Shoals Technologies Group, Inc. Reports Financial Results for Second Quarter 2022
Shoals Technologies Group reported a 23% revenue growth year-over-year, achieving a record $73.5 million in Q2 2022. The company also posted a record gross profit of $28.6 million. Backlog and awarded orders surged 63% year-over-year, reaching $327.2 million. System Solutions contributed 77% of total revenue. However, net income declined to $7.3 million from $9.2 million in the prior-year period due to increased general and administrative expenses. The company reaffirmed its 2022 revenue outlook between $300 million and $325 million.
- Revenue increased 23% to $73.5 million.
- Gross profit reached a record $28.6 million.
- Backlog and awarded orders rose 63% to $327.2 million.
- Strong demand for combine-as-you-go solutions.
- Net income decreased to $7.3 million, down from $9.2 million.
- General and administrative expenses increased to $13.3 million.
- Gross profit margin declined to 38.9% from 43.8%.
– Revenue Grew
– Record Gross Profit of
– Backlog and Awarded Orders Up
– System Solutions Represented
– Reaffirms 2022 Outlook –
PORTLAND, Tenn., Aug. 15, 2022 (GLOBE NEWSWIRE) -- Shoals Technologies Group, Inc. (“Shoals” or the “Company”) (Nasdaq: SHLS), a leading provider of electrical balance of system (“EBOS”) solutions for solar, battery storage and electric vehicle charging infrastructure, today announced results for its second quarter ended June 30, 2022.
“Shoals navigated the significant challenges and uncertainty the industry faced during the second quarter to deliver record revenue and gross profit, while maintaining gross margin within our targeted range,” said Jason Whitaker, Chief Executive Officer of Shoals.
“We continue to see robust growth across our business, with backlog and awarded orders up
Second Quarter 2022 Financial Results
Revenue grew
Gross profit increased
General and administrative expenses were
Income from operations was
Net income was
Adjusted EBITDA was
Adjusted net income was
Backlog and Awarded Orders
The Company’s backlog and awarded orders on June 30, 2022 were
Full Year 2022 Outlook
Based on current business conditions, business trends and other factors, for the year ending December 31, 2022, the Company continues to expect:
- Revenues to be in the range of
$300 million to$325 million - Adjusted EBITDA to be in the range of
$77 million to$86 million - Adjusted net income to be in the range of
$45 million to$53 million
A reconciliation of the Company’s non-GAAP measures to the applicable GAAP measures are found within this release.
Webcast and Conference Call Information
Company management will host a webcast and conference call on August 15, 2022, at 5:00 p.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.
The conference call can be accessed live over the phone by dialing 1-855-327-6837 (domestic) or +1-631-891-4304 (international). A telephonic replay will be available approximately two hours after the call by dialing 1-844-512-2921 or for international callers, +1-412-317-6671. The conference ID for the live call and pin number for the replay is 10019579. The replay will be available until 11:59 p.m. Eastern Time on August 29, 2022.
About Shoals Technologies Group, Inc.
Shoals Technologies Group, Inc. is a leading provider of electrical balance of systems (EBOS) solutions for solar, storage, and electric vehicle charging infrastructure. 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 20 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
Phone: 615-323-9836
Forward-Looking Statements
This 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, business strategies, technology developments, financing and investment plans, dividend policy, competitive position, industry and regulatory environment, potential growth opportunities and the effects of competition. 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. 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
(1) A reconciliation of projected adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, which are forward-looking measures that are not prepared in accordance with GAAP, to the most directly comparable GAAP financial measures, 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 measures 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 and adjusted net income per share. We expect to continue to exclude these items in future disclosures of these non-GAAP measures and may also exclude other similar items that may arise in the future (collectively, "non-GAAP adjustments").
Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share (“EPS”)
We define Adjusted EBITDA as net income (loss) plus (i) interest expense, net, (ii) income tax expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) payable pursuant to the tax receivable agreement adjustment, (vi) loss on debt repayment, (vii) equity-based compensation, (viii) acquisition-related expenses, (ix) COVID-19 expenses and (x) non-recurring and other expenses. We define Adjusted Net Income as net income (loss) attributable to Shoals Technologies Group, Inc. plus (i) net income impact from pro forma conversion of Class B common stock to Class A common stock, (ii) amortization of intangibles, (iii) payable pursuant to the tax receivable agreement adjustment, (iv) loss on debt repayment, (v) amortization of deferred financing costs, (vi) equity-based compensation, (vii) acquisition-related expenses, (viii) COVID-19 expenses and (ix) non-recurring and other 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 shares outstanding for the applicable period, which assumes the pro forma exchange of all outstanding Class B common shares for Class A common shares.
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 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 EBITDA, Adjusted Net Income and Adjusted Diluted EPS: (i) as factors in evaluating management’s performance when determining incentive compensation; (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 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; in the case of Adjusted EBITDA, does not reflect income tax expense or benefit for periods prior to the reorganization; 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 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 net income to Adjusted EBITDA, 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)
June 30, 2022 | December 31, 2021 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 10,094 | $ | 5,006 | |||
Accounts receivable, net | 57,827 | 31,499 | |||||
Unbilled receivables | 14,580 | 13,533 | |||||
Inventory, net | 64,961 | 38,368 | |||||
Other current assets | 8,827 | 5,042 | |||||
Total Current Assets | 156,289 | 93,448 | |||||
Property, plant and equipment, net | 16,830 | 15,574 | |||||
Goodwill | 69,941 | 69,436 | |||||
Other intangible assets, net | 60,727 | 65,236 | |||||
Deferred tax assets | 175,059 | 176,958 | |||||
Other assets | 17,771 | 5,762 | |||||
Total Assets | $ | 496,617 | $ | 426,414 | |||
Liabilities and Stockholders' Equity (Deficit) | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 24,258 | $ | 19,985 | |||
Accrued expenses and other | 25,297 | 9,569 | |||||
Current portion of payable pursuant to the tax receivable agreement | 3,583 | — | |||||
Long-term debt—current portion | 2,000 | 2,000 | |||||
Total Current Liabilities | 55,138 | 31,554 | |||||
Revolving line of credit | 85,140 | 55,140 | |||||
Long-term debt, less current portion | 189,515 | 189,913 | |||||
Payable pursuant to the tax receivable agreement, less current portion | 153,591 | 156,374 | |||||
Other long-term liabilities | 4,793 | 931 | |||||
Total Liabilities | 488,177 | 433,912 | |||||
Stockholders’ Equity (Deficit) | |||||||
Preferred stock, | — | — | |||||
Class A common stock, | 1 | 1 | |||||
Class B common stock, | 1 | 1 | |||||
Additional paid-in capital | 101,243 | 95,684 | |||||
Accumulated deficit | (86,091 | ) | (93,133 | ) | |||
Total stockholders’ equity attributable to Shoals Technologies Group, Inc. | 15,154 | 2,553 | |||||
Non-controlling interests | (6,714 | ) | (10,051 | ) | |||
Total stockholders' equity (deficit) | 8,440 | (7,498 | ) | ||||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 496,617 | $ | 426,414 |
Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Revenue | $ | 73,490 | $ | 59,722 | $ | 141,466 | $ | 105,326 | |||||||
Cost of revenue | 44,897 | 33,543 | 86,581 | 60,373 | |||||||||||
Gross profit | 28,593 | 26,179 | 54,885 | 44,953 | |||||||||||
Operating Expenses | |||||||||||||||
General and administrative expenses | 13,265 | 10,018 | 27,184 | 16,834 | |||||||||||
Depreciation and amortization | 2,344 | 2,062 | 4,710 | 4,130 | |||||||||||
Total Operating Expenses | 15,609 | 12,080 | 31,894 | 20,964 | |||||||||||
Income from Operations | 12,984 | 14,099 | 22,991 | 23,989 | |||||||||||
Interest expense, net | (4,170 | ) | (3,620 | ) | (8,006 | ) | (7,329 | ) | |||||||
Payable pursuant to the tax receivable agreement adjustment | — | (1,664 | ) | — | (1,664 | ) | |||||||||
Loss on debt repayment | — | — | — | (15,990 | ) | ||||||||||
Income (loss) before income taxes | 8,814 | 8,815 | 14,985 | (994 | ) | ||||||||||
Income tax benefit (expense) | (1,511 | ) | 339 | (3,033 | ) | 1,814 | |||||||||
Net income | 7,303 | 9,154 | 11,952 | 820 | |||||||||||
Less: net income (loss) attributable to non-controlling interests | 2,901 | 4,596 | 4,910 | (879 | ) | ||||||||||
Net income attributable to Shoals Technologies Group, Inc. | $ | 4,402 | $ | 4,558 | $ | 7,042 | $ | 1,699 | |||||||
Three Months Ended June 30, | Six Months Ended June 30, 2022 | Period from January 27, 2021 to June 30, 2021 | |||||||||||||
2022 | 2021 | ||||||||||||||
Earnings (loss) per share of Class A common stock: | |||||||||||||||
Basic | $ | 0.04 | $ | 0.05 | $ | 0.06 | $ | (0.01 | ) | ||||||
Diluted | $ | 0.04 | $ | 0.05 | $ | 0.06 | $ | (0.01 | ) | ||||||
Weighted average shares of Class A common stock outstanding: | |||||||||||||||
Basic | 112,489 | 93,544 | 112,350 | 93,542 | |||||||||||
Diluted | 112,616 | 166,827 | 112,428 | 93,542 |
Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Six Months Ended June 30, | |||||||
2022 | 2021 | ||||||
Cash Flows from Operating Activities | |||||||
Net income | $ | 11,952 | $ | 820 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 5,402 | 4,808 | |||||
Amortization/write off of deferred financing costs | 684 | 5,415 | |||||
Equity-based compensation | 7,896 | 4,172 | |||||
Provision for obsolete or slow-moving inventory | 443 | — | |||||
Deferred taxes | 2,847 | (524 | ) | ||||
Gain on sale of assets | — | 61 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (26,259 | ) | (15,973 | ) | |||
Unbilled receivables | (1,047 | ) | (3,003 | ) | |||
Inventory | (27,404 | ) | (6,151 | ) | |||
Other assets | (2,059 | ) | (4,631 | ) | |||
Accounts payable | 4,060 | (410 | ) | ||||
Accrued expenses and other | 16,742 | (362 | ) | ||||
Net Cash Used in Operating Activities | (6,743 | ) | (14,114 | ) | |||
Cash Flows Used In Investing Activities | |||||||
Purchases of property, plant and equipment | (2,149 | ) | (1,736 | ) | |||
Net Cash Used in Investing Activities | (2,149 | ) | (1,736 | ) | |||
Cash Flows from Financing Activities | |||||||
Distributions to non-controlling interest | (4,566 | ) | (2,973 | ) | |||
Employee withholding taxes related to net settled equity awards | (1,297 | ) | (137 | ) | |||
Deferred financing costs | — | (94 | ) | ||||
Payments on term loan facility | (1,000 | ) | (151,750 | ) | |||
Proceeds from revolving credit facility | 38,000 | 34,000 | |||||
Proceeds from issuance of Class A common stock sold in an IPO, net of underwriting discounts and commissions | — | 278,833 | |||||
Purchase of LLC Interests with proceeds from IPO | — | (124,312 | ) | ||||
Deferred offering costs | — | (9,619 | ) | ||||
Net Cash Provided By Financing Activities | 23,137 | 18,948 | |||||
Net Increase in Cash, Cash Equivalents and Restricted Cash | 14,245 | 3,098 | |||||
Cash, Cash Equivalents and Restricted Cash—Beginning of Period | 9,557 | 10,073 | |||||
Cash, Cash Equivalents and Restricted Cash—End of Period | $ | 23,802 | $ | 13,171 |
Shoals Technologies Group, Inc.
Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share (“EPS”) (Unaudited)
(in thousands)
Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Net income | $ | 7,303 | $ | 9,154 | $ | 11,952 | $ | 820 | |||||
Interest expense, net | 4,170 | 3,620 | 8,006 | 7,329 | |||||||||
Income tax benefit (expense) | 1,511 | (339 | ) | 3,033 | (1,814 | ) | |||||||
Depreciation expense | 470 | 411 | 893 | 816 | |||||||||
Amortization of intangibles | 2,238 | 1,996 | 4,509 | 3,992 | |||||||||
Payable pursuant to the TRA adjustment (a) | — | 1,664 | — | 1,664 | |||||||||
Loss on debt repayment | — | — | — | 15,990 | |||||||||
Equity-based compensation | 4,063 | 2,780 | 7,896 | 4,172 | |||||||||
Acquisition-related expenses | 12 | — | 12 | — | |||||||||
COVID-19 expenses (b) | — | 106 | — | 161 | |||||||||
Non-recurring and other expenses (c) | — | 1,239 | — | 1,578 | |||||||||
Adjusted EBITDA | $ | 19,767 | $ | 20,631 | $ | 36,301 | $ | 34,708 |
(a) Represents an adjustment to eliminate the remeasurement of the payable pursuant to the TRA.
(b) Represents costs incurred as a direct impact from the COVID-19 pandemic, disinfecting and reconfiguration of facilities, medical professionals to conduct daily screenings of employees, premium pay during the pandemic to hourly workers in 2020 and direct legal costs associated with the pandemic.
(c) Represents certain costs associated with non-recurring professional services, Oaktree’s expenses and other costs.
Reconciliation of Net Income (Loss) Attributable to Shoals Technologies Group, Inc. to Adjusted Net Income (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net income attributable to Shoals Technologies Group, Inc. | $ | 4,402 | $ | 4,558 | $ | 7,042 | $ | 1,699 | |||||||
Net income impact from pro forma conversion of Class B common stock to Class A common stock (a) | 2,901 | 4,596 | 4,910 | (879 | ) | ||||||||||
Adjustment to the provision for income tax (b) | (686 | ) | (942 | ) | (1,159 | ) | 192 | ||||||||
Tax effected net income | 6,617 | 8,212 | 10,793 | 1,012 | |||||||||||
Amortization of intangibles | 2,238 | 1,996 | 4,509 | 3,992 | |||||||||||
Amortization of deferred financing costs | 408 | 305 | 684 | 675 | |||||||||||
Payable pursuant to the TRA adjustment (c) | — | 1,664 | — | 1,664 | |||||||||||
Loss on debt repayment | — | — | — | 15,990 | |||||||||||
Equity-based compensation | 4,063 | 2,780 | 7,896 | 4,172 | |||||||||||
Acquisition-related expenses | 12 | — | 12 | — | |||||||||||
COVID-19 expenses (d) | — | 106 | — | 161 | |||||||||||
Non-recurring and other expenses (e) | — | 1,239 | — | 1,578 | |||||||||||
Tax impact of adjustments (f) | (1,588 | ) | (1,635 | ) | (3,093 | ) | (5,806 | ) | |||||||
Adjusted Net Income | $ | 11,750 | $ | 14,667 | $ | 20,801 | $ | 23,438 |
(a) Reflects net income (loss) to Class A common shares from pro forma exchange of corresponding shares of our Class B common shares held by our Founder and management.
(b) Shoals Technologies Group, Inc. is subject to U.S. Federal income taxes, in addition to state and local taxes with respect to its allocable share of any net taxable income of Shoals Parent LLC. The adjustment to the provision for income tax reflects the effective tax rates below, assuming Shoals Technologies Group, Inc. owns
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Statutory U.S. Federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | |||
Permanent adjustments | 0.1 | % | 2.0 | % | 0.1 | % | 2.0 | % | |||
State and local taxes (net of federal benefit) | 2.5 | % | (2.5 | )% | 2.5 | % | (1.1 | )% | |||
Effective income tax rate for Adjusted Net Income | 23.6 | % | 20.5 | % | 23.6 | % | 21.9 | % |
(c) Represents an adjustment to eliminate the remeasurement of the payable pursuant to the TRA.
(d) Represents costs incurred as a direct impact from the COVID-19 pandemic, disinfecting and reconfiguration of facilities, medical professionals to conduct daily screenings of employees, premium pay during the pandemic to hourly workers in 2020 and direct legal costs associated with the pandemic.
(e) Represents certain costs associated with non-recurring professional services, Oaktree’s expenses and other costs.
(f) Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (in thousands, except per share):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Diluted weighted average shares of Class A common shares outstanding, excluding Class B common shares | 112,616 | 93,760 | 112,428 | 93,650 | |||||||
Assumed pro forma conversion of Class B common shares to Class A common shares | 54,635 | 73,067 | 54,585 | 73,067 | |||||||
Adjusted diluted weighted average shares outstanding | 167,251 | 166,827 | 167,013 | 166,717 | |||||||
Adjusted Net Income (a) | $ | 11,750 | $ | 14,667 | $ | 20,801 | $ | 23,438 | |||
Adjusted Diluted EPS | $ | 0.07 | $ | 0.09 | $ | 0.12 | $ | 0.14 |
(a) Represents Adjusted Net Income for the full period presented.
FAQ
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