Shoals Technologies Group (NasdaqGM:SHLS) Update / briefing March 31, 2026 10:00 AM ET Company ParticipantsJeff Tolnar - PresidentKishan Ponnadurai - BESS Product Line ManagerMatt Tractenberg - VP of Finance and Investor RelationsConference Call ParticipantsChristine Cho - Clean Tech AnalystChristine ChoGood morning, everyone. Thank you for joining us today for this webinar on battery energy storage solutions with Shoals Technologies. My name is Christine Cho, and I'm the clean tech analyst here at Barclays ...

Financial Data and Key Metrics Changes - The company's backlog reached a record of $5.5 billion, reflecting a significant increase in U.S. contracting activity driven by the One Big Beautiful Bill Act and rising demand forecasts [7] - Q1 2026 revenue was $475 million, representing 14% of the full-year guidance and nearly double the 18% of full-year 2025 revenue earned during Q1 2025 [16] - Adjusted gross profit for the quarter was $27 million, with an adjusted gross margin of 5.6%, below the full-year expectation of 11%-13% [16][17] - Total liquidity at the end of the quarter was approximately $1.1 billion, including $477 million in cash and $617 million available through credit facilities [19] Business Line Data and Key Metrics Changes - The company signed over $750 million in new orders globally during Q1, with more than $500 million from the U.S., indicating strong growth from prior quarters [8] - The pipeline increased by approximately $7 billion, or 30%, with the majority of growth coming from the U.S. market [9][22] - The company is engaged in discussions covering 36 GWh of projects with data centers, which are not yet included in the pipeline, representing a significant upside opportunity [10] Market Data and Key Metrics Changes - The U.S. market is expected to represent about half of the total order growth for the year, consistent with previous patterns [9] - The company is seeing growing demand from developers, independent power producers (IPPs), utilities, and data centers [9] Company Strategy and Development Direction - The company is focused on expanding its domestic content strategy and enhancing its supply chain to support growth [12][14] - The management emphasized the importance of converting the growing pipeline into signed orders and is concentrating efforts on this conversion [9] - The company is optimistic about the future of the battery storage market in the U.S., driven by changing dynamics and increasing demand [31] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed the fiscal 2026 guidance, supported by greater revenue visibility and confidence in execution [8] - The company expects continued margin improvement driven by strong execution, supply chain-enabled cost advantages, and innovation as energy storage demand grows [18] - Management expressed confidence in meeting commitments to customers and delivering long-term value for shareholders [22] Other Important Information - The company resolved two pending legal matters, including a settlement related to the Moss Landing incident and a court dismissal of a $230 million claim related to the Diablo Canyon project [15] - The domestic supply chain is performing well, with cell and module production ahead of schedule [12] Q&A Session Summary Question: Clarification on ASC ownership resolution - Management stated that the main objective is to ensure access to PFE-compliant cells at competitive terms and that they expect ASC to resolve ownership issues without company involvement [28] Question: Competitive environment in data centers - Management acknowledged increased competition but emphasized that the competitive landscape has not fundamentally changed, with a diversification of battery cell suppliers [33] Question: Data center pipeline conversion - Management indicated that none of the new data center projects have been converted to backlog yet, but they expect some conversion in the second half of the year [44] Question: Incremental costs related to projects - Management explained that the $20 million impact is due to changes in project scope and schedule, and they plan to recover these costs through contracts with customers [50] Question: Margin pressures and competitive landscape - Management confirmed that they do not foresee major changes in competitiveness or tariffs affecting their outlook [56] Question: Vertical integration and M&A opportunities - Management expressed that they do not see a strong need for vertical integration and are comfortable working with contracted manufacturers [114]