[Forward-Looking Statements](index=5&type=section&id=FORWARD-LOOKING%20STATEMENTS) [Overview of Forward-Looking Statements](index=5&type=section&id=Overview%20of%20Forward-Looking%20Statements) The report's forward-looking statements are based on management's current beliefs and are subject to risks - Forward-looking statements cover future results, market expectations, business strategies, and potential risks[8](index=8&type=chunk) - Such statements involve known and unknown risks that may cause actual results to differ materially from expectations[9](index=9&type=chunk) - Readers should not place undue reliance on these statements, which reflect management's beliefs as of the report date[9](index=9&type=chunk) [Key Risk Factors](index=5&type=section&id=Key%20Risk%20Factors) Key risks include solar demand, warranty estimates, supply chain disruptions, and macroeconomic conditions - Diminished demand for solar energy projects could materially adversely impact growth and financial results[11](index=11&type=chunk) - Failure to accurately estimate losses from the wire insulation shrinkback matter could materially impact profit margins[11](index=11&type=chunk) - Supply chain disruptions due to raw material flow interruptions or trade policy changes could adversely affect revenue[11](index=11&type=chunk) - Defects or performance problems in products can lead to equipment failure, reputational damage, and decreased revenue[12](index=12&type=chunk) - Macroeconomic conditions and intense market competition pose risks to business and financial results[12](index=12&type=chunk) - Ongoing patent infringement complaints and wire insulation shrinkback litigation present significant legal uncertainties[12](index=12&type=chunk) [PART I — FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes [Condensed Consolidated Balance Sheets (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $794,964 | $793,080 | | Total Current Assets | $190,073 | $188,352 | | Cash and cash equivalents | $4,686 | $23,511 | | Accounts receivable, net | $103,432 | $78,181 | | Inventory, net | $56,899 | $55,977 | | Total Liabilities | $219,557 | $236,280 | | Total Current Liabilities | $81,346 | $80,912 | | Warranty liability—current portion | $15,102 | $29,602 | | Total Stockholders' Equity | $575,407 | $556,800 | - Total assets increased slightly to **$795.0 million**, while **cash and cash equivalents significantly decreased** from $23.5 million to $4.7 million[15](index=15&type=chunk) - Total liabilities decreased to **$219.6 million**, primarily due to a **reduction in the current portion of warranty liability** from $29.6 million to $15.1 million[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Condensed Consolidated Statements of Operations | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $110,841 | $99,249 | $191,202 | $190,056 | | Gross profit | $41,202 | $39,997 | $69,342 | $76,457 | | Income from operations | $15,998 | $18,581 | $20,310 | $30,165 | | Net income | $13,855 | $11,802 | $13,573 | $16,576 | | Basic EPS | $0.08 | $0.07 | $0.08 | $0.10 | | Diluted EPS | $0.08 | $0.07 | $0.08 | $0.10 | - Quarterly revenue **increased by 11.7% YoY** to $110.8 million, while six-month revenue saw a modest **0.6% increase**[16](index=16&type=chunk) - Quarterly net income **grew 17.4% YoY** to $13.9 million, but six-month net income **decreased by 18.1% YoY** to $13.6 million[16](index=16&type=chunk) - Gross profit percentage **decreased to 37.2% for the quarter** and **36.3% for the six months** due to strategic pricing and product mix changes[157](index=157&type=chunk)[164](index=164&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric (in thousands, except shares) | Balance at Dec 31, 2024 | Balance at Jun 30, 2025 | | :--- | :--- | :--- | | Class A Common Stock Shares | 166,762,392 | 167,353,860 | | Class A Common Stock Amount | $2 | $2 | | Additional Paid-in Capital | $483,550 | $488,525 | | Treasury Stock Shares | 3,908,387 | 3,908,387 | | Treasury Stock Amount | $(25,331) | $(25,272) | | Retained Earnings | $98,579 | $112,152 | | Total Stockholders' Equity | $556,800 | $575,407 | - Total stockholders' equity **increased to $575.4 million**, driven by net income and equity-based compensation[18](index=18&type=chunk) - The company **did not repurchase any shares** of its common stock during the six months ended June 30, 2025[18](index=18&type=chunk)[83](index=83&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,737 | $50,701 | | Net Cash Used in Investing Activities | $(10,342) | $(4,485) | | Net Cash Used in Financing Activities | $(10,220) | $(65,734) | | Net Decrease in Cash and Cash Equivalents | $(18,825) | $(19,518) | | Cash and Cash Equivalents—End of Period | $4,686 | $3,189 | - Net cash from operating activities **significantly decreased to $1.7 million** from $50.7 million, primarily due to changes in working capital[21](index=21&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Net cash used in investing activities **increased to $10.3 million**, driven by higher purchases of property, plant, and equipment[21](index=21&type=chunk)[187](index=187&type=chunk) - Net cash used in financing activities **decreased to $10.2 million** due to lower debt payments and reduced share repurchases[21](index=21&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1. Organization and Business](index=14&type=section&id=Note%201.%20Organization%20and%20Business) - Shoals Technologies Group, Inc. is a leading provider of electrical balance of systems (EBOS) solutions for the global energy transition market[25](index=25&type=chunk) - The company is headquartered in Portland, Tennessee, with five direct or indirect subsidiaries as of June 30, 2025[24](index=24&type=chunk)[26](index=26&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=14&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are prepared in accordance with U.S. GAAP, consolidating all subsidiaries[27](index=27&type=chunk)[28](index=28&type=chunk) - Management makes significant estimates for revenue recognition, credit losses, warranty liability, and other key areas[32](index=32&type=chunk) Customer Concentration | Customer | 2025 Revenue % | 2025 Accounts Receivable % | 2024 Revenue % | 2024 Accounts Receivable % | | :--- | :--- | :--- | :--- | :--- | | Customer A | 17.5 % | 22.6 % | 35.2 % | 19.0 % | | Customer B | 14.5 % | 6.1 % | 8.1 % | 8.8 % | - **Customer A's revenue concentration decreased significantly** from 35.2% in 2024 to 17.5% in 2025 for the six-month period[33](index=33&type=chunk) - The company is evaluating the impact of new FASB ASUs related to income tax and expense disaggregation disclosures[35](index=35&type=chunk)[38](index=38&type=chunk) [Note 3. Accounts Receivable](index=16&type=section&id=Note%203.%20Accounts%20Receivable) Accounts Receivable | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable | $103,928 | $78,677 | | Less: allowance for credit losses | $(496) | $(496) | | Accounts receivable, net | $103,432 | $78,181 | - Net accounts receivable **increased by 32.3%** to $103.4 million at June 30, 2025[40](index=40&type=chunk) [Note 4. Inventory](index=16&type=section&id=Note%204.%20Inventory) Inventory | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | $58,876 | $55,703 | | Work in process | $1,949 | $2,316 | | Finished goods | $353 | $2,415 | | Allowance for obsolete or slow-moving inventory | $(4,279) | $(4,457) | | Inventory, net | $56,899 | $55,977 | - Net inventory **increased slightly by 1.6%** to $56.9 million, primarily due to an increase in raw materials[41](index=41&type=chunk) [Note 5. Property, Plant and Equipment](index=17&type=section&id=Note%205.%20Property,%20Plant%20and%20Equipment) Property, Plant and Equipment | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Construction in progress | $20,156 | $3,968 | | Total PP&E | $56,961 | $41,284 | | Less: accumulated depreciation | $(14,983) | $(13,062) | | Property, plant and equipment, net | $41,978 | $28,222 | - Net property, plant, and equipment **increased significantly by 48.8%** to $42.0 million, driven by a substantial increase in construction in progress[43](index=43&type=chunk) - Depreciation expense for the six months was **$2.8 million**, up from $2.4 million in 2024[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 6. Goodwill and Other Intangible Assets](index=17&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) - Goodwill remained unchanged at **$69.9 million** as of June 30, 2025[45](index=45&type=chunk) Other Intangible Assets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total amortizable intangibles | $102,200 | $102,200 | | Total accumulated amortization | $64,909 | $61,117 | | Total other intangible assets, net | $37,291 | $41,083 | - Net other intangible assets **decreased by 9.2%** to $37.3 million due to ongoing amortization[47](index=47&type=chunk) - Amortization expense for intangible assets was **$3.8 million** for the six months ended June 30, 2025, consistent with the prior year[47](index=47&type=chunk) [Note 7. Accrued Expenses and Other](index=18&type=section&id=Note%207.%20Accrued%20Expenses%20and%20Other) Accrued Expenses and Other | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued compensation | $4,626 | $5,005 | | Accrued interest | $344 | $259 | | Accrued rebates | $3,618 | $3,058 | | Accrued professional fees | $6,079 | $1,448 | | Other accrued expenses | $2,261 | $2,771 | | Total accrued expenses and other | $16,928 | $12,541 | - Total accrued expenses **increased by 35.0%** to $16.9 million, primarily due to a significant increase in accrued professional fees[48](index=48&type=chunk) [Note 8. Warranty Liability](index=18&type=section&id=Note%208.%20Warranty%20Liability) - The estimated general warranty liability decreased from $1.1 million to **$0.6 million** at June 30, 2025[49](index=49&type=chunk) - The wire insulation shrinkback warranty liability remained at an estimated low-end loss of **$73.0 million**, with a remaining liability of **$19.2 million**[52](index=52&type=chunk) - **No warranty expense** related to wire insulation shrinkback was recorded in the first six months of 2025 or 2024[54](index=54&type=chunk) Warranty Liability Activity | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Warranty liability, beginning of period | $31,413 | $51,799 | $40,994 | $54,914 | | Warranty expense | $0 | $829 | $256 | $1,394 | | Payments | $(11,626) | $(5,298) | $(21,463) | $(8,978) | | Warranty liability, end of period | $19,787 | $47,330 | $19,787 | $47,330 | [Note 9. Long-Term Debt](index=20&type=section&id=Note%209.%20Long-Term%20Debt) Long-Term Debt | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Revolving Credit Facility | $131,750 | $141,750 | | Long-term debt, net of current portion | $131,750 | $141,750 | - Outstanding borrowings under the Revolving Credit Facility **decreased by $10.0 million** to $131.8 million[57](index=57&type=chunk) - As of June 30, 2025, the interest rate on the facility ranged from **7.11% to 7.17%**, with **$68.2 million of availability**[64](index=64&type=chunk) - The company was in **compliance with all required debt covenants** as of June 30, 2025[66](index=66&type=chunk) [Note 10. Earnings per Share ("EPS")](index=21&type=section&id=Note%2010.%20Earnings%20per%20Share%20(%22EPS%22)) Earnings per Share | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income - basic and diluted | $13,855 | $11,802 | $13,573 | $16,576 | | Weighted average shares outstanding - basic | 167,286 | 169,991 | 167,124 | 170,136 | | Weighted average shares outstanding - diluted | 167,562 | 170,100 | 167,238 | 170,252 | | Basic EPS | $0.08 | $0.07 | $0.08 | $0.10 | | Diluted EPS | $0.08 | $0.07 | $0.08 | $0.10 | - Basic and diluted EPS for Class A common stock were **$0.08** for the three and six months ended June 30, 2025[70](index=70&type=chunk) [Note 11. Equity-Based Compensation](index=22&type=section&id=Note%2011.%20Equity-Based%20Compensation) - The company granted **2.0 million Restricted Stock Units (RSUs)** during the six months ended June 30, 2025[72](index=72&type=chunk) - **0.9 million Performance Stock Units (PSUs)** were granted, cliff vesting after 3 years upon meeting performance targets[73](index=73&type=chunk)[75](index=75&type=chunk) Equity-Based Compensation Expense | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Equity-based compensation expense | $2,594 | $4,087 | $5,255 | $9,110 | - Unrecognized compensation costs totaled **$19.8 million** as of June 30, 2025, to be recognized over a weighted average period of 2.2 years[75](index=75&type=chunk) [Note 12. Stockholders' Equity](index=23&type=section&id=Note%2012.%20Stockholders'%20Equity) - Holders of Class A common stock are entitled to one vote per share; **no Class B common stock was outstanding**[76](index=76&type=chunk) - A **$150.0 million share repurchase program** was announced on June 11, 2024[77](index=77&type=chunk) - **No shares were repurchased** under the program during the six months ended June 30, 2025, leaving **$125.0 million authorized**[83](index=83&type=chunk) [Note 13. Commitments and Contingencies](index=25&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) - The company is pursuing **two intellectual property litigations** against Hikam and Voltage for patent infringement[85](index=85&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - The ITC reversed a finding of violation against Voltage, which the company has appealed[85](index=85&type=chunk) - A lawsuit was filed against Prysmian for damages caused by **defective wire insulation shrinkback**[90](index=90&type=chunk) - Multiple **securities class action and derivative lawsuits** have been filed against the company related to the wire insulation matter[91](index=91&type=chunk)[92](index=92&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - The maximum potential payment obligation for surety bonds was **$5.8 million** as of June 30, 2025[99](index=99&type=chunk) [Note 14. Income Taxes](index=29&type=section&id=Note%2014.%20Income%20Taxes) Effective Tax Rate | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Effective tax rate for continuing operations | 28.5% | 27.1% | - The effective tax rate **increased from 27.1% to 28.5%** in H1 2025, primarily due to discrete items for equity awards and a state tax refund adjustment[102](index=102&type=chunk) [Note 15. Revenue Recognition](index=29&type=section&id=Note%2015.%20Revenue%20Recognition) Revenue by Product Type | Product Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | System solutions | $84,412 | $79,292 | $141,806 | $144,350 | | Components | $26,429 | $19,957 | $49,396 | $45,706 | | Total revenue | $110,841 | $99,249 | $191,202 | $190,056 | - System solutions accounted for **74.2% of total revenue** for the six months ended June 30, 2025[124](index=124&type=chunk) Contract Balances | Contract Balance (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Billed accounts receivable | $94,979 | $70,882 | | Retainage | $8,453 | $7,299 | | Contract assets | $1,591 | $4,251 | | Unbilled receivables | $9,861 | $20,834 | | Deferred revenue | $20,075 | $18,737 | | Accrued rebates | $3,618 | $3,058 | - **Unbilled receivables decreased significantly** from $20.8 million to $9.9 million, while billed accounts receivable increased[107](index=107&type=chunk) [Note 16. Segment Reporting](index=30&type=section&id=Note%2016.%20Segment%20Reporting) - The company operates as a **single operating and reportable segment** focusing on EBOS solutions and components[112](index=112&type=chunk) - The Chief Operating Decision Maker (CODM) reviews consolidated financial information for resource allocation[113](index=113&type=chunk)[115](index=115&type=chunk) - All long-lived tangible assets are located within the United States[116](index=116&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, key operational trends, liquidity, and critical accounting policies [Overview](index=32&type=section&id=Overview) - Shoals is a leading provider of EBOS solutions and components for the global energy transition market[119](index=119&type=chunk) - The company's system solutions are primarily sold to EPCs for utility-scale solar projects in the U.S[120](index=120&type=chunk)[122](index=122&type=chunk) - A strategic expansion into international, BESS, data center, and CC&I markets was announced in Q3 2024[123](index=123&type=chunk) Backlog and Awarded Orders | Metric | June 30, 2025 | | :--- | :--- | | Backlog and awarded orders | $671.3 million | | Backlog | $260.9 million | | Awarded orders | $410.4 million | | Estimated delivery in next 12 months (backlog) | $247.1 million | | Estimated delivery in next 12 months (awarded orders) | $293.2 million | | International projects (backlog and awarded orders) | >13.3% | | YoY increase in backlog and awarded orders | 4.4% | | QoQ increase in backlog and awarded orders | 4.1% | [Trends and Uncertainties](index=33&type=section&id=Trends%20and%20Uncertainties) - The global trade environment is uncertain due to tariffs and trade restrictions, which could increase raw material costs[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) - The 2022 Inflation Reduction Act (IRA) incentivized solar development, but recent legislation modifies these provisions, potentially reducing future demand[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - The U.S. solar market faces volatility but is poised for continued growth due to new manufacturing capacity[136](index=136&type=chunk) - Global inflationary pressures, higher interest rates, and supply chain challenges are expected to persist[138](index=138&type=chunk)[139](index=139&type=chunk) [Key Components of Our Results of Operations](index=35&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations) - Revenue is generated from EBOS solutions and components and is influenced by price, volume, and product mix[141](index=141&type=chunk)[143](index=143&type=chunk) - Cost of revenue includes raw materials, shipping, warranty, and personnel, affecting gross profit[145](index=145&type=chunk) - Operating expenses consist of general and administrative costs, with personnel being the most significant component[146](index=146&type=chunk)[147](index=147&type=chunk) - Non-operating expenses include interest expense, interest income, gain on asset sale, and income tax expense[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Three Months Ended June 30 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $110,841 | $99,249 | $11,592 | 11.7 % | | Cost of revenue | $69,639 | $59,252 | $10,387 | 17.5 % | | Gross profit | $41,202 | $39,997 | $1,205 | 3.0 % | | General and administrative expenses | $23,064 | $19,218 | $3,846 | 20.0 % | | Income from operations | $15,998 | $18,581 | $(2,583) | (13.9)% | | Net income | $13,855 | $11,802 | $2,053 | 17.4 % | - For the three months ended June 30, 2025, **revenue increased by 11.7%**, but **gross profit percentage decreased to 37.2%**[156](index=156&type=chunk)[157](index=157&type=chunk) - General and administrative expenses **increased by 20.0%** for the three months, primarily due to a **$3.0 million rise in legal expenses**[158](index=158&type=chunk) Six Months Ended June 30 | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $191,202 | $190,056 | $1,146 | 0.6 % | | Cost of revenue | $121,860 | $113,599 | $8,261 | 7.3 % | | Gross profit | $69,342 | $76,457 | $(7,115) | (9.3)% | | General and administrative expenses | $44,757 | $41,990 | $2,767 | 6.6 % | | Income from operations | $20,310 | $30,165 | $(9,855) | (32.7)% | | Net income | $13,573 | $16,576 | $(3,003) | (18.1)% | - For the six months ended June 30, 2025, **revenue increased by 0.6%**, but **gross profit decreased by 9.3%**[163](index=163&type=chunk)[164](index=164&type=chunk) - General and administrative expenses **rose by 6.6%** for the six months, driven by a **$2.1 million increase in legal expenses**[165](index=165&type=chunk) - Interest expense **decreased by 39.9%** for the six months due to lower outstanding debt balances[167](index=167&type=chunk) - A **$3.1 million gain on asset sale** was recognized due to the consolidation of operations[161](index=161&type=chunk)[168](index=168&type=chunk) [Non-GAAP Financial Measures](index=42&type=section&id=Non-GAAP%20Financial%20Measures) - The company presents supplemental non-GAAP measures to provide additional insight into operational performance[170](index=170&type=chunk)[171](index=171&type=chunk) - These measures exclude items like wire insulation shrinkback and litigation expenses to offer a clearer view of core business performance[170](index=170&type=chunk)[176](index=176&type=chunk) Non-GAAP Reconciliation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Adjusted Gross Profit | $41,202 | $40,463 | $69,342 | $76,923 | | Adjusted Gross Profit Percentage | 37.2 % | 40.8 % | 36.3 % | 40.5 % | | Adjusted EBITDA | $24,472 | $27,685 | $37,261 | $48,143 | | Adjusted Net Income | $16,938 | $17,808 | $22,137 | $30,445 | | Adjusted Diluted EPS | $0.10 | $0.10 | $0.13 | $0.18 | - **Adjusted EBITDA decreased by 22.6%** for the six months ended June 30, 2025, compared to the prior year[175](index=175&type=chunk) - **Adjusted Diluted EPS decreased from $0.18 to $0.13** for the six months ended June 30, 2025, compared to the prior year[177](index=177&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) - Operations are financed primarily through operating cash flows and borrowings, with resources deemed sufficient[178](index=178&type=chunk) - Cash and cash equivalents **decreased from $23.5 million to $4.7 million** at June 30, 2025[179](index=179&type=chunk) - Net cash provided by operating activities was **$1.7 million**, a significant decrease from $50.7 million in the prior year[179](index=179&type=chunk)[185](index=185&type=chunk) - Net cash used in investing activities was **$10.3 million**, primarily for property and equipment purchases[187](index=187&type=chunk) - Net cash used in financing activities was **$10.2 million**, reflecting payments on the Revolving Credit Facility[188](index=188&type=chunk) - Approximately **$20.7 million of cash was used for wire insulation shrinkback remediation** during the six months[183](index=183&type=chunk) [Critical Accounting Policies and Accounting Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Accounting%20Estimates) - The company performs an annual goodwill impairment assessment in Q4 or more frequently if indicators exist[195](index=195&type=chunk) - Fair value determinations for goodwill require significant judgment and are sensitive to changes in assumptions[196](index=196&type=chunk) - Despite a decline in market capitalization, management does not believe the reporting unit's fair value is below its carrying value[197](index=197&type=chunk)[198](index=198&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposure are reported for the period - **No material changes** in market risk exposure occurred during the six months ended June 30, 2025[199](index=199&type=chunk) - For a detailed analysis of market risk, refer to the 2024 Form 10-K[199](index=199&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures as of the reporting date - Disclosure controls and procedures were evaluated and concluded to be **effective at the reasonable assurance level** as of June 30, 2025[201](index=201&type=chunk) - **No changes to internal control over financial reporting** occurred during the quarter that materially affected controls[202](index=202&type=chunk) [PART II – OTHER INFORMATION](index=48&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings detailed in the financial statement notes - The company is involved in various litigation types, including intellectual property, contract, and warranty claims[204](index=204&type=chunk) - Except as detailed in Note 13, no current claims are believed to have a material adverse effect on the business[204](index=204&type=chunk) - The results of litigation are uncertain and may involve significant costs and diversion of management resources[204](index=204&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) Readers are directed to the 2024 Form 10-K for a comprehensive discussion of risk factors - Readers should refer to the risk factors in the 2024 Form 10-K for material factors affecting the business[205](index=205&type=chunk) - The disclosed risk factors may not cover every risk, and additional unknown risks could adversely affect the company[205](index=205&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds occurred during the period[206](index=206&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities are reported for the period - Not applicable; no defaults upon senior securities[207](index=207&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Not applicable; no mine safety disclosures[208](index=208&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the period - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025[209](index=209&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL documents - Exhibits include organizational documents, an Offer Letter, CEO and CFO certifications, and various Inline XBRL documents[211](index=211&type=chunk)[214](index=214&type=chunk) [SIGNATURES](index=51&type=section&id=SIGNATURES) [Report Signatures](index=51&type=section&id=Report%20Signatures) The report is certified by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 5, 2025, by the Chief Executive Officer and Chief Financial Officer[216](index=216&type=chunk)[218](index=218&type=chunk)

[Shoals Technologies Group, Inc. Q2 2025 Earnings Release](index=1&type=section&id=Shoals%20Technologies%20Group%2C%20Inc.%20Q2%202025%20Earnings%20Release) [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Shoals Technologies Group reported strong financial results for the second quarter of 2025, with revenue increasing 11.7% year-over-year to $110.8 million, achieving a record backlog and awarded orders of $671.3 million, and increasing its full-year 2025 revenue guidance Q2 2025 Key Metrics | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenue | $110.8 million | +11.7% | | Gross Margin | 37.2% | -3.1 p.p. | | Operating Profit | $16.0 million | -14.0% | | Adjusted EBITDA | $24.5 million | -11.6% | | Backlog & Awarded Orders | $671.3 million | +4.4% | - The company raised its revenue outlook for the full year 2025, signaling confidence in future performance[3](index=3&type=chunk)[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Brandon Moss highlighted a strong start to the year, with revenue exceeding guidance and a record backlog, noting that despite a shifting regulatory environment, underlying market fundamentals for energy transition remain healthy, prompting an increase in full-year revenue guidance - The company's strategy of accelerating growth in core domestic utility-scale markets is proving effective[2](index=2&type=chunk) - Management observes that experienced customers are navigating regulatory uncertainty and remain committed to project timelines, leading to a more constructive view on the demand environment[3](index=3&type=chunk) - The company is seeing encouraging traction within its four growth initiatives, which are expanding its exposure to new markets, customers, and applications[2](index=2&type=chunk) [Second Quarter 2025 Financial Results](index=3&type=section&id=Second%20Quarter%202025%20Financial%20Results) In Q2 2025, revenue grew 11.7% YoY to $110.8 million, driven by strong product demand, though gross margin decreased to 37.2% from 40.3% due to strategic pricing, volume discounts, and mix changes, resulting in operating income falling to $16.0 million and Adjusted EBITDA declining to $24.5 million Q2 2025 vs. Q2 2024 Performance (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $110.8 | $99.2 | | Gross Profit | $41.2 | $40.0 | | Gross Margin | 37.2% | 40.3% | | Income from Operations | $16.0 | $18.6 | | Net Income | $13.9 | $11.8 | | Adjusted EBITDA | $24.5 | $27.7 | | Adjusted Net Income | $16.9 | $17.8 | | Diluted EPS | $0.08 | $0.07 | | Adjusted Diluted EPS | $0.10 | $0.10 | - General and administrative expenses increased to **$23.1 million** from **$19.2 million**, primarily due to a **$3.0 million** rise in legal expenses related to wire insulation shrinkback, intellectual property, and shareholder litigation[8](index=8&type=chunk) [Backlog and Awarded Orders](index=3&type=section&id=Backlog%20and%20Awarded%20Orders) As of June 30, 2025, the company's backlog and awarded orders reached a record high of $671.3 million, representing a 4.4% increase year-over-year and a 4.1% sequential increase, reflecting consistent product demand and significant growth in international markets - Backlog and awarded orders increased **4.4%** compared to the prior-year period and **4.1%** sequentially from March 31, 2025[10](index=10&type=chunk) - Growth in international markets is a key driver, with these markets now comprising over **13.2%** of the total backlog and awarded orders[10](index=10&type=chunk) [Business Outlook](index=3&type=section&id=Business%20Outlook) The company issued guidance for the third quarter of 2025 and raised its full-year 2025 revenue outlook, reflecting a positive view of current business conditions and trends [Third Quarter 2025 Outlook](index=3&type=section&id=Third%20Quarter%202025%20Outlook) For the third quarter ending September 30, 2025, Shoals anticipates revenue to be in the range of $125.0 million to $135.0 million and Adjusted EBITDA between $30.0 million and $35.0 million Q3 2025 Guidance | Metric | Guidance Range (in millions) | | :--- | :--- | | Revenue | $125.0M - $135.0M | | Adjusted EBITDA | $30.0M - $35.0M | [Full Year 2025 Outlook](index=4&type=section&id=Full%20Year%202025%20Outlook) The company increased its full-year 2025 revenue guidance and provided expectations for other key financial metrics, including Adjusted EBITDA, cash flow from operations, and capital expenditures Full Year 2025 Guidance | Metric | Guidance Range (in millions) | | :--- | :--- | | Revenue | $450.0M - $470.0M | | Adjusted EBITDA | $100.0M - $115.0M | | Cash Flow from Operations | $15.0M - $25.0M | | Capital Expenditures | $30.0M - $40.0M | | Interest Expense | $8.0M - $12.0M | [Financial Statements](index=10&type=section&id=Financial%20Statements) This section provides the unaudited condensed consolidated financial statements as of and for the periods ended June 30, 2025, including the Balance Sheets, Statements of Operations, and Statements of Cash Flows [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets stood at $795.0 million, with total liabilities of $219.6 million, while cash and cash equivalents decreased significantly to $4.7 million from $23.5 million at the end of 2024, and accounts receivable increased Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,686 | $23,511 | | Total Current Assets | $190,073 | $188,352 | | Total Assets | $794,964 | $793,080 | | Total Current Liabilities | $81,346 | $80,912 | | Total Liabilities | $219,557 | $236,280 | | Total Stockholders' Equity | $575,407 | $556,800 | [Condensed Consolidated Statements of Operations](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company generated $110.8 million in revenue and $13.9 million in net income, with six-month revenue at $191.2 million and net income of $13.6 million Q2 Statement of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $110,841 | $99,249 | | Gross Profit | $41,202 | $39,997 | | Income from Operations | $15,998 | $18,581 | | Net Income | $13,855 | $11,802 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was $1.7 million, a sharp decline from $50.7 million in the same period of 2024, while net cash used in investing activities was $10.3 million and financing activities used $10.2 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,737 | $50,701 | | Net Cash Used in Investing Activities | ($10,342) | ($4,485) | | Net Cash Used in Financing Activities | ($10,220) | ($65,734) | | Net Decrease in Cash | ($18,825) | ($19,518) | [Reconciliation of GAAP to Non-GAAP Measures](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) The company provides detailed reconciliations of GAAP to non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Net Income, by excluding items like interest, taxes, depreciation, amortization, equity-based compensation, and specific litigation expenses related to wire insulation shrinkback to offer a clearer view of core operating performance, with Q2 2025 net income of $13.9 million reconciled to an Adjusted EBITDA of $24.5 million - Non-GAAP measures are used by management to compare performance across periods on a consistent basis by excluding items not considered indicative of core operating performance, such as wire insulation shrinkback expenses and related litigation costs[25](index=25&type=chunk)[26](index=26&type=chunk) Q2 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Description | Amount | | :--- | :--- | | **Net Income** | **$13,855** | | Interest expense | $2,236 | | Interest income | ($76) | | Income tax expense | $3,117 | | Depreciation expense | $1,439 | | Amortization of intangibles | $1,896 | | Equity-based compensation | $2,593 | | Gain on sale of asset | ($3,134) | | Wire insulation shrinkback litigation expenses | $2,546 | | **Adjusted EBITDA** | **$24,472** | [Forward-Looking Statements and Risk Factors](index=5&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section details forward-looking statements concerning future results and operations and outlines significant risks that could impact the business, including fluctuations in demand for solar energy, potential losses from the wire insulation shrinkback issue, supply chain disruptions, product defects, competition, and macroeconomic pressures - The company identifies several key risk factors that could materially affect future performance, including[20](index=20&type=chunk)[21](index=21&type=chunk) - Diminished demand for solar energy projects[20](index=20&type=chunk)[21](index=21&type=chunk) - Failure to accurately estimate or recover costs related to the wire insulation shrinkback matter[20](index=20&type=chunk)[21](index=21&type=chunk) - Supply chain disruptions and trade restrictions[20](index=20&type=chunk)[21](index=21&type=chunk) - Defects or performance problems in products[20](index=20&type=chunk)[21](index=21&type=chunk) - Increased competition in the EBOS market[20](index=20&type=chunk)[21](index=21&type=chunk) - Adverse macroeconomic conditions[20](index=20&type=chunk)[21](index=21&type=chunk)

PORTLAND, Tenn., Aug. 05, 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 second quarter ended June 30, 2025. "The year is shaping up to be very strong. We delivered revenue above the high end ...

Revenues are expected to be $104.44 million, up 5.2% from the year-ago quarter. Estimate Revisions Trend The consensus EPS estimate for the quarter has been revised 1.72% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Wall Street expects a year-over-year decline in earnings on higher revenues when Shoals Technologies Group (SHLS) reports results for the quarter ended June ...

Core Viewpoint - Shoals Technologies Group (SHLS) shows potential as a stock pick due to its recent technical performance and positive earnings estimate revisions [1][4]. Technical Analysis - SHLS has surpassed the 20-day moving average, indicating a short-term bullish trend [1][2]. - The 20-day simple moving average is favored by traders for its ability to smooth out short-term price trends and signal trend reversals [2]. Performance Metrics - Over the past four weeks, SHLS has gained 23.5% [4]. - The company currently holds a Zacks Rank 2 (Buy), suggesting further upward movement potential [4]. Earnings Estimates - There have been two upward revisions for SHLS's earnings estimates for the current fiscal year, with no downward revisions, indicating strong investor confidence [4][5]. - The consensus earnings estimate has also increased, reinforcing the bullish outlook for the stock [4].

Core Viewpoint - The "One Big Beautiful Bill" (OBBB) introduced by President Trump is significantly impacting the U.S. renewable energy sector, shifting market expectations and prompting analysts to downgrade several solar companies while creating "winners" and "losers" in the industry [1] Winners and Losers - Companies favored under the new policy include First Solar (FSLR.US), Bloom Energy (BE.US), and Sunrun (RUN.US), which are expected to benefit from expanded subsidy policies and favorable technology licensing [2] - Conversely, Fluence Energy (FLNC.US), Nextracker (NXT.US), Shoals Technologies (SHLS.US), and Enlight Renewable Energy (ENLT.US) face greater policy resistance and market saturation risks, leading to rating downgrades for these firms [2] Utility Solar Outlook - The outlook for utility-scale solar projects appears bleak, as the bill accelerates the expiration of tax incentives for solar and wind energy, with potential construction deadlines and grid access bottlenecks limiting project deployment [3] - Nextracker and Shoals have had their ratings downgraded from "outperform" to "neutral," with Nextracker's target price reduced by 3% to $65 [3] Manufacturing and Storage Boost - Domestic clean energy manufacturers are expected to be the biggest beneficiaries of the OBBB, with the 45X manufacturing tax credit retained and restrictions placed on foreign entities from receiving subsidies [4] - Target prices for Canadian Solar (CSIQ.US) and First Solar have been adjusted upward, reflecting their eligibility for subsidies due to U.S. manufacturing [4] Fuel Cells and Nuclear Energy Favor - The bill reinstates a 30% investment tax credit for natural gas fuel cells, benefiting companies like Bloom Energy, which sees its target price raised by 19% to $31 [5] - New nuclear technologies also receive extended tax credit support until 2033, positioning the nuclear sector as a long-term winner under the OBBB [5] Broad Impact on Clean Energy Technology - While the OBBB retains manufacturing subsidies and storage incentives, the accelerated exit of solar and wind support policies may lead to a short-term demand surge followed by uncertainty [7] - The bill significantly restricts opportunities for Chinese companies to receive U.S. clean energy subsidies, posing challenges for firms reliant on Chinese manufacturing for batteries or solar panels [7]

Company Overview - Shoals Technologies (NASDAQ: SHLS) is a notable entity in the solar energy sector, possessing patented technology for building electrical balance of system solutions [1]. Investment Strategy - The company emphasizes diversification across different asset classes and investment methods to meet various short-term and long-term goals [1]. - It adopts a "long only" investment approach, avoiding shorting companies, and engages in delta-neutral options strategies to capitalize on stock or fund price stability [1]. Options Trading - The company is a proponent of various options strategies, including covered calls, iron condors, butterflies, calendar spreads, and call-put spreads, indicating a comprehensive approach to options trading [1].

One company to watch right now is Shoals Technologies Group (SHLS) . SHLS is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 14.23, which compares to its industry's average of 15.59. Over the last 12 months, SHLS's Forward P/E has been as high as 17.31 and as low as 7.04, with a median of 10.85. Investors will also notice that SHLS has a PEG ratio of 0.59. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a ...

Core Insights - Value investing remains a popular strategy for identifying undervalued stocks in various market conditions [2] - Zacks has developed a Style Scores system to categorize stocks, with a focus on the "Value" category for value investors [3] Company Analysis: Array Technologies (ARRY) - Array Technologies holds a Zacks Rank of 2 (Buy) and a Value grade of A, with a P/E ratio of 10.06 compared to the industry average of 17.02 [4] - The Forward P/E for ARRY has fluctuated between 5.23 and 12.17 over the past 52 weeks, with a median of 7.82 [4] - ARRY has a PEG ratio of 0.46, lower than the industry average of 0.76, with its PEG ratio ranging from 0.28 to 1.22 in the past year [5] Company Analysis: Shoals Technologies Group (SHLS) - Shoals Technologies Group also has a Zacks Rank of 2 (Buy) and a Value Score of A, with a forward earnings multiple of 14.79 [6][7] - The PEG ratio for SHLS is 0.62, compared to the industry average of 0.76, with its PEG ratio ranging from 0.29 to 0.72 over the past year [7] - SHLS has a P/B ratio of 1.79, while the industry average is 1.98, with SHLS's P/B fluctuating between 0.84 and 2.18 in the last 12 months [8] Overall Value Assessment - Both Array Technologies and Shoals Technologies Group exhibit strong value characteristics, indicating they may be undervalued in the current market [9]

Core Insights - Shoals Technologies Group, Inc. has secured a contract with CJR Renewables to provide its Big Lead Assembly (BLA) for the 110 MW Alcones project in Chile, marking a significant step in the company's expansion into South America [1][3] - The BLA system is designed to enhance energy yield, reduce the levelized cost of energy, and simplify installation processes, thereby improving long-term reliability of solar installations [2][3] - Once operational, the Alcones project is expected to supply electricity to over 86,000 households and prevent more than 62,000 tons of CO₂ emissions annually [3] Company Overview - Shoals Technologies Group is a leader in electrical balance of systems (EBOS) solutions for the energy transition market, recognized for its innovative technologies that enhance installation efficiency and system performance [4] - The company has a strong track record of delivering high-quality EBOS solutions that exceed industry standards, positioning itself as a key player in the renewable energy sector [3][4]