Shoals Technologies Group, Inc. Reports Financial Results for First Quarter 2025

– Quarterly Revenue of $80.4 million – – Gross Margin of 35.0% – – Net Loss of $(0.3) million – – Adjusted EBITDA1 of $12.8 million – – Backlog and Awarded Orders Increased 5% Year-Over-Year to $645.1 million – – Provides Second Quarter and Full Year 2025 Outlook – PORTLAND, Tenn., May 06, 2025 (GLOBE NEWSWIRE) -- Shoals Technologies Group, Inc. (“Shoals” or the “Company”) (Nasdaq: SHLS), a leading provider of electrical balance of system (“EBOS”) solutions and components, including battery energy storage solutions (“BESS”) and Original Equipment Manufacturer (“OEM”) components for the global energy transition market, today announced results for its first quarter ended March 31, 2025. “We began the year with a strong start, delivering revenue above our guided range. The investment that we have made in our commercial function is paying dividends as evidenced in both the growth and quality of our order book. I’m proud of the robust backlog and awarded orders of $645 million, with approximately $500 million scheduled for the coming four quarters. The strategic initiatives that are driving increased market penetration and diversification are progressing very well, with commercial success in international, CC&I, BESS, and OEM markets,” said Brandon Moss, CEO of Shoals. “While volatility and uncertainty may dominate today’s headlines, the markets that we operate within are showing continued strength. Our value proposition of delivering high-quality, innovative products combined with exceptional engineering and design support is resonating with new and existing customers. The underlying fundamentals of both our industry and business opportunities remain very positive. Projects are moving forward, and 2025 is shaping up to be a solid year,” added Mr. Moss. ________________________1 Non-GAAP financial measures referenced in this release are used by management to assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included in the non-GAAP reconciliation in this release. Non-GAAP measures should not be used as a substitute for the closest comparable GAAP measures. First Quarter 2025 Financial ResultsRevenue decreased 11.5%, to $80.4 million, compared to $90.8 million for the prior-year period, driven by strategic pricing actions, volume discounts, and customer and product mix. Gross profit was $28.1 million, compared to $36.5 million in the prior-year period. Gross profit as a percentage of revenue was 35.0% compared to 40.2% in the prior-year period. The decline from the prior-year period was driven by strategic pricing actions, volume discounts, customer and product mix, and reduced fixed cost absorption due to lower revenues. General and administrative expenses were $21.7 million, compared to $22.8 million during the same period in the prior year. The decrease in general and administrative expenses was the result of a $3.3 million decrease in general legal expenses for intellectual property and shareholder litigation matters, offset by a $1.7 million increase in legal expenses related to wire insulation shrinkback litigation. Income from operations was $4.3 million, compared to $11.6 million during the prior-year period. Net income (loss) was $(0.3) million compared to $4.8 million during the prior-year period. Earnings (loss) per share was $(0.00) compared to $0.03 in the prior-year period. Adjusted EBITDA1 decreased $7.7 million to $12.8 million compared to $20.5 million for the prior-year period. Adjusted net income1 decreased $7.4 million to $5.2 million compared to $12.6 million during the prior-year period. Adjusted diluted earnings per share1 were $0.03 compared to $0.07 in the prior-year period. Backlog and Awarded OrdersThe Company’s backlog and awarded orders as of March 31, 2025, were $645.1 million, representing a 4.9% increase compared to the prior-year period and a 1.6% sequential increase from December 31, 2024. The increase in backlog and awarded orders as compared to the prior-year period reflects consistent demand for the Company’s innovative products, with growth in international markets, which comprises more than 13.4% of backlog and awarded orders. Backlog represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders are orders we are in the process of documenting with a contract but for which a contract has not yet been signed. Second Quarter 2025 OutlookThe Company is providing an outlook for the second quarter given the near-term uncertainty in the utility scale solar market, which has resulted in shifting order patterns. Based on current business conditions, business trends and other factors, for the quarter ending June 30, 2025, the Company expects: Revenue in the range of $100 million to $110 millionAdjusted EBITDA1 in the range of $20 million to $25 million Full Year 2025 OutlookBased on current business conditions, business trends and other factors, for the full year 2025, the Company expects: Revenue in the range of $410 million to $450 millionAdjusted EBITDA1 in the range of $100 million to $115 millionCash Flow from operations in the range of $30 million to $45 millionCapital expenditures in the range of $25 million to $35 millionInterest expense in the range of $8 million to $12 million A reconciliation of Adjusted EBITDA1 guidance, which is a forward-looking measure that is a non-GAAP measure, to the most closely comparable GAAP measure is not provided because we are unable to provide such reconciliation without unreasonable effort. The inability to provide a quantitative reconciliation is due to the uncertainty and inherent difficulty in predicting the occurrence, the financial impact and the periods in which the components of the applicable GAAP measures and non-GAAP adjustments may be recognized. The GAAP measure may include the impact of such items as non-cash share-based compensation, amortization of intangible assets and the tax effect of such items, in addition to other items we have historically excluded from Adjusted EBITDA. We expect to continue to exclude these items in future disclosures of this non-GAAP measure and may also exclude other similar items that may arise in the future. Webcast and Conference Call InformationCompany management will host a webcast and conference call on May 6, 2025, at 8:00 a.m. Eastern Time, to discuss the Company’s financial results. Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company’s website at https://investors.shoals.com. About Shoals Technologies Group, Inc.Shoals Technologies Group, Inc. is a leading provider of electrical balance of system (“EBOS”) solutions and components, including battery energy storage solutions (“BESS”) and Original Equipment Manufacturer (“OEM”) components, for the global energy transition market. Since its founding in 1996, the Company has introduced innovative technologies and systems solutions that allow its customers to substantially increase installation efficiency and safety while improving system performance and reliability. Shoals Technologies Group, Inc. is a recognized leader in the renewable energy industry whose solutions are deployed on over 70 GW of solar systems globally. For additional information, please visit: https://www.shoals.com. Investor Relations Contact Shoals Technologies Group, Inc.Email: investors@shoals.com Forward-Looking StatementsThis report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations; expectations regarding the utility-scale solar market; project delays; regulatory environment; the effects of strategic pricing actions, volume discounts and customer mix in our key markets; pipeline and orders; business strategies, plans and expectations, including sales and marketing goals; technology developments; financing and investment plans; warranty and liability accruals and estimates of loss or gains; estimates of potential loss related to the wire insulation shrinkback matter (as defined below); litigation strategy and expected benefits or results from the current intellectual property and wire insulation shrinkback litigation; potential growth opportunities, including opportunities associated with our entry into new markets; production and capacity at our plants; and potential repurchases under the Company’s Repurchase Program (as defined below). Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Some of the key factors and scenarios that could cause actual results to differ from our expectations include, among others, If demand for solar energy projects diminishes, we may not be able to grow; if we fail to accurately estimate the potential losses related to the wire insulation shrinkback matter, or fail to recover the costs and expenses incurred by us from the supplier; the interruption of the flow of raw materials from international vendors has disrupted our supply chain, including as a result of the imposition of additional duties, tariffs, and other charges on imports and exports; the imposition of trade restrictions, import tariffs, anti-dumping, and countervailing duties; we have modified, and in the future may modify, our business strategy to abandon lines of business or implement new lines of business, and modifying our business strategy could have an adverse effect on our business and financial results; amounts included in our backlog and awarded orders may not result in actual revenue or translate into profits; defects or performance problems in our products or their parts, whether due to manufacturing, installation, or use, including those related to the wire insulation shrinkback matter, have a high consequence of failure and can lead to equipment and systems failure, physical injury or death; we have experienced, and may experience in the future, delays, disruptions, quality control, or reputational problems in our manufacturing operations in part due to our vendor concentration; if we fail to retain our key personnel and attract additional qualified personnel; our products are primarily manufactured and shipped from our production facilities in Tennessee, and any damage or disruption at these facilities may harm our business; we may face difficulties with respect to the planned consolidation and relocation of our Tennessee-based manufacturing and distribution operations, and may not realize the benefits thereof; safety issues may subject us to penalties, negatively impact customer relationships, result in higher operating costs, and negatively impact employee morale and turnover; the market for our products is competitive, and we face increased competition as new and existing competitors introduce EBOS system solutions and components; macroeconomic conditions, including high inflation, high interest rates, and geopolitical instability, impact our business and financial results; we are subject to risks associated with the patent infringement complaints that we filed with the U.S. International Trade Commission (“ITC”) and District Courts; if we fail to, or incur significant costs in order to obtain, maintain, protect, defend, or enforce our intellectual property portfolio and other proprietary rights, including the patents we are asserting in ongoing patent infringement litigation; acquisitions, joint ventures, and/or investments and the failure to integrate acquired businesses could disrupt our business; a loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment could harm our business; a significant drop in the price of electricity may harm our business; the unauthorized access to our information technology systems or the disclosure of personal or sensitive data or confidential information, whether through a breach of our computer system or otherwise, could severely disrupt our business; failure of our information technology systems, including those managed by third parties, whether intentional or inadvertent, could lead to delays in our business operations and, if significant or extreme, affect our results of operations; our expansion outside the U.S. could subject us to additional business, financial, regulatory, and competitive risks; our indebtedness could adversely affect our financial flexibility, restrict our current and future operations, and our competitive position; existing electric utility industry, federal, state, and municipal renewable energy and solar energy policies and regulations, including zoning and siting laws, and any subsequent changes, present technical, regulatory, and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our products or harm our ability to compete; changes in tax laws or regulations that are applied adversely to us, or our customers could materially adversely affect our business, financial condition, results of operations, and prospects; and the market price of our Class A common stock may decline and may continue to be subject to significant volatility. These and other important risk factors are described more fully in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other documents filed with the Securities and Exchange Commission and could cause actual results to vary from expectations. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Non-GAAP Financial Measures Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share (“EPS”) We define Adjusted Gross Profit as gross profit plus wire insulation shrinkback expenses. We define Adjusted Gross Profit Percentage as Adjusted Gross Profit divided by revenue. We define Adjusted EBITDA as net income (loss) plus/(minus) (i) interest expense, (ii) interest income, (iii) income tax expense, (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) wire insulation shrinkback expenses, and (viii) wire insulation shrinkback litigation expenses. We define Adjusted Net Income as net income (loss) plus (i) amortization of intangibles, (ii) amortization / write-off of deferred financing costs, (iii) equity-based compensation, (iv) wire insulation shrinkback expenses, and (v) wire insulation shrinkback litigation expenses, all net of applicable income taxes. We define Adjusted Diluted EPS as Adjusted Net Income divided by the diluted weighted average shares of Class A common stock outstanding for the applicable period. Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, GAAP. We present Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS: (i) as factors in evaluating management’s performance when determining incentive compensation, as applicable; (ii) to evaluate the effectiveness of our business strategies; and (iii) because our credit agreement uses measures similar to Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS to measure our compliance with certain covenants. Among other limitations, Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and may be calculated by other companies in our industry differently than we do or not at all, which may limit their usefulness as comparative measures. Because of these limitations, Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. You should review the reconciliation of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage, net income (loss) to Adjusted EBITDA, and net income (loss) to Adjusted Net Income and Adjusted Diluted EPS below and not rely on any single financial measure to evaluate our business. Shoals Technologies Group, Inc.Condensed Consolidated Balance Sheets (Unaudited)(in thousands, except shares and par value) March 31,2025 December 31,2024Assets Current Assets Cash and cash equivalents$35,609 $23,511 Accounts receivable, net 67,704 78,181 Unbilled receivables 10,409 20,834 Inventory, net 61,173 55,977 Other current assets 12,851 9,849 Total Current Assets 187,746 188,352 Property, plant and equipment, net 30,040 28,222 Goodwill 69,941 69,941 Other intangible assets, net 39,187 41,083 Deferred tax assets 451,872 454,160 Other assets 9,635 11,322 Total Assets$788,421 $793,080 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable$26,714 $20,032 Accrued expenses and other 12,418 12,541 Warranty liability—current portion 25,956 29,602 Deferred revenue 15,195 18,737 Total Current Liabilities 80,283 80,912 Revolving line of credit 141,750 141,750 Warranty liability, less current portion 5,457 11,392 Other long-term liabilities 2,003 2,226 Total Liabilities 229,493 236,280 Commitments and Contingencies Stockholders’ Equity Preferred stock, $0.00001 par value - 5,000,000 shares authorized; none issued and outstanding as of March 31, 2025 and December 31, 2024 — — Class A common stock, $0.00001 par value - 1,000,000,000 shares authorized; 171,078,789 and 170,670,779 shares issued; 167,170,402 and 166,762,392 outstanding as of March 31, 2025 and December 31, 2024, respectively 2 2 Additional paid-in capital 485,960 483,550 Treasury stock, at cost, 3,908,387 shares as of March 31, 2025 and December 31, 2024, respectively (25,331) (25,331)Retained earnings 98,297 98,579 Total stockholders' equity 558,928 556,800 Total Liabilities and Stockholders’ Equity$788,421 $793,080 Shoals Technologies Group, Inc.Condensed Consolidated Statements of Operations (Unaudited)(in thousands, except per share amounts) Three Months Ended March 31, 2025 2024 Revenue$80,631 $90,807 Cost of revenue 52,221 54,347 Gross profit 28,140 36,460 Operating expenses General and administrative expenses 21,693 22,772 Depreciation and amortization 2,135 2,104 Total operating expenses 23,828 24,876 Income from operations 4,312 11,584 Interest expense (2,415) (4,475)Interest income 118 113 Income before income taxes 2,015 7,222 Income tax expense (2,297) (2,448)Net income (loss)$(282) $4,774 Earnings (loss) per share of Class A common stock: Basic$(0.00) $0.03 Diluted$(0.00) $0.03 Weighted average shares of Class A common stock outstanding: Basic 166,960 170,282 Diluted 166,960 170,514 Shoals Technologies Group, Inc.Condensed Consolidated Statements of Cash Flows (Unaudited)(in thousands) Three Months Ended March 31, 2025 2024 Cash Flows from Operating Activities Net income (loss)$(282) $4,774 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 3,287 3,002 Amortization/write off of deferred financing costs 156 2,626 Equity-based compensation 2,661 5,023 Provision for obsolete or slow-moving inventory 252 — Provision for warranty expense 257 565 Deferred taxes 2,288 2,495 Changes in assets and liabilities: Accounts receivable 10,477 3,715 Unbilled receivables 10,425 16,730 Inventory (5,448) (6,761)Other assets (1,471) (3,165)Accounts payable 6,682 1,332 Accrued expenses and other (347) (13,402)Warranty liability (9,837) (3,680)Deferred revenue (3,542) (394)Net Cash Provided by Operating Activities 15,558 12,860 Cash Flows from Investing Activities Purchases of property, plant and equipment (3,209) (2,483)Net Cash Used in Investing Activities (3,209) (2,483)Cash Flows from Financing Activities Employee withholding taxes related to net settled equity awards (251) (816)Payments on term loan facility — (143,750)Proceeds from revolving credit facility 20,000 143,750 Repayments of revolving credit facility (20,000) (15,000)Deferred financing costs — (2,032)Net Cash Used in Financing Activities (251) (17,848)Net Increase (Decrease) in Cash and Cash Equivalents 12,098 (7,471)Cash and Cash Equivalents—Beginning of Period 23,511 22,707 Cash and Cash Equivalents—End of Period$35,609 $15,236 Shoals Technologies Group, Inc.Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income andAdjusted Diluted Earnings per Share (“EPS”) (Unaudited) Reconciliation of Gross Profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage (in thousands): Three Months Ended March 31, 2025 2024 Revenue$80,361 $90,807 Cost of revenue 52,221 54,347 Gross profit$28,140 $36,460 Gross profit percentage 35.0% 40.2% Wire insulation shrinkback expenses (a)$— $— Adjusted gross profit$28,140 $36,460 Adjusted gross profit percentage 35.0% 40.2% Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands): Three Months Ended March 31, 2025 2024 Net income (loss)$(282) $4,774 Interest expense 2,415 4,475 Interest income (118) (113)Income tax expense 2,297 2,448 Depreciation expense 1,391 1,106 Amortization of intangibles 1,896 1,896 Equity-based compensation 2,661 5,023 Wire insulation shrinkback expenses(a) — — Wire insulation shrinkback litigation expenses (b) 2,529 849 Adjusted EBITDA$12,789 $20,458 Reconciliation of Net Income (Loss) to Adjusted Net Income (in thousands): Three Months Ended March 31, 2025 2024 Net income (loss)$(282) $4,774 Amortization of intangibles 1,896 1,896 Amortization / write-off of deferred financing costs 156 2,626 Equity-based compensation 2,661 5,023 Wire insulation shrinkback expenses(a) — — Wire insulation shrinkback litigation expenses (b) 2,529 849 Tax impact of adjustments (c) (1,767) (2,547)Adjusted Net Income$5,193 $12,621 (a) For the three months ended March 31, 2025 and 2024, there were no expenses related to warranty for wire insulation shrinkback relating to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback. We consider expenses incurred in connection with the identification, repair and replacement of the impacted wire harnesses distinct from normal, ongoing service identification, repair and replacement expenses that would be reflected under ongoing warranty expenses within the operation of our business, which we do not exclude from our non-GAAP measures. In the future, we also intend to exclude from our non-GAAP measures the benefit of liability releases, if any. We believe excluding expenses from these discrete liability events provides investors with a better view of the operating performance of our business and allows for comparability through periods. (b) For the three months ended March 31, 2025 and 2024, represents $2.5 million and $0.8 million, respectively, of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire. We consider this litigation distinct from ordinary course legal matters given the expected magnitude of the expenses, the nature of the allegations in the Company’s complaint, the amount of damages sought, and the impact of the matter underlying the litigation on the Company’s financial results. In the future, we also intend to exclude from our non-GAAP measures the benefit of recovery, if any. We believe excluding expenses from these discrete litigation events provides investors with a better view of the operating performance of our business and allows for comparability through periods. (c) Shoals Technologies Group, Inc. is subject to U.S. Federal income taxes, in addition to state and local taxes. Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax. The adjustment to the provision for income tax reflects the effective tax rates below. Three Months Ended March 31, 2025 2024Statutory U.S. Federal income tax rate21.0% 21.0%Permanent adjustments0.6% 0.8%State and local taxes (net of federal benefit)2.8% 2.7%Effective income tax rate for Adjusted Net Income24.4% 24.5% Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (in thousands, except per share): Three Months Ended March 31, 2025 2024 Adjusted diluted weighted average shares outstanding 166,960 170,514 Adjusted Net Income$5,193 $12,621 Adjusted Diluted EPS$0.03 $0.07

Shoals Technologies Group, Inc. Reports Financial Results for First Quarter 2025

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