Shoals Technologies (US:SHLS)2024-11-12 12:53Financial Performance - Revenue for Q3 2024 was $102,165 thousand, a decrease of 24% compared to $134,209 thousand in Q3 2023[15] - Gross profit for Q3 2024 increased to $25,376 thousand, compared to $14,150 thousand in Q3 2023, reflecting a significant improvement[15] - Operating expenses decreased to $20,852 thousand in Q3 2024 from $24,721 thousand in Q3 2023, a reduction of approximately 16%[15] - Net loss attributable to Shoals Technologies Group, Inc. was $267 thousand in Q3 2024, an improvement from a net loss of $9,828 thousand in Q3 2023[15] - The company reported a net income of $4,774 thousand for the nine months ended September 30, 2024, compared to $26,079 thousand for the same period in 2023[15] - Net income for the nine months ended September 30, 2024, was $16,309,000, a decrease of 37.9% compared to $26,079,000 for the same period in 2023[20] - The net income attributable to Shoals Technologies Group, Inc. for the nine months ended September 30, 2024, was $16.3 million, a decrease of 30.1% from $23.4 million in the same period of 2023[55] Assets and Liabilities - Total current assets decreased to $190.769 million as of September 30, 2024, down from $227.186 million at December 31, 2023, representing a decline of approximately 16%[13] - Cash and cash equivalents dropped to $11.106 million from $22.707 million, a decrease of about 51%[13] - Accounts receivable decreased to $95.301 million from $107.118 million, reflecting a decline of approximately 11%[13] - Inventory increased to $65.854 million, up from $52.804 million, indicating a rise of about 25%[13] - Total liabilities decreased to $256.105 million from $298.997 million, a reduction of approximately 14%[13] - Long-term debt, net of deferred financing costs, decreased to $141,750,000 as of September 30, 2024, from $179,445,000 on December 31, 2023, a reduction of 21.0%[49] - Total accrued expenses decreased to $12,865,000 as of September 30, 2024, from $22,907,000 on December 31, 2023, indicating a 43.9% reduction[43] Equity and Capital - Additional paid-in capital increased to $479.764 million from $470.542 million, reflecting a growth of approximately 2.6%[13] - Retained earnings rose to $90.761 million from $74.452 million, an increase of about 22%[13] - Total stockholders' equity as of September 30, 2024, was $545,196 thousand, reflecting an increase from $524,640 thousand as of September 30, 2023[19] - The company has a revolving line of credit of $141.750 million, significantly higher than the previous $40 million[13] - The company repurchased $25,331,000 of Class A common stock during the financing activities, indicating a commitment to returning value to shareholders[20] - On June 11, 2024, the company announced a share repurchase program authorizing the repurchase of up to $150 million of Class A common stock, with an estimated completion date of December 31, 2025[65] Cash Flow and Expenses - Net cash provided by operating activities was $66,400,000, slightly up from $65,508,000 in the prior year, indicating a growth of 1.4%[20] - Cash paid for interest decreased to $13,452,000 in 2024 from $17,380,000 in 2023, a reduction of 22.4%[22] - Interest expense decreased to $(3,088) thousand in Q3 2024 from $(5,899) thousand in Q3 2023, indicating improved financial management[15] - Amortization expense related to intangible assets was $1.9 million for the three months ended September 30, 2024, down from $2.0 million in 2023, a decline of 5.0%[42] Warranty and Litigation - The company reported a current portion of warranty liability at $34.743 million, up from $31.099 million, an increase of about 12%[13] - The company recorded warranty liability decrease to $15,374,000 in 2024 from $3,669,000 in 2023, reflecting a significant increase in warranty claims[20] - The company recorded warranty expense of $13,809,000 for the three months ended September 30, 2024, compared to $50,421,000 for the same period in 2023, a decrease of 72.6%[46] - The company is involved in ongoing litigation related to defective wire insulation, which may impact future financial results[72] - The company has filed a complaint against Prysmian for damages related to defective wire, seeking compensatory and punitive damages[72] - The company has consolidated multiple derivative lawsuits related to fiduciary duty claims against current and former officers and directors[76] Market and Future Outlook - The company faces risks related to potential project delays and macroeconomic factors, including high inflation and interest rates, which could impact future growth[9] - The company anticipates continued growth in the energy transition market, focusing on expanding its electrical balance of systems solutions[24] - Customer A accounted for 30.4% of revenue in 2024, down from 34.1% in 2023, indicating a diversification in revenue sources[31] Stock and Compensation - The company granted 1,447,831 restricted stock units (RSUs) during the nine months ended September 30, 2024, with grant date fair values ranging from $5.12 to $15.39 per unit[58] - The company recognized equity-based compensation of $1.3 million for the three months ended September 30, 2024, compared to $5.1 million for the same period in 2023[60] - As of September 30, 2024, the company had $15.7 million of unrecognized compensation costs expected to be recognized over a weighted average period of 1.9 years[60] - The company had 1,838,740 outstanding RSUs as of September 30, 2024, with a weighted average price of $13.13[59] Revenue Breakdown - Revenue from system solutions in Q3 2024 was $78.587 million, down 21% from $99.461 million in Q3 2023[82] - Revenue from components in Q3 2024 was $23.578 million, a decline of 32% compared to $34.748 million in Q3 2023[82] - Total revenue for Q3 2024 was $102.165 million, a decrease of 24% compared to $134.209 million in Q3 2023[82]