Shoals Technologies Group, Inc. Reports Financial Results for First Quarter 2023
– Revenue of
– System Solutions Revenue of
– Gross Margin of
– Backlog and Awarded Orders of
– Raising 2023 Outlook –
PORTLAND, Tenn., May 08, 2023 (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 first quarter ended March 31, 2023.
“Shoals had an exceptional first quarter, delivering record revenue and earnings. We grew revenue
“Backlog and awarded orders increased
“Solar market conditions remain favorable, both for the industry as a whole and for Shoals specifically. We believe we are just starting to realize the full power of the Shoals platform and we could not be more excited about the future,” concluded Mr. Tolnar.
First Quarter 2023 Financial Results
Revenue grew
Gross profit increased
General and administrative expenses were
Income from operations was
Net income increased
Adjusted EBITDA* increased
Adjusted net income* grew
* A reconciliation of the Company’s non-GAAP measures to the most closely comparable U.S. generally accepted accounting principles (“GAAP”) measures are found within this release.
Backlog and Awarded Orders
The Company’s backlog and awarded orders as of March 31, 2023 were
Backlog represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders are orders we are in the process of documenting a contract but for which a contract has not yet been signed.
Full Year 2023 Outlook
Based on current business conditions, business trends and other factors, for the year ending December 31, 2023, the Company is raising its outlook as follows:
- Revenue to be in the range of
$480 million to$510 million - Adjusted EBITDA to be in the range of
$145 million to$160 million - Adjusted net income to be in the range of
$92 million to$102 million
Based on current business conditions, business trends and other factors, for the year ending December 31, 2023, the Company continues to expect:
- Interest expense to be in the range of
$22 t o$26 million - Capital expenditures to be in the range of
$8 t o$12 million
A reconciliation of Adjusted EBITDA and Adjusted net income guidance, which are forward-looking measures that are non-GAAP measures, to the most closely comparable GAAP 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. 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.
Webcast and Conference Call Information
Company management will host a webcast and conference call on May 8, 2023 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 10020955. The telephonic replay will be available until 11:59 p.m. Eastern Time on May 22, 2023.
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.
Some of the key factors that could cause actual results to differ from our expectations include, among others, lower than anticipated growth in demand for solar energy projects and EV charging infrastructure; macroeconomic events, including heightened inflation, rises in interest rates and a potential recession; defects or performance problems in our products or their parts, including those manufactured by third parties, and related warranty claims; supply chain challenges, including as a result of additional duties and charges on imports and exports; our failure to, or incurrence of significant costs in order to, obtain, maintain, protect, defend or enforce our intellectual property and other proprietary rights; governmental policies and regulations, and any subsequent changes, which may present technical, regulatory and economic barriers; changes in the United States trade environment; failure to integrate acquired businesses, and delays, disruptions or quality control problems in our manufacturing operations in part due to vendor concentration.
Other risks and uncertainties are described in the section entitled "Item 1A. Risk Factors" of our periodic reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q. 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
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 and (v) equity-based compensation. We define Adjusted Net Income as net income attributable to Shoals Technologies Group, Inc. plus (i) net income impact from assumed exchange of Class B common stock to Class A common stock as of the beginning of the earliest period presented, (ii) amortization of intangibles, (iii) amortization of deferred financing costs and (iv) equity-based compensation, 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 stock outstanding for the applicable period, which assumes the exchange of all outstanding Class B common stock for Class A common stock as of the beginning of the earliest period presented.
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; 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 and net income attributable to Shoals Technologies Group, Inc. 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) | ||||||||
| March 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 6,460 | $ | 8,766 | ||||
| Accounts receivable, net | 75,415 | 50,575 | ||||||
| Unbilled receivables | 19,661 | 16,713 | ||||||
| Inventory, net | 73,729 | 72,854 | ||||||
| Other current assets | 8,094 | 4,632 | ||||||
| Total Current Assets | 183,359 | 153,540 | ||||||
| Property, plant and equipment, net | 18,388 | 16,870 | ||||||
| Goodwill | 69,941 | 69,941 | ||||||
| Other intangible assets, net | 54,563 | 56,585 | ||||||
| Deferred tax assets | 476,283 | 291,634 | ||||||
| Other assets | 6,067 | 6,325 | ||||||
| Total Assets | $ | 808,601 | $ | 594,895 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 21,936 | $ | 9,481 | ||||
| Accrued expenses and other | 17,382 | 17,882 | ||||||
| Deferred revenue | 23,450 | 23,259 | ||||||
| Long-term debt—current portion | 2,000 | 2,000 | ||||||
| Total Current Liabilities | 64,768 | 52,622 | ||||||
| Revolving line of credit | 45,000 | 48,000 | ||||||
| Long-term debt, less current portion | 188,836 | 189,063 | ||||||
| Other long-term liabilities | 3,917 | 4,221 | ||||||
| Total Liabilities | 302,521 | 293,906 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, | — | — | ||||||
| Class A common stock, | 2 | 1 | ||||||
| Class B common stock, | — | 1 | ||||||
| Additional paid-in capital | 457,304 | 256,894 | ||||||
| Accumulated earnings | 48,774 | 34,478 | ||||||
| Total stockholders’ equity attributable to Shoals Technologies Group, Inc. | 506,080 | 291,374 | ||||||
| Non-controlling interests | — | 9,615 | ||||||
| Total stockholders' equity | 506,080 | 300,989 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 808,601 | $ | 594,895 | ||||
| Shoals Technologies Group, Inc. | ||||||||
| Condensed Consolidated Statements of Operations (Unaudited) | ||||||||
| (in thousands, except per share amounts) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | 105,086 | $ | 67,976 | ||||
| Cost of revenue | 56,829 | 41,684 | ||||||
| Gross profit | 48,257 | 26,292 | ||||||
| Operating expenses | ||||||||
| General and administrative expenses | 19,992 | 13,919 | ||||||
| Depreciation and amortization | 2,165 | 2,366 | ||||||
| Total operating expenses | 22,157 | 16,285 | ||||||
| Income from operations | 26,100 | 10,007 | ||||||
| Interest expense, net | (5,996 | ) | (3,836 | ) | ||||
| Income before income taxes | 20,104 | 6,171 | ||||||
| Income tax expense | (3,121 | ) | (1,522 | ) | ||||
| Net income | 16,983 | 4,649 | ||||||
| Less: net income attributable to non-controlling interests | 2,687 | 2,009 | ||||||
| Net income attributable to Shoals Technologies Group, Inc. | $ | 14,296 | $ | 2,640 | ||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Earnings per share of Class A common stock: | ||||||||
| Basic | $ | 0.10 | $ | 0.02 | ||||
| Diluted | $ | 0.10 | $ | 0.02 | ||||
| Weighted average shares of Class A common stock outstanding: | ||||||||
| Basic | 146,409 | 112,211 | ||||||
| Diluted | 147,107 | 112,240 | ||||||
| Shoals Technologies Group, Inc. | ||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| (in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income | $ | 16,983 | $ | 4,649 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 2,507 | 2,694 | ||||||
| Amortization/write off of deferred financing costs | 350 | 276 | ||||||
| Equity-based compensation | 7,523 | 3,831 | ||||||
| Provision for credit losses | 308 | — | ||||||
| Provision for obsolete or slow-moving inventory | 2,322 | — | ||||||
| Deferred taxes | 2,999 | 1,419 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (25,148 | ) | (25,388 | ) | ||||
| Unbilled receivables | (2,948 | ) | (2,616 | ) | ||||
| Inventory | (3,197 | ) | (11,111 | ) | ||||
| Other assets | (3,281 | ) | (3,421 | ) | ||||
| Accounts payable | 12,521 | (2,106 | ) | |||||
| Accrued expenses and other | (1,217 | ) | 1,124 | |||||
| Deferred revenue | 191 | 4,790 | ||||||
| Net Cash Provided by (Used in) Operating Activities | 9,913 | (25,859 | ) | |||||
| Cash Flows from Investing Activities | ||||||||
| Purchases of property, plant and equipment | (2,003 | ) | (882 | ) | ||||
| Net Cash Used in Investing Activities | (2,003 | ) | (882 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Distributions to non-controlling interests | (2,628 | ) | (2,938 | ) | ||||
| Employee withholding taxes related to net settled equity awards | (3,532 | ) | (1,297 | ) | ||||
| Payments on term loan facility | (500 | ) | (500 | ) | ||||
| Proceeds from revolving credit facility | 5,000 | 35,000 | ||||||
| Repayments of revolving credit facility | (8,000 | ) | — | |||||
| Other | (556 | ) | — | |||||
| Net Cash Provided By (Used in) Financing Activities | (10,216 | ) | 30,265 | |||||
| Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | (2,306 | ) | 3,524 | |||||
| Cash, Cash Equivalents and Restricted Cash—Beginning of Period | 8,766 | 9,557 | ||||||
| Cash, Cash Equivalents and Restricted Cash—End of Period | $ | 6,460 | $ | 13,081 | ||||
| Shoals Technologies Group, Inc. | ||||||||
| Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share (“EPS”) (Unaudited) | ||||||||
| Reconciliation of Net Income to Adjusted EBITDA (in thousands): | ||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net income | $ | 16,983 | $ | 4,649 | ||||
| Interest expense, net | 5,996 | 3,836 | ||||||
| Income tax expense | 3,121 | 1,522 | ||||||
| Depreciation expense | 484 | 424 | ||||||
| Amortization of intangibles | 2,022 | 2,270 | ||||||
| Equity-based compensation | 7,523 | 3,831 | ||||||
| Adjusted EBITDA | $ | 36,129 | $ | 16,532 | ||||
| Reconciliation of Net Income Attributable to Shoals Technologies Group, Inc. to Adjusted Net Income (in thousands): | ||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net income attributable to Shoals Technologies Group, Inc. | $ | 14,296 | $ | 2,640 | ||||
| Net income impact from assumed exchange of Class B common stock to Class A common stock (a) | 2,687 | 2,009 | ||||||
| Adjustment to the provision for income tax (b) | (653 | ) | (475 | ) | ||||
| Tax effected net income | 16,330 | 4,174 | ||||||
| Amortization of intangibles | 2,022 | 2,270 | ||||||
| Amortization of deferred financing costs | 350 | 276 | ||||||
| Equity-based compensation | 7,523 | 3,831 | ||||||
| Tax impact of adjustments (c) | (2,404 | ) | (1,508 | ) | ||||
| Adjusted Net Income | $ | 23,821 | $ | 9,043 | ||||
| (a) | Reflects net income to Class A common stock from assumed exchange of corresponding shares of our Class B common stock held by the 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 March 31, | ||||||
| 2023 | 2022 | |||||
| Statutory U.S. Federal income tax rate | 21.0 | % | 21.0 | % | ||
| Permanent adjustments | 0.3 | % | 0.1 | % | ||
| State and local taxes (net of federal benefit) | 3.0 | % | 2.5 | % | ||
| Effective income tax rate for Adjusted Net Income | 24.3 | % | 23.6 | % | ||
| (c) | 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 March 31, | ||||||||
| 2023 | 2022 | |||||||
| Diluted weighted average shares of Class A common stock outstanding, excluding Class B common stock | 147,107 | 112,240 | ||||||
| Assumed exchange of Class B common stock to Class A common stock | 23,110 | 54,794 | ||||||
| Adjusted diluted weighted average shares outstanding | 170,217 | 167,034 | ||||||
| Adjusted Net Income | $ | 23,821 | $ | 9,043 | ||||
| Adjusted Diluted EPS | $ | 0.14 | $ | 0.05 | ||||
