Shoals Technologies (US:SHLS)2022-05-17 02:13Financial Data and Key Metrics Changes - Revenue for Q1 2022 grew by 49% year-over-year to $68 million, with gross profit increasing by 40% to $26.3 million, setting new records for the company [13][25][26] - Gross margins improved sequentially by over 550 basis points to 38.7%, indicating recovery from lower margins experienced in the previous quarter [13][26] - Adjusted EBITDA rose 17% to $16.5 million compared to $14.1 million in the prior year [27] Business Line Data and Key Metrics Changes - Components revenue surged by 73% year-over-year, driven by battery storage shipments and onboarding new customers [15][25] - System Solutions revenue increased by 40% year-over-year, representing 69% of total revenue, down from 73% in the prior period [25][26] - The average project size for converted customers increased significantly, with seven customers representing up to 2 gigawatts of demand for the year [16] Market Data and Key Metrics Changes - The backlog in awarded orders reached a record $302.3 million, up 67% year-over-year, reflecting strong customer demand [28] - The company is expanding its international presence, receiving orders from three new international customers during the quarter [19] Company Strategy and Development Direction - The company is investing heavily in SG&A to support growth initiatives, including expanding product development capabilities and scaling up the EV business [14] - Strategic partnerships with Ernst & Young and Luminace Brookfield are expected to generate new sales opportunities [21] - The company is focused on transitioning customers to new system solutions and expanding its international sales presence [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the revenue outlook despite potential project delays due to the US Department of Commerce's investigation into solar cells and panels [22][23] - The company reaffirmed its revenue guidance for 2022, expecting revenues between $300 million and $325 million, representing a year-over-year increase of 41% to 52% [29] - Management noted that while backlog growth may slow due to project delays, the current book of business is sufficient to meet plans until the tariff situation is resolved [24] Other Important Information - The company increased its credit facility by $50 million to $150 million, providing additional liquidity for working capital needs [32] - The certification process for new products, including BLA 2.0, is underway, with expected shipments in the second half of the year [18][81] Q&A Session Summary Question: Revenue breakdown for EV business versus solar - Management did not provide specific revenue breakdowns for the EV business but expressed excitement about the growth opportunities in that area [37][38] Question: Risks for 2023 revenue growth - Management indicated that while they are not providing guidance for 2023, they are comfortable with the low end of their 2022 outlook and are monitoring project activity closely [39][41] Question: Revenue from storage in Q1 - Management acknowledged growing revenue opportunities in storage but did not provide specific figures [44][45] Question: Working capital needs in Q2 and beyond - Management expects working capital usage to increase through Q2 and early Q3, with a decrease anticipated in Q4 [53][54] Question: Geographic diversity in quotation activity - Management did not release specific geographic data related to quotation activity but acknowledged the growing international presence [65][66] Question: EV infrastructure growth timelines - Management highlighted significant funding opportunities for school bus electrification and expects this to drive growth in the EV segment [68][70] Question: International business and project commitments - Management confirmed that the three international customers mentioned are committed to specific projects outside the US [76][78]