meetings and different things like that. And then we also give access to executives. So we have our first cup of coffee to open that -- open up their line of communication. And then also, we make sure there is development as part of that process. Giga-Week is probably one of the things in my first 10 months that I'm most proud of. You hear a lot of companies trying to figure this out. I'm not going to boast as say we figured it out, but we are definitely on our way to making a huge impact inside of our organization, and it's an integral part of our operating model. Investing in talent development. We're laying the foundation around talent planning. So we're thinking about talent planning, both at the functional level, the position level, individual level. We're also looking at how we develop our supervisors because we all know supervisors are the most important touch point with a majority of our employees. So we're investing there. And then as I said earlier, we have an extremely diverse organization in production. And we're even -- we'll be rolling out classes as English as a second language to help raise that bar across the facilities, whether that's a safety, quality and production. We've also instituted a language learning program, where we've elevated certain individuals inside of our facilities that speak multiple languages to help sure we can overcome some of the hurdles around communication. And there's, of course, something that we all like talking about is, how do we reward high performance. Our annual and long-term incentive plans are all tied to organizational performance -- the performance of the organization, excuse me. I like the tagline at the bottom that "When We Win, We Win Together," and that's true. We want to be market leaders inside of compensation, both with total rewards and our benefits. So we're always looking around in our area in the Portland region, but then also looking outside to make sure that we can be, as I said earlier, market leaders. So key takeaways today. We're going to maintain that entrepreneurial zest inside of the organization. That deep institutional knowledge that we have, not only do we have that, we're combining it with new talent and mixing it all together and making sure that we can increase scalability. We're in the early innings of transformation. You hear transformation, that word used so often, but we really are. We're transforming as an organization before your very eyes and we're less than a year inside of that transformation. And like I said earlier, whoever has a top talent wins, and we have a clear strategy of how to bring that top talent on both in attracting and then also retaining. So before we call up the next speaker, who is a Inez Lund, we'll have a short video. But also, I want to say -- I talked about Giga-Week a little bit earlier, one component I didn't say anything about is, Inez actually has a part-time role as a physical fitness instructor during Giga-Week. So if you ever are around Portland during that period of time, please stop by and see us and go through one of Inez' classes. But thank you for your time. [Presentation]

Well, good morning. We're almost there. My name, again, is Inez Lund. I'm the Chief Accounting Officer with Shoals. I joined Shoals in May of 2021 from EY. I started my career many years ago with Deloitte, technically [indiscernible]. That's how long ago it was. In the interim, I worked with companies such as Nissan and AIG, even had my own shingle up for over 10 years, right down the street in the Cummins Station building. So I am a little bit of a jack of all trades, which makes Shoals a great fit for my skill set. I'm also one of 5 CPAs that we have on the team at Shoals, and 80% of us have Big 4 experience, which I'm very proud of. . So James mentioned, thank you very much that I am an inferno hot pilates teacher, so it's a HIIT workout. So I think this would be a great time to do some burpees. So could we get everybody up. So you guys are lucky, I did not wear the right shoes to do burpees today. So we'll pass on doing the burpees. But James also mentioned that we have an amazing workforce. And it's how we come together as a team and we work effectively and efficiently, that's how we are solidifying the Shoals way of working. And that's what I want to talk about today. If you looked at our balance sheet, our biggest asset is our deferred tax asset. Anybody wants to talk about that. I'm happy to share more information on our DTA. But truly, our biggest asset is our people and how we work together. So that's what makes our solidifying that way of working is so important. Brandon mentioned that we are just starting our maturity process as a public company, and we are doing that through institutionalizing our way of working around core values. And the only way we can work efficiently and make good decisions as we stressed, is with good data. And so we've been striving to build that technology backbone that can support that decision-making. And that decision-making is executed through our standardized operating system that has come so far in the last year. And finally, we want to lead by example by elevating our sustainability efforts as a green company. So let's talk about that Shoal's way, those core values. This is really part of our DNA now. You heard Jeff and his team talk about how they're using innovation to meet their commercial objectives. You heard Gary talk about the need for agility as we go into the global markets because one size does not fit all. We all take responsibility very seriously. Every one of us is responsible for quality. Dana talked about quality assurance, good raw materials going into our manufacturing process. He talked about quality control, testing those finished goods as they're coming off the manufacturing floor. I am personally very proud of the quality that we have in our financial data in our structure that we put around SOX and internal control. All of us are responsible for quality. And we also are very committed to that sweet little town of Portland, Tennessee that we call home. Portland may be surrounded by a workforce of over 2 million people, but the town itself is less than 14,000 people. So being an employer of over 1,000 people there locally means we really need to step up to the plate to support that community, and we do that literally. Last summer, we set 4 teams to the local softball tournament. We have food drives to help stock the shelves of the local food pantry. In addition, Portland is the strawberry capital of Tennessee, and we sponsor events at the Annual Strawberry festival. So these principles are very important to us and something that has just become, again, part of the way that we work. But having those principles isn't enough. We have to have good data to support our decision-making. So again, we have a rich history, but that history came from being a privately held company. And like so many privately held companies, you have silos of information, you have manual processes, you have restricted access to data. So we're trying to move from that to an environment that encourages that intellectual curiosity, that one source of the truth. In a few weeks, we're going to have Salesforce come on site to help meet with us about their overall architecture and how we can connect that architecture to our ERP system. So we can have one customer list, one set of thoughts. We're all singing from the same quire book. Dana talked about using the Amper tool to gather data, good data about our machines, their capacity, their efficiency. We need that data to support our decision-making and how do we execute that decision making? That's through our operating system. Brandon referred to our EBOS system as the nervous system of a solar field. Well, this operating system is our spinal cord, our nervous system. It starts with the nerve endings of the win meetings. What's important now? These meetings are held daily between our operations team, HR, safety and quality coming together decide what's important for us today, what are our daily objectives. Those then feed up into a higher level, we have our weekly SIOP meetings. Sales inventory and operational planning meetings. This is where we look at what did we do last week? What's coming down the pike for this week, this month, this quarter so that we can be prepared from both a production and a procurement perspective. James talked about our Giga-Week. Those monthly BizOps meetings are where we have that accountability that measurement against our KPIs. So we can decide where is our risk? Where do we need to pivot? How can we be more agile? And just last month, we had our annual strategy planning session where we aligned around those 5 core objectives that we're all striving to. And speaking of alignment, it's so important for us to be aligned on the importance of sustainability, especially as a green energy company. This timeline shows the amazing progress that we've made on this journey. Back in 2021, we were just starting to investigate our ESG journey. Last year, we hired our first Director of Sustainability, and he is here today. And now today, we have an actual sustainability committee that is a cross-functional team that helps, again, make sure that we all see the importance of ESG. As Lindsey and James like to say, we all have a role to play in this book. So again, kind of reiterating and rounding out the key important items here. We are solidifying our way of working by being values-driven. We are building that digital backbone to give us great data and we're executing our decision-making through a standardized operating system. And finally, we're practicing what we preach by enhancing our own sustainability initiatives. This is what helps us to bring value to our people, our customers and to you as investors. Speaking of value, we do value your time, and we are about to turn it over to Dominic Bardos to talk about how we're bringing future value to our financial statements through all the things that we've talked about today. So there's some new resources that should now be available on our event site. So if you click on the Resources tab, you first want to right click and make sure that it opens in a new tab because we don't want anyone to get disconnected from what's happening today. And then you'll see a new set of slides called Creating Shareholder Value. So with that, I want to turn it over to the guy I call, boss, Dominic Bardos.

With all the secrecy, I feel like it's a gender reveal. So the color is green, everybody. So a little bit about myself. I've had the opportunity to meet many of you in person, which has been fantastic. I've been with Shoals for about 2 years. I've got over 35 years of experience and have been a CFO, either in a major public company division, a private company or a public companies for about 7 years of those 35. But I think more importantly about myself, I think it's important to understand a little bit of my background a little bit further back. I am 1 of 10 children, and 9 brothers and sisters. My parents immigrated from Hungary in 1956. So besides the values and the fact that we were poor and if I wanted something I had to work for it, I got my work ethic there. There's a couple of things I learned about in a large family. Number one, I learned to eat quickly so I could get my phone. And so that clearly worked, I'm here. Number two, I also learned that I had to speak louder and faster than my siblings, if I wanted to be heard. So I apologize if I get excited and race ahead. I'm going to try to measure my pace because I do get excited about these topics. I was actually reprimanded by the court reporter in the ITC hearing for setting a record for words per minute, she struggled to keep up with. So I did slow down when she told me in a break, she goes, "You know Dominic, if you slow down, people will listen to every word." Well, I'm not going to do that today. So a couple of key messages. Look, we got a track record at Shoals. I've been very blessed to land at Shoals 2 years ago, as I mentioned, an exceptional track record of driving performance, exceptional growth. We'll see some of the numbers here. The ability to drive the cash flow, to delever the way we have in just a couple of years' time is really relatively unprecedented. It's really fantastic, and you'll see a comparison to some of our peers. And we are well positioned. We have a fantastic base to grow from. We have a solid company. We have capacity that we're building in right now. And I think we are in a fantastic place to take advantage of the things that you heard about today. Now I am the Chief Financial Officer, and the past couple of quarters have not been exactly fun to talk about from a guidance standpoint. I don't have any more eyes left to blacken. So what you're going to see is a model that is grounded in the conservative Wood Mackenzie forecast. So let's talk about the accomplishments first. In the past few years, 52% revenue CAGR, 66% adjusted gross profit CAGR, 66% adjusted EBITDA CAGR, fantastic growth. You all know that story, so we'll keep moving. Relative to the peers, we have been in an explosive period of capturing share. If you look at this, our 52% CAGR on revenue compares to 25%. In the small font at the bottom, which I can't read because eyes are bad, it's the list of the companies that we compared against here. But we had dominated these categories from a growth standpoint in the recent years. You all know that story, but we're talking about the future. One thing I want to point out is adjusted EBITDA is an adjusted gross margin. We're impacted by the warranty, and I want to give you an update on where we are with that because that was a big number for us. As you know, last year, about a year ago, we took a $60 million charge to cost of goods sold. That's an adjustment from an adjusted EBITDA standpoint as well. But the opportunity that we have now is to continue working on the remediation in the fashion that we have. The number of sites that have reported to us has slowed to 1 or 2 a quarter. We are working through all the assumptions that we have and the data that we have. And the current status of the remediation is that we're still operating to the smallest number of the range of $60 million to $185 million. The $60 million number was recorded. We are still operating there, so you have not seen any additional charges to cost of goods sold in that time period. What's next? We are continuing to work on the known sites where we have issues. We fully expect the ones that we know about to be remediated by midyear '25. That is something we're working on the customers' timelines. We do want to minimize disruption because these are live sites. These have gone COD, they're producing energy. So we have to do a lot of the remediation work on their schedules based on the weather elements, based on night time, whatever it takes. But we're working with our customers, customers, customers. So I want to make sure you keep ticking that on your list. Okay. So let's look at the targets. As a reminder on the left, you see the Wood Mackenzie compared to the BNEF forecast. And yes, the Wood Mackenzie is in green, and it is, I think, Mark, you pointed out. It's a little less optimistic. As Bru pointed out, there are some challenges that the solar industry has to figure out. We have to figure out interconnections. We have to figure out the supply chain of some of the key componentry. We have to figure out what does AD/CDV do to us. What are these things happening in the solar space. So the financial forecast and the numbers that I'm talking about are grounded in that more conservative estimate of what's going on with the market. I just want to point that out. So let's talk about it. If the market is doing single-digit growth, we're suggesting that we will grow 8% to 12% in our core domestic utility scale. Now the number on the left is $385 million. I think that's the midpoint of our guide for this year. Now keep in mind that we presented things today a little bit differently than what you found in our filings. So for example, the $385 million does include OEM. It's listed in our filings, in our Qs as components when we break down revenue between solutions and components. That piece of the business, the junction boxes that we make for First Solar, as an example, are listed and included in that base number. What we've talked about now is that it's actually shifted into these new markets. So I want to point out that the $385 million on the left is not just utility scale solar. Everything is in there. That's the consolidated number for Shoals. So we've said that we can grow 8% to 12% from the domestic utility scale markets alone. And that's because of the work that Karen, Jeff, Troy, everyone is doing what the utility scale customers. Customers that we believe have long-term partnerships were driving significant value for. In the new markets, based on that $385 million, there's another 4% to 6% coming from that. Now the growth rates within those markets are significantly higher. But because we're starting from a small base, it only contributes 4% to 6%. So the model here, as I mentioned, is based on the conservative Wood Mackenzie data, and that is what's going to take us to the future. From an EBITDA margin standpoint, there's a couple of other things. Clearly, we get leverage from the growth. That's something that comes with just absolutely keeping our fixed costs from a public company at a limited amount, that we have the productivity. Dana talked about some of the things that we're doing on the COGS side. We also have productivity gains that we're looking for on the SG&A side as well. Now product mix, customer mix, geographic mix, those things can have a play in here. For example, we've talked about components having a lower margin than the full BLA EBOS solution. That's something we've talked about for years. Well, if we grow that business, that would be a mix issue that we have a higher percentage of growth coming from that space, and that could be a little bit of a deterrent to having the margin expansion. From a pricing standpoint, look, price is discussed on every job that we do. Everybody wants lower price. I'm sure Bru does as well. We have to maintain pricing and that's one of our levers. We recognize that if we can drive the productivity gains, we will have the ability to drive some of that value back to our customers as well. And that goes to the long-term nature of these contracts. So we have a tremendous amount of confidence in the numbers here. Do I think we can achieve more than that? Of course. Do I think that the market is tremendous, and there's going to be tremendous demand for energy in this country? Of course. But my job is to make sure that we have a model that you have the same amount of confidence in that we do internally that we can be. So we're guiding to 12% to 18% revenue growth over the next few years. 42%, give or take, gross margins, taking into account everything we've talked about. That's the full solutions, that's the new components, that's a new markets, it's everything rolled in. 30% EBITDA margin. That's something that we feel very strongly about. We are capital light. So we -- our annual CapEx, $20 million-ish a year for the few next few years will allow us to do some of the things that Dana talked about, investing in automation, new technologies, to be able to maximize the plant that you will see today as a drive by. The 1500 Shoals Way is actually a 638,000 square foot facility, which more than doubled the amount of square footage that we had total a year ago. So it's a big facility. We'll be able to purpose-built for what we need to do. In terms of cash flow, we absolutely are driving free cash flow. Historically, you see the growth. We've used that cash flow for a number of ways. Number one, investing in the business. Number two, we paid down a lot of debt. You'll see it coming up slide here, you'll see the leverage ratio. And we also did a $25 million accelerated share repurchase just last quarter, we completed that. Our balance sheet remains very strong. Now this is something that people ask me all the time, "Hey, what do you want to do from a capital asset standpoint, allocation standpoint? You want to do M&A, do you want to invest in the business? What is it you want to do?" Well, first and foremost, you see that we paid down debt. We've actually been looking at M&A deals and passed on several where the economics did not work for us. And now with the share price where it is, we have to be very careful about being dilutive to our shareholders. We do not want to do that. So we will have a very disciplined approach to M&A. I've got a slide here, in a second, I'll talk about that. But the main thing is that we've been able to pay down debt. We have a very strong balance sheet with some flexibility. The Board authorized $150 million share repurchase. We've executed $25 million of that. So that's still an option for us as well. So the capital allocation. I've said this, I think, every quarter since I've been here. Number one is drive organic growth. Number two would be to maintain the flexibility on the balance sheet, pay down debt, make sure that we're prepared and have dry powder to do things like number three, inorganic, buy something. Now not just anything. It's got to be something that really helps us drive our strategy forward. It could be complementary product set. It could be something that helps us get a footprint overseas. But it has to be something that is strategically important to us. We're not just going to purchase for the sake of purchasing. And last, which has always been last on my list, more prevalent recently, is returning capital to shareholders. With a disconnect in the pricing and the value that we see in the future, we do believe that that's something that we'll keep an eye on. It is active. Every quarter, we talk about it. So if you want to talk about M&A for a second. We do have a framework. We are looking at things that will help us with diversification. One of the things that we want to talk about is as we diversify from today's -- if you remember the chart where I had today's basis, roughly 90% of the revenue of the $385 million number is utility scale solar in the U.S. In the future, on the right, it's only 75%. Those are things that we're doing organically to diversify where our revenue streams are coming from. But M&A can also help us do that. So that would be a consideration. If it helps us with the strategy standpoint, it will also help us with international and the complementary products could be other things that we have available to us within the solar space. So there are multiple components that go into what Shoals looks like for the next few years. First and foremost, as we protect and grow our core, it's 8% to 12% growth in that space alone. Diversifying into new markets, including now our OEM, remember, I said, we just kind of split it from the way we've done it in the past. That would be the additional 4% to 6% CAGR. The operational excellence will allow us to do multiple things. First and foremost, from our employee standpoint, the investments in Portland and the pride and being able to have things done in the safe and laid out manner, it's really fantastic. But also helps us maintain the pricing and drive down pricing so that we can actually help our customers who share that value with them as well. As we optimize our balance sheet, we will continue to have very strong free cash flows. We've paid down debt. It's now below our target leverage ratio, which is a great place to be, gives us some flexibility. And we also will maintain a very disciplined capital allocation process to make sure that our investments are driving long-term shareholder value. So key takeaways. I know we'll get some Q&A. I'm expecting the first one to be from well, probably Phil, but that's okay. We won't give you the microphone right away. We'll make you wait. The key takeaways: one, we got a track record. Fantastic springboard, fantastic place to start from. Very excited about the future. There's tremendous tailwinds in our space. Can we meet all that? Gosh, I sure hope so. I hate seeing headlines where a nuclear power plant might come back online in Michigan. That's a horrible headline for me to see, while they have a connection to a grid. So maybe to meet demand, other plants might stay online longer. That's horrible. I don't want to believe any of that. I want solar to take the way. I want green energy to take the lead, and that's why I'm so optimistic about it. Now the BNEF model, they probably have a lot more of that consideration. Wood Mackenzie, maybe not so much, but that's okay. We're going to -- this forecast is based on Wood Mackenzie, I think there's upside to that. We will drive significant cash flows. Our margins will remain strong. We are going to be very capital light, $20 million-ish for the next few years, each year, and that we're well positioned to drive that long-term shareholder value. So with that, I'm going to turn it back over to Brandon for our closing remarks. Thank you.

Thanks, Dom. Dominic started by talking about speaking fast. You may have noticed he was speaking fast. What you guys don't know is we have a standing bet amongst the team for every minute that you go over, you have to put $20 in the jar and it goes to the bartender tonight. So if I were you guys, I would cozy up next to Karen Bezela and Gary Uren. They're going to be buying drinks tonight. But look, hey, fantastic day. I truly appreciate the time and attention, everybody I know. Again, it's a long day. I really am excited about the next phase, where we'll go up the street and look at not only the future of Shoals, 1500 Shoals Way our mega plant, new corporate campus will be. But we'll get to walk through the plant and get to see production and meet some of our employees that I'm excited to have the opportunity to work with each and every day. So just before we do that, a couple of closing remarks. I started out the day with talking about Shoals being a pillar in the solar industry. And that is truly the case. We have the brand. We have the scale. We have the technology, the patented protected technology to continue to innovate and grow not only in our core markets, which we will continue to do, but diversify our business moving forward. I'm hoping today that you also understand the level of talent that we have brought into the organization. I think it's exceptional. I think it's going to propel our company forward. So we have the human capital to move forward. And as Dominic shared, we've got the capacity to continue to fuel our growth financially. So I have never been more excited than I am about being part of this company right now. We've got a wonderful, wonderful future ahead of us. We've got a winning team and we've got a company that's winners. So I thank you all for your time and attention today. I think we're going to do some question and answer. Matt will provide some logistics on how we're getting to Portland and then we'll go have a great afternoon at our plant and a great evening this evening here in Nashville. So thank you very much. For those of you out there virtually look forward to seeing you next week in Anaheim. Thank you.

All right. So Dana, Inez, Jeff, you join us? We'll take a couple of handhelds. Do we need handhelds or is everybody mic'd up? Everybody's mic'd up. Great.

Colin Rusch from Oppenheimer. Thanks so much for the time. I guess one of the things that I'm curious about is your opportunity on the pricing side. Obviously, given what we're seeing in the labor market, the construction timeline is getting compressed here. It seems to me that you're in a position to drive pricing. Can you talk a little bit about those dynamics and what that might do to the financial model? And then I have a follow-up on some of the cash flow.

So first of all, from a financial model standpoint, we've actually indicated that pricing. We actually intend to drive pricing down a little bit for a couple of reasons. We believe that we can continue to drive value. We do think price is a great lever to make sure that we maintain, protect our core. There's going to be markets where pricing may not be quite as easy to get as we make entries into new markets. So I think right now, the current dynamics are such that we've contemplated in our guidance. We haven't guided specifically to 2025 yet, but we absolutely believe that we're in position of strength, and we're very optimistic how to use that. Brandon, is there anything else you want to add on the commercialization of it?

Just look, I mean we get asked questions about pricing constantly, right? Pricing is a part of every decision, an EPC mix. It's a constant in the conversation. I view pricing as table stakes, right? I mean we've got to have the right price to win the business, and we want our partners to win business. So we've got to give them the right price. So I view it as table stakes. As it relates specific to our margin profile, as we talked about in the operations section of the program today, I'm extremely confident in our ability to continue to become more efficient to protect our margins in the long term. So I think the company will be in great shape on that front.

Great. And then just a follow-up on the use of cash. Obviously, you guys have delevered the balance sheet pretty significantly. You're still generating a fair amount of cash, and you're looking at some incremental opportunities for growth. As you look at other uses of cash potentially inorganic, like how robust is your effort in evaluating opportunities around adjacent markets that you could grow into?

Sure. So we've actually engaged third-party advisers to help us from an M&A standpoint. We've had them for a while now. As I mentioned, we've actually passed on some deals where the financial economics didn't work for our shareholders. We're going to be very diligent about how we analyze every potential acquisition. Right now with the share price and our multiple, it makes it a little bit more challenging. There's certainly something that would love to see some correction there, but fundamentally, over time, we believe that we have a very strong balance sheet. I would like to maintain some flexibility on the balance sheet. As I mentioned, our Board has authorized additional share repurchase. We could do that, but I'd like to maintain that flexibility for the right opportunity. It might help us strategically get a footprint overseas. It might help us tangentially in complementary products here in the United States. But fundamentally, I want to maintain some flexibility in how we use that cash.

Vikram Bagri from Citigroup. A couple of questions about the growth profile you laid out. I wanted to focus on international markets. You're clearly largest market share in the U.S. You had the head start in the U.S. as well. But you are new entrant in the international market. How is the pricing different? How much different is the pricing in the international market? How much is the margin different? How is the patent protection? Is that only in the U.S.? Do you have the same level of patent protection in the international margin -- markets? And then when should we -- when will we see maybe the first few orders from the data center market, when do you expect that to happen? And then finally, on the product side, there was nothing mentioned on EV BLA. Is that sort of the new C&I where you won't pursue that. And then I have a follow-up.

Well, okay. So let's start with the first of your 45 questions there, Vikram. Okay. So a couple of things: one, the guidance that we've given and I've baked into the model does include all markets, all geographies, all product offerings and all customers. Clearly, there are some things as we go into places in certain regions where they're much more price-focused historically, but the owner developers are now realizing the quality is not there. So the ITC for us is good. IPCs for solar are bad. So in our case, we're going to make entries, but we are sensitive to what the pricing needs to be to win those jobs. When I look at our margin profile, that's taken into consideration. We've taken into consideration the fact that some pricing may not have the same cents per watt that we realize in the United States as we do as you make an entry into a new market. . You asked about some of the product differentiation. Some of the other things, I probably lost track of all your questions in there. So let me just talk a little bit about the product set because as we looked at our product margins, everything that we're doing we're targeting specific margins for that category. For example, I mentioned components. We talked about First Solar in junction boxes. Those don't carry the same margin profile as a full BLA solution does. And so we've targeted within that range, and the mix of those products has been taken into consideration as we guide to maintaining a margin north of 40%. The approximate 42% is because we're driving value. You saw a lot of time in the videos, the engineering that goes into it. And that value add is really how we can maintain that margin profile going forward. Specifically about EV and the other.

Yes. EV, we've made a pivot from, as Jeff indicated. Jeff, you can add on the data center front. I mean we are early. You'll see a prototype today, when you go to Plant 4, we've had some validation, as Jeff said, from hyperscalers and some smaller contractors in the data center space, but we're ways away. And anything else...

Yes. The one point I want to add on international, Gary mentioned, and he was going very quickly for Gary, is that localization will help us with price competition. When you think about how we're doing it today, IEC wire shipped from the source to the U.S. manufactured then shipped back, that's not cost effective nor is it time effective. So localization will help us in that regard.

I'll try to keep it short. But just on the productivity tailwinds that you talked about. I'm just curious because you're moving into a lot of different product categories expanding internationally. Can you just talk to kind of the key drivers behind the productivity gains and the benefit?

Sure. First and foremost, I think domestically here in the U.S., productivity gains are going to come once we're fully moved into the new facility. I think on the bus tour, you'll do a drive by Shoals Way where we have our main plant 1 was 1400 Shoals Way. The new one across the street is 1500. That is not even slated for us to move into starting until '25. So it's going to take some time for us to get together, and that's when productivity gains will really start to come into play domestically. As we look internationally, we're looking at things like contract manufacturing for certain component parts. We're looking at how we can get a footprint there. So I think we're going to look at productivity gains that we can do in our core to help fund some of the things that we know we have to make efforts, first-time ramp-ups and things like that, where we might spend a little more money against that in the future.

Maheep from Mizuho. One question on the data centers and the new products in international markets. How far are the product launch is in terms of getting the certifications for these products? That's the first question on that. And second, just on the financial guidance, Dominic, maybe for you. The CAGR, does that factor in the 100 million kind of which was pushed out from this year to next year? Just trying to understand the CAGR, like what's the base on that?

From a data center perspective, what I'd mention is, we're leveraging products that were certified for alternating current and e-mobility. Now they're in a new setting for data centers. So we're evaluating the National Electric Code to make sure we have full compliance there. Very early-stage, prototype stage. So when you think through where we're at in that area, you need to think through prototypes and the early innings of that game.

And secondarily, from a modeling standpoint, we do have the disconnect of when we recognize revenue and when something goes COD. So for example, the project delays that happened and caused our revenues to drop this year, is actually going to not be seen until CODs on those projects probably until later '25 or perhaps even '26 at this point in time. So we pegged our forecast to the Wood Mackenzie number, which is relatively flat, I think, as Mark pointed out, but that's where we have the favorability of the ITC. We have the customer actions that we're doing with Karen and the team to recapture some share where there was some revenue loss. I don't know if a share loss, but they were done on revenue. So Brandon has given me the sign to...

No, no, you're good. There was a question on international. Those products are in the process of being quoted. So yes, I would think of those as certified and us being able to meet our typical sales cycle. Back to the data center thing though, I just want to drive home the point, much like utility scale solar, this is a new product to market. Like anything, it's going to have to go through engineering approval, approved vendor list. It is going to take some time to get in the marketplace.

Phil with ROTH. I have a follow-up question for my first one, Brandon. Back on Slide 17, we spent a bunch of time on the 12 gigawatts, but more focused on the CC&I, the 9 gigawatts is the bigger chunk of opportunity. And so I was wondering if you could expand a little bit more and give us some color as to why that wasn't addressed in the past. And then importantly, what kind of probability do you think, what kind of win rate you think you might be able to have on that 9 gigawatts?

Sure. Yes. Look, maybe just the methodology of how we think about that. We look at projects, COD and then we go measure that versus -- our CRM is Salesforce, right? Like most people we see if we've quoted those projects, whether we won or loss of projects, if we did quote them. And what we determined over probably a 3-year period is that we were not accessing about 30% of the marketplace. And we've talked about big projects and small projects before. It wasn't because they were small projects. It was because we were not quoting those projects. I mean they could have been 500-megawatt sites. Part of the reason was is there is one particular EPC that has a significant share of that 30% that we were not partnered with. We are partnered with that particular EPC, now our quoting products and actually delivering products. The other was made up of EPC, that, in some cases, we didn't quote, but we're doing business with. In other cases, maybe we weren't doing business with them at all. And Karen talked a lot about just basic sales fundamentals. And if I had to pin it on one issue, to me, that's what it was. It was just the basic sales fundamentals of prospecting, having account management, sitting down with customers on a quarterly basis, make sure that we're doing what we can to support them. So look, I never want to classify things as an easy sale or being low-hanging fruit. But these are customers that we know that are buying similar products, that are buying our products in many cases and we should be transacting more business with them. So when I talk about our ability to continue to grow in our core utility scale solar, that's what gives me confidence that we're able to do that. I mean, just candidly, I've had direct conversations with some of these customers, and I'm approaching the conversation is, how do we win your business back? How do we establish a good relationship and some of the times the response is, there's nothing wrong. Where you've been. And you hate to hear that from a sales execution standpoint, but it does provide an opportunity for us in the future.

Yes. Just had 2 quick ones and maybe just a follow-up on that, is the -- you got 10 percentage points of above-market growth it looks like in the long-term model in the domestic utility scale market. Is that all from that 30% pie that you hadn't been addressing? Or is that also including the recapture of wallet shipment? And then quickly on the second one, on a more near-term basis, I think with the ITC ruling, feedback has been, I think a lot of people in this room, including some of your customers thought you were going to lose. So this is obviously a surprising outcome positive for you guys. What are the practical implications? What's the customer feedback? Are you expecting bookings momentum to ensue here in the near term.

Sure. Yes, I'll start with the first part of that, Brian. The growth is also here and come from current customers. I mean there's some -- there's a lot of growth potential with our current customer base because we've partnered with the best of the best and they're taking share. So that's incorporated into our growth profile and plans. So yes, I mean, I think there's growth opportunities across the board. I mean it really -- you'd have to walk EPC by EPC to really dictate the specifics on each one, which we do quite often. So we feel very good about outperforming the market. And as you indicated, I mean, it's an outperformance in the utility scale market of around 3x. Anything to add, Jeff?

Yes. The thing I would add is we have continued to recover the revenue loss from those customers that Karen mentioned. So as we were focused on the customers that we're growing substantially, we lost focus on others. So we're recapturing those. It's a dedication to fundamental sales principles, but then also when we look at that 30%, there is 30% opportunity for us to quote maybe a combiner in home runs that Shoals would have walked away from in the past or just pick up the phone for an opportunity with [ Steve Novy ] on CC&I. So there's plenty of opportunity to be had there. And then as far as ITC goes, we can't comment a lot about that. But ultimately, we feel we've got a better product that is protected by our patents, and that's now been proven. And our customers that are continuing to be our customers know they made the right choice and others are looking saying, okay, may be able to take a look at Shoals and call them back and take another look.

I only have one question. It's kind of a two-part one, though. If I look at your '27 forecast and that kind of back out what appears to be the new market growth, it looks to me like you're saying that the core U.S. solar business is going to get back to around where it was in 2023? Am I -- is my analysis correct? And if so what does that say? Does that say basically that you're thinking in terms of market share, you can basically get back to where you were last year given the fact that you're basing yourself off of Wood Mac, which doesn't really show any growth.

So a couple of things. One, from a market share standpoint, we are very pleased with where we've landed over the past few years, but it does change year-to-year. For example, in 2022, there was some projects that were delayed out. AD/CVD came in and their projects pushed out '22 into '23, et cetera. So market share fluctuated for us. Why? Some of the larger projects were delayed. This year, we had a great outperformance. It was outsized for us in 2023. There's no complaints there, no issues with that. Some of those projects, over 80% of that revenue has yet to go COD in projects that could be '24, that could be '25. So as we look at market share and the market growth, we did want to make sure that we looked at the Wood Mackenzie projections and what was happening with our lead times to COD because their projections are COD and some of the projects going COD this year, for example, you saw the video in Gemini, we did that revenue recognition in Q3 of 2022. So we always have to take into account that we lead the market COD and we're looking at that growth over time. We're very optimistic that we'll have very strong growth and performance, but the forecast right now that we've tied to is pretty conservative.

Sorry, but I correct in saying that your model more or less is implying that your core solar business in '27 ends up back around where it was in '23. Is that a correct assertion?

I don't know how to answer that one, I'm afraid, because it's the market share that if you're speaking specific to the market share, I'd have to look at what the revenue rec was in '27 versus the market of '28 and '29.

I think you're saying just from a revenue standpoint, right? .

Yes.

Revenues will be roughly similar, yes.

Oh, no. It's Vikram?

Dominic, if you characterize what are the drivers of low end and high end of the guidance range. It sounds like it's market share fluctuations and project timing, what are the biggest drivers of that low and high end? And if you're pricing in or baking in, in the high end, some benefit of like BNEF guidance, Wood Mackenzie being conservative, what are the sort of drivers of low and high end?

Yes. So a few things. One is, we took into consideration what may be an outcome of the ITC. Clearly, we have a very favorable initial determination from Judge Monica Bhattacharyya. I'm going to mess up the name, I apologize. From the ALJ. If that stands, clearly, we're in a competitive environment. Everyone is going look for alternative designs that don't infringe, et cetera. We've taken into some account there. We've looked at the opportunities that have been laid out by EPC. We looked at the market share that we believe we can attain there. And so between the market itself being relatively flat during that time period, although growing towards a tail end, keeping in mind that we precede the market, we see growth there naturally. We see recapture of some revenue from existing customers and some of the new things that we've talked about within our core. So it's a multipronged model that has all that.

I got a question e-mailed to me from an investor. Is it possible to kind of talk about the profile of the CAGR over the next several years? I mean, so if you've got near-term project delays, but opportunities to regain some of that wallet share, how are you weighing everything looking at, call it, kind of low teens over the next several years? Is it lower initially, but higher [ in all ] years?

Well, we haven't given guidance yet specifically within the years, I think it's fair to say that the near term has more challenges than the longer term from the way we've laid out some of the growth legs that are going to take off for us. But I don't think it's a radical departure. We haven't guided specifically to the annuals yet. But I would say near term still has some headwinds that Bru even mentioned. So yes.

Shifting gears to your OEM business. It sounds like you're producing junction boxes for First Solar. I was wondering if you could talk about the opportunity to pursue? It sounds like maybe Qcells, but then others out there, there is Suniva, et cetera. And would you diversify that offering with -- or for this end market, could there be acquisitions at some point in the future to maybe do some frame offering? I think there's an -- well, anyway, so what else could you do besides junction box going forward next?

Do you want to take that?

Yes. Yes, I'll get that one. So we've been in that business for junction boxes with First Solar for a very long time, and we're quite good at it. It's a low mix, high volume offering. When we look at now the movement to get solar panel developers into the U.S., it's opened up many more potential doors. Now each of those junction boxes are different and unique for the different solar panel providers. First Solar has a variant. There will be variance for each of the others. So there's not hundreds of those out there. There are probably 20 to 30. And then the top 5 are the predominant. So when we look at the OEM category, it's substantial because there is a junction box associated with every panel that goes out the door. I would expect each one of those panel providers to have multiple -- a couple of sources. They're good at what they do, and they want to make sure they protect their supply chain. And it's really the first time that Shoals has opened that door up beyond First Solar. So I see that as a near-term really strong opportunity with something that we're quite good at.

And what's the margin profile, sorry?

I haven't mentioned that.

As I've talked about, though, historically, that's been part of our components business, and we've always said that components has a lower margin profile than the full solution. That's about the extent of the difference that we talked about.

Phil, the other thing just maybe to think about as it relates to the OEM business is we're looking at things more broadly, right? You think about solar canopies for instance, while those solar canopies have an EBOS solution that comes affixed to them. There's no reason why we shouldn't be evaluating some of these business opportunities that -- again, it's near and dear. It's easy for us to do these things in our production facilities. So as things move back, manufacturing moves back into the states, being a U.S. manufacturer, we can take advantage of those sides.

All right. Just real quick on the confidence of guidance for '25. Like as you exit this year, you've seen project shift. You've gone through customers that you lost share with, maybe you think are going to gain share, but how do you kind of frame up your confidence for 2025?

Yes. So I haven't specifically guided to '25 yet. We typically do that when we release our final K for the year, we'll do that in February. We are going to look at everything project by project. As I mentioned, 2 quarters in a row, we had to reduce the guidance. And that is never a good place I want to be. So I'm going to be very cautious before we guide to '25 and make sure that I'm very comfortable before we talk about that number.

Okay. And then another question around the TAMs in relation to 2027 framework that you just posted. You had the BES TAM, you had the data center TAM. I didn't see an international TAM. You talked about kind of a number of moving parts of the markets. But I guess the implied kind of like other new markets, it seems to me like you're sort of basing 2027 or relo capture rate when you stack international data centers and C&I?

Yes. Again, realized data centers, brand new business. C&I, small market, 3 gigawatts. So effectively, we took a 50% share of that. It's relatively small versus the rest of our business. As it relates to the TAM, for international, Gary, correct me if I'm wrong, 63 gigawatts is what we've said is our current addressable marketplace. So you guys all have your assumptions on cents per watt, you can factor -- factor share and market size off of that. So if you add the combined, call it, market adjacencies, noncore, nondomestic utility scale, the growth rate on those combined, it's a triple-digit growth rate. I mean it's significant. It's just small in comparison to our base utility scale business.

Derek Soderberg from Cantor. Can you talk about pricing relative to your peers in the market? What sort of premium are you guys getting in the market today? And talked a lot about operational improvements, how does that premium sort of evolve over time? Is it shrinking to be more price competitive? Can you talk a bit about that, that would be great.

So a couple of things on the pricing side. Some of what we are comparing against in our -- in the marketplace today is a lesser product quality. Installation piercing connectors do not do as well on the field long term. So if someone can offer a better price on that technology, so be it. We're competing on a premium product with the engineering solution that you saw Mickey and the team of our integration engineers, that is a huge piece for us. So from a pricing standpoint, we are not going to apologize for driving value for our customers. We're not going to apologize for driving strong margins for our investors and our shareholders.

Yes. I guess just in addition to that, I think we offer the highest amount of value around installation, as I talked about in my opening. The cost to install the products about 1.5x the actual cost of the product itself. We feel we offer the ability to drive significant savings in the installation process. So along with that we command a price premium. And look, the other thing you can ignore is, we're a U.S. manufactured product, right? So can somebody compete in a lower-cost product, compete overseas. There's always going to be low price, low-value, low-quality players from overseas. We're a U.S.-based manufacturer. Our cost to manufacture in the U.S. is obviously higher than it is in some countries. So that is reflected in our pricing as well.

So for everybody in the room, we have a lot more time with the extended management team. So we encourage you to move around during lunch, find your seat next to folks on the bus and, obviously, we have a reception this evening. We were able to make up our time, so we're doing well. This is also the point in our day where we say thank you and goodbye to our virtual audience. So we're very grateful for you taking time out of your day to join us today. Thank you, again. And please, if you have follow-up questions, reach out to us. We're happy to help, that's what we're here for.