Shoals Technologies (NASDAQ: SHLS) grows revenue but posts Q1 loss
Filing Impact
Filing Sentiment
Form Type
10-Q
Shoals Technologies Group reported strong top-line growth but flat profitability in Q1 2026. Revenue rose 74.9% year over year to $140.6 million, driven by higher project volumes and market share gains. Gross margin narrowed to 29.2% from 35.0% as tariffs, higher materials costs, and facility-related amortization increased cost of revenue.
The company posted a small net loss of $0.3 million, similar to the prior year, as legal and settlement costs offset operating gains. Adjusted EBITDA improved to $21.1 million from $13.5 million. Operating cash flow turned to an outflow of $41.4 million, mainly from inventory builds and working-capital changes, and cash ended at $1.9 million.
Backlog and awarded orders totaled $758.0 million, with significant volumes expected to ship within 12 months. Revolving credit facility borrowings increased to $181.8 million with $15.4 million of remaining availability. The estimated total loss tied to the wire insulation shrinkback issue remains $73.0 million, with $71.8 million incurred and a remaining warranty liability of $1.2 million. A securities litigation settlement of $70.0 million was preliminarily approved, of which $64.8 million is covered by insurance, leaving a $5.3 million expense this quarter.
Positive
- Strong growth and backlog: Q1 2026 revenue increased 74.9% to $140.6 million and backlog plus awarded orders reached $758.0 million, with a large portion expected to convert within 12 months.
- Improved adjusted profitability: Adjusted EBITDA rose to $21.1 million from $13.5 million, and Adjusted Net Income more than doubled to $12.1 million, showing better underlying operating performance despite reported net loss.
Negative
- Cash flow and leverage pressure: Operating cash flow shifted to a $41.4 million outflow, inventory expanded sharply, and revolving credit facility borrowings increased to $181.8 million, reducing liquidity headroom.
- Margin and legal headwinds: Gross margin declined to 29.2% due to tariffs and higher costs, while a $70.0 million securities settlement (with $5.3 million current expense) and ongoing shrinkback and IP litigation add uncertainty.
Insights
Revenue and backlog are strong, but cash flow, tariffs, and legal matters weigh on near-term quality of results.
Shoals Technologies Group delivered Q1 2026 revenue of $140.6 million, up 74.9%, with system solutions contributing 78.8% and backlog plus awarded orders reaching $758.0 million. This supports a solid demand outlook across solar, storage, and critical power infrastructure.
However, gross margin fell to 29.2%, pressured by $3.8 million of additional tariffs, higher material costs, and increased right-of-use asset amortization from its consolidated facility. Adjusted EBITDA improved to $21.1 million, but reported earnings were held back by a $5.3 million securities litigation settlement expense.
Operating cash flow swung to a $41.4 million outflow, driven largely by a $69.6 million inventory build and working-capital shifts, while revolver borrowings climbed to $181.8 million. The wire insulation shrinkback loss estimate remains $73.0 million with $71.8 million incurred, and the company continues to pursue recovery from its supplier and advance multiple IP and derivative cases. Subsequent filings may clarify how quickly cash flow recovers as inventories normalize and legal items resolve.
Key Figures
Revenue: $140.6 million
Gross margin: 29.2%
Net loss: $0.3 million
+5 more
8 metrics
Revenue
$140.6 million
Three months ended March 31, 2026; up 74.9% year over year
Gross margin
29.2%
Q1 2026 gross profit as a percentage of revenue; down from 35.0% in Q1 2025
Net loss
$0.3 million
Three months ended March 31, 2026; similar to $0.3 million loss in prior year
Adjusted EBITDA
$21.1 million
Q1 2026, compared with $13.5 million in Q1 2025
Operating cash flow
($41.4 million)
Net cash used in operating activities for three months ended March 31, 2026
Backlog and awarded orders
$758.0 million
Total as of March 31, 2026 across solar and related projects
Revolving credit borrowings
$181.8 million
Outstanding under Revolving Credit Facility as of March 31, 2026
Wire shrinkback loss estimate
$73.0 million
Total estimated loss for wire insulation shrinkback matter; $71.8 million incurred
Key Terms
EBOS, wire insulation shrinkback, Adjusted EBITDA, backlog and awarded orders, +2 more
6 terms
EBOS financial
"We design, manufacture and sell a variety of products used by the solar and battery storage industries, including Solar BLA Solutions; Homeruns, Interconnection and Extension Solutions; Combiners and Re-Combiners; Load Break Disconnects and Transition Solutions; Wireless Performance Monitoring; and BESS."
wire insulation shrinkback financial
"The Company was notified by certain customers that a subset of wire harnesses used in its EBOS solutions has presented unacceptable levels of contraction of wire insulation (“wire insulation shrinkback”)."
Adjusted EBITDA financial
"We define Adjusted EBITDA as net loss plus/(minus) (i) interest expense, (ii) interest income, (iii) income tax expense/(benefit), (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) gain (loss) on sale of asset (viii) wire insulation shrinkback litigation expenses, (ix) plant optimization expenses, (x) shareholder litigation expenses, and (xi) litigation settlement expense, net of insurance recoveries."
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
backlog and awarded orders financial
"As of March 31, 2026, we had $758.0 million of backlog and awarded orders."
Investment Tax Credits financial
"Under the IRA, taxpayers investing in solar projects may qualify for Investment Tax Credits (“ITC”) or elect to claim Production Tax Credits (“PTC”) for eligible facilities."
Investment tax credits are government discounts on an investor’s tax bill tied to putting money into certain projects or assets, effectively returning a portion of the upfront cost as a tax saving. They matter to investors because they improve after-tax returns and can make otherwise marginal projects more profitable—like a manufacturer offering a coupon that lowers the net price of a major purchase—so they influence valuation, cash flow forecasts and investment decisions.
Revolving Credit Facility financial
"As of March 31, 2026, there were $181.8 million of outstanding borrowings, $2.8 million of outstanding letters of credit, and $15.4 million of availability under the Revolving Credit Facility."
A revolving credit facility is a type of loan that a business can borrow from whenever it needs money, up to a set limit. It’s like having a credit card for companies—allowing them to borrow, pay back, and borrow again as needed, providing flexibility for managing cash flow or funding short-term expenses.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended March 31, 2026
or
For the transition period from _________ to _________
Commission File Number: 001-39942
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
| (Registrant’s telephone number, including area code) | |||||
| N/A | ||
| (Former name, former address and former fiscal year, if changed since last report) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of April 29, 2026, the registrant had 167,771,817 shares of Class A common stock and no shares of Class B common stock outstanding. This number excludes 3,908,387 shares held by the registrant as Treasury Stock.
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TABLE OF CONTENTS
| ITEM | PAGE | |||||||
| PART I | ||||||||
| Item 1. | Financial Statements (Unaudited) | 1 | ||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 | ||||||
| Item 4. | Controls and Procedures | 32 | ||||||
| PART II | ||||||||
| Item 1. | Legal Proceedings | 32 | ||||||
| Item 1A. | Risk Factors | 33 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 | ||||||
| Item 3. | Defaults Upon Senior Securities | 33 | ||||||
| Item 4. | Mine Safety Disclosures | 33 | ||||||
| Item 5. | Other Information | 33 | ||||||
| Item 6. | Exhibits | 33 | ||||||
| SIGNATURES | 35 | |||||||
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”) of Shoals Technologies Group, Inc. (the “Company,” “we,” “us,” “our,” and “Shoals”) 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; expectations regarding the utility-scale solar market; project delays; regulatory environment, including changes or potential changes to such environment; the effects of strategic pricing actions, volume discounts and customer mix in our key markets; pipeline and orders; business strategies, plans and expectations, including sales and marketing goals; technology developments; financing and investment plans; warranty and liability accruals and estimates of loss or gains; estimates of potential loss related to the wire insulation shrinkback matter (as defined in Note 8 to the notes to condensed consolidated financial statements); litigation strategy and expected benefits or results from the current intellectual property and wire insulation shrinkback litigation; potential growth opportunities, including opportunities associated with our entry into new markets; and production and capacity at our plants. 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.
Important factors that could cause actual results to differ materially from expectations are included in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part I and Item 1A “Risk Factors” of Part II of this Form 10-Q, as well as Part I Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025.
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. Some of the key factors that could cause actual results to differ from our expectations include the following:
•If demand for solar energy projects diminishes, we may not be able to grow, and our financial results, business and prospects could be materially adversely impacted.
•If we fail to accurately estimate the potential losses related to the wire insulation shrinkback matter, or fail to recover the costs and expenses incurred by us from the supplier, our profit margins, financial results, business and prospects could be materially adversely impacted.
•The interruption of the flow of raw materials from international vendors has disrupted our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports.
•We are subject to risks from changes to trade restrictions, import tariffs, anti-dumping and countervailing duties. Such changes could adversely affect the amount or timing of our revenue, results of operations or cash flows.
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•We have modified, and in the future may modify, our business strategy to abandon lines of business or implement new lines of business. Modifying our business strategy could have an adverse effect on our business and financial results.
•Amounts included in our backlog and awarded orders may not result in actual revenue or translate into profits.
•Defects or performance problems in our products or their parts, whether due to manufacturing, installation, or use, including those related to the wire insulation shrinkback matter, have a high consequence of failure and can lead to equipment and systems failure, physical injury or death, and in the past have, and in the future could, result in loss of customers, reputational damage and decreased revenue, and materially adversely impact our business, financial condition and results of operations.
•We have experienced, and may experience in the future, delays, disruptions, quality control or reputational problems in our manufacturing operations in part due to our vendor concentration.
•If we fail to retain our key personnel and attract additional qualified personnel, our business strategy and prospects could suffer.
•Our products are primarily manufactured and shipped from our production facilities in Tennessee, and any damage or disruption at these facilities may harm our business.
•We may face difficulties integrating and optimizing our consolidated Tennessee-based manufacturing and distribution operations and may not fully realize the anticipated benefits.
•Safety issues may subject us to penalties, negatively impact customer relationships, result in higher operating costs, and negatively impact employee morale and turnover.
•The market for our products is competitive, and we face increased competition as new and existing competitors introduce EBOS system solutions and components, which could negatively affect our results of operations and market share.
•Macroeconomic conditions, including high inflation, high interest rates, and geopolitical instability impacts our business and financial results.
•We are subject to risks related to our ability to protect, enforce, and defend our intellectual property.
•Acquisitions, joint ventures and/or investments and the failure to integrate acquired businesses, could disrupt our business and negatively impact our results of operations.
•A loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment could harm our business and negatively impact revenue, results of operations, and cash flow.
•A significant drop in the price of electricity may harm our business, financial condition, results of operations and prospects.
•Failure of our information technology systems, including those managed by third parties, or cybersecurity incidents could disrupt our operations and adversely affect our results of operations.
•Our expansion outside the U.S. could subject us to additional business, financial, regulatory and competitive risks.
•Our indebtedness could adversely affect our financial flexibility, restrict our current and future operations, and our competitive position
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•Existing electric utility industry, federal state and municipal renewable energy and solar energy policies and regulations, including zoning and siting laws, and any subsequent changes, present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our products or harm our ability to compete.
•Changes in tax laws or regulations that are applied adversely to us, or our customers could materially adversely affect our business, financial condition, results of operations and prospects.
•The market price of our Class A common stock may decline and may continue to be subject to significant volatility.
•Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management.
•Our amended and restated certificate of incorporation also provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Shoals Technologies Group, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except shares and par value)
| March 31, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Unbilled receivables | |||||||||||
| Inventory | |||||||||||
| Insurance receivable | |||||||||||
| Other current assets | |||||||||||
| Total Current Assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Deferred tax assets | |||||||||||
| Right-of-use operating lease assets | |||||||||||
| Other assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other | |||||||||||
| Litigation settlement liability | |||||||||||
| Warranty liability—current portion | |||||||||||
| Deferred revenue | |||||||||||
| Total Current Liabilities | |||||||||||
| Revolving line of credit | |||||||||||
| Right-of-use operating lease liabilities | |||||||||||
| Warranty liability, less current portion | |||||||||||
| Other long-term liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Commitments and Contingencies (Note 13) | |||||||||||
| Stockholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Class A common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Total Stockholders' Equity | |||||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
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Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Revenue | $ | $ | |||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Litigation settlement expense, net of recoveries | ( | ||||||||||||||||||||||
| Gain (loss) on sale of assets | ( | ||||||||||||||||||||||
| Foreign currency gain (loss) | ( | ||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax benefit (expense) | ( | ||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | |||||||||||||||||||
| Loss per share of Class A common stock: | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | |||||||||||||||||||
| Diluted | $ | ( | $ | ( | |||||||||||||||||||
| Weighted average shares of Class A common stock outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
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Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(in thousands, except shares)
For the three months ended March 31, 2026
| Class A Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Activity under equity-based compensation plan | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
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Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (continued)
(in thousands, except shares)
For the three months ended March 31, 2025
| Class A Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Activity under equity-based compensation plan | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Vesting of restricted / performance stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
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Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization/write off of deferred financing costs | |||||||||||
| Equity-based compensation | |||||||||||
| Provision for obsolete or slow-moving inventory | |||||||||||
| Provision for warranty expense | |||||||||||
| Deferred taxes | ( | ||||||||||
| Other | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Unbilled receivables | |||||||||||
| Inventory | ( | ( | |||||||||
| Other assets | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other | ( | ||||||||||
| Warranty liability | ( | ( | |||||||||
| Litigation receivable and settlement liabilities | |||||||||||
| Deferred revenue | ( | ( | |||||||||
| Net Cash Provided by (Used in) Operating Activities | ( | ||||||||||
| Cash Flows from Investing Activities | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Net Cash Used in Investing Activities | ( | ( | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Employee withholding taxes related to net settled equity awards | ( | ( | |||||||||
| Proceeds from revolving credit facility | |||||||||||
| Repayments of revolving credit facility | ( | ||||||||||
| Net Cash Provided by (Used in) Financing Activities | ( | ||||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | ( | ||||||||||
| Cash and Cash Equivalents—Beginning of Period | |||||||||||
| Cash and Cash Equivalents—End of Period | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| Supplemental Cash Flows Information: | 2026 | 2025 | |||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid (refunded or received) for taxes | $ | ( | $ | ( | |||||||
| Non-cash investing and financing activities: | |||||||||||
| Purchased equipment not yet paid for | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
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Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Business
Shoals Technologies Group, Inc. (the “Company”) is headquartered in Portland, Tennessee and is a leading design-engineering company and manufacturer of advanced electrical infrastructure solutions for mission‑critical applications across solar photovoltaic (PV), battery energy storage solutions (BESS), and data center power systems for the global energy transition market.
As of March 31, 2026, the Company owns directly or indirectly five subsidiaries: Shoals Intermediate Parent Inc., Shoals Technologies Group, LLC, Shoals International, LLC, Shoals Energy Spain, S.L. and Shoals Energy Australia Pty Ltd.
2. Summary of Significant Accounting Policies
Basis of Accounting and Presentation
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation.
Unaudited Interim Financial Information
The accompanying condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, the condensed consolidated statements of operations, changes in stockholders’ equity and cash flows for the three months ended March 31, 2026 and 2025 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2026 and the results of its operations and its cash flows for the three months ended March 31, 2026 and 2025. The financial data and other information disclosed in these notes related to the three months ended March 31, 2026 and 2025 are also unaudited. The results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period. The balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements
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Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates include revenue recognition, allowance for credit losses, useful lives of property, plant and equipment and other intangible assets, impairment of long-lived assets, allowance for obsolete or slow moving inventory, valuation allowance on deferred tax assets, equity-based compensation expense and warranty liability.
Customer Concentrations
The Company had the following revenue concentration representing approximately 10% or more of revenue for the three months ended March 31, 2026 and 2025 and related accounts receivable concentration as of March 31, 2026 and December 31, 2025:
| 2026 | 2025 | ||||||||||||||||||||||
| Revenue % | Accounts Receivable % | Revenue % | Accounts Receivable % | ||||||||||||||||||||
| Customer A | % | % | % | % | |||||||||||||||||||
| Customer B | % | % | % | % | |||||||||||||||||||
| Customer C | % | % | % | % | |||||||||||||||||||
| Customer D | % | % | % | % | |||||||||||||||||||
Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs may be used to measure fair value, as follows:
•Level 1 – Quoted prices in active markets for identical assets or liabilities.
•Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.
The fair values of the Company’s cash and cash equivalents, accounts receivable, and accounts payable approximate their carrying values due to their short maturities. The carrying value of the Company’s revolving line of credit approximates fair value and is considered level 2, as it is based on current market rates at which the Company could borrow funds with similar terms.
Recent Accounting Pronouncements
Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
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Notes to Condensed Consolidated Financial Statements (Unaudited)
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs, and enhances disclosure requirements. This update is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. ASU 2025-06 is not expected to significantly change our current accounting for internal-use software.
In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants Received by Business Entities, to establish guidance on the recognition, measurement, and presentation of government grants received by business entities. The new guidance leverages the principles in the accounting framework for government assistance in International Accounting Standard 20 "Accounting for Government Grants and Disclosure of Government Assistance". The new guidance is effective for public business entities in annual periods beginning after December 15, 2028, with early adoption permitted. ASU 2025-10 is not expected to significantly change our current accounting for incentives from federal, state, and local governments.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
3. Accounts Receivable
Accounts receivable, net consists of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Accounts receivable | $ | $ | |||||||||
| Less: allowance for credit losses | ( | ( | |||||||||
| Accounts receivable, net | $ | $ | |||||||||
4. Inventory
Inventory consists of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
| Allowance for obsolete or slow-moving inventory | ( | ( | |||||||||
| Inventory | $ | $ | |||||||||
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Notes to Condensed Consolidated Financial Statements (Unaudited)
5. Property, Plant and Equipment
Property, plant, and equipment, net consists of the following (in thousands):
| Estimated Useful Lives (Years) | |||||||||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||||||||
| Land | N/A | $ | $ | ||||||||||||||
| Building and land improvements | |||||||||||||||||
| Machinery and equipment | |||||||||||||||||
| Furniture and fixtures | |||||||||||||||||
| Vehicles | |||||||||||||||||
| Construction in progress | |||||||||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||||||||
| Property, plant and equipment, net | $ | $ | |||||||||||||||
Depreciation expense for the three months ended March 31, 2026 and 2025 was $2.2 million and $1.4 million, respectively. During the three months ended March 31, 2026 and 2025, $1.8 million and $1.2 million, respectively, of depreciation expense was allocated to cost of revenue and $0.4 million and $0.2 million, respectively, of depreciation expense was allocated to operating expenses.
6. Goodwill and Other Intangible Assets
Goodwill
There were no changes in the carrying amount of goodwill during the three months ended March 31, 2026. Goodwill totaled $69.9
Other Intangible Assets
Other intangible assets, net consists of the following (in thousands):
| Estimated Useful Lives (Years) | March 31, 2026 | December 31, 2025 | |||||||||||||||
| Amortizable: | |||||||||||||||||
| Costs: | |||||||||||||||||
| Customer relationships | $ | $ | |||||||||||||||
| Developed technology | |||||||||||||||||
| Trade names | |||||||||||||||||
| Total amortizable intangibles | |||||||||||||||||
| Accumulated amortization: | |||||||||||||||||
| Customer relationships | |||||||||||||||||
| Developed technology | |||||||||||||||||
| Trade names | |||||||||||||||||
| Total accumulated amortization | |||||||||||||||||
| Total other intangible assets, net | $ | $ | |||||||||||||||
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Notes to Condensed Consolidated Financial Statements (Unaudited)
Amortization expense related to intangible assets amounted to $1.9
7. Accrued Expenses and Other
Accrued expenses and other consists of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Accrued compensation | $ | $ | |||||||||
| Accrued interest | |||||||||||
| Accrued rebates | |||||||||||
| Accrued professional fees | |||||||||||
| Other accrued expenses | |||||||||||
| Total accrued expenses and other | $ | $ | |||||||||
8. Warranty Liability
General Warranty
The Company offers an assurance-type warranty for its products against manufacturer defects which does not contain a service element. For these assurance-type warranties, a provision for estimated future costs related to warranty expense is recorded when they are probable and reasonably estimable. As of March 31, 2026 and December 31, 2025 our estimated general warranty liability was approximately $0.5 million and $0.3 million, respectively. The Company recorded total warranty expense related to general warranty matters of $0.5 million and $0.3 million for three months ended March 31, 2026 and 2025, respectively.
Wire Insulation Shrinkback Warranty
The Company was notified by certain customers that a subset of wire harnesses used in its EBOS solutions has presented unacceptable levels of contraction of wire insulation (“wire insulation shrinkback”). Based upon the Company’s assessment, the Company currently believes the wire insulation shrinkback is related to defective wire manufactured by Prysmian Cables and Systems USA, LLC (“Prysmian”). Based on the Company’s continued analysis of information available as of the date of this Quarterly Report, the Company determined that a loss was both probable and reasonably estimable. For the period ended March 31, 2025, the Company disclosed a range of potential loss from $73.0 million to $160.0 million. The Company recorded no warranty expense related to this matter for the three months ended March 31, 2025.
As of March 31, 2026, the estimate of potential losses remains unchanged from the estimate provided as of December 31, 2025. In accordance with ASC 450, Contingencies, the Company believes the total estimated loss for this matter is $73.0 million, which represents the best estimate of the potential loss as of March 31, 2026, of which $71.8 million has been incurred to date. As of March 31, 2026, our recorded remaining warranty liability related to this matter was $1.2 million. It is possible that our liability could exceed the amount recorded, including due to additional reports of wire insulation shrinkback at previously affected and reported solar projects or at projects not previously reported or otherwise identified. Any excess amounts remain uncertain.
The estimated loss, as revised, continues to be based on several assumptions, including estimated failure rates, future notification of impacted harnesses, the potential magnitude of engineering, procurement and construction firm’s labor cost to identify and perform the repair and replacement of impacted harnesses, materials replacement cost, planned remediation method, and inspection costs. While our wire insulation
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Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
shrinkback warranty liability represents our best estimate of expected losses, the Company will monitor future activity to best estimate potential losses. The Company has previously increased, and may further increase in the future, its estimated warranty liability from its current estimate based on available information, including future remediation efforts and the scope of future replacements, if any. Such increase may be material. The Company does not maintain insurance for product warranty issues and has commenced a lawsuit against Prysmian, as discussed in more detail under Wire Insulation Shrinkback Litigation section of Note 13 - Commitments and Contingencies. Because the lawsuit against Prysmian is ongoing, potential recovery from Prysmian is not considered probable as defined in ASC 450, Contingencies, and has not been considered in our estimate of the warranty liability as of March 31, 2026.
The Company recorded no
Warranty liability, which includes both general warranty and wire insulation shrinkback warranty, is estimated as follows (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Warranty liability, beginning of period | $ | $ | |||||||||||||||||||||
| Warranty expense | |||||||||||||||||||||||
| Payments | ( | ( | |||||||||||||||||||||
| Warranty liability, end of period | |||||||||||||||||||||||
| Less: current portion | |||||||||||||||||||||||
| Warranty liability, net of current portion | $ | $ | |||||||||||||||||||||
9. Long-Term Debt
Long-term debt consists of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Revolving Credit Facility | $ | $ | |||||||||
Senior Secured Credit Agreement
The Company entered into a senior secured credit agreement (as amended, the “Senior Secured Credit Agreement”), which consisted of (i) a senior secured six-year term loan facility (the “Term Loan Facility”) and (ii) a revolving credit facility (the “Revolving Credit Facility”).
On March 19, 2024, the Company entered into an amendment to the Senior Secured Credit Agreement. The amendment, among other things, (i) increased the amount available for borrowing under the Revolving Credit Facility from $150.0 million to $200.0 million, (ii) reduced the interest rate margin applicable to the Revolving Credit Facility by at least 0.25 %, with additional 0.25 % step-downs if the consolidated first lien secured leverage ratio does not exceed certain thresholds (which step-downs will step back up if such leverage ratio exceeds those thresholds), (iii) reduced the commitment fee applicable to the undrawn amount of the Revolving Credit Facility by at least 0.10 % with additional 0.05 % step-downs if the consolidated first lien secured leverage ratio does not exceed certain thresholds (which step-downs will step back up if such leverage ratio exceeds such thresholds), (iv) lowered the maximum consolidated leverage ratio permitted under the
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Notes to Condensed Consolidated Financial Statements (Unaudited)
Senior Secured Credit Agreement to (a) 4.25 :1.00 from April 1, 2024 through March 31, 2025 and (b) thereafter, 4.00 :1.00 (with temporary increases to the maximum consolidated first lien secured leverage ratio in the event a material acquisition closes), (v) extended the maturity date applicable to the Revolving Credit Facility to March 19, 2029, the fifth anniversary of the amendment’s effective date, and (vi) amended certain covenants under the Senior Secured Credit Agreement in a manner customary for facilities of this type.
The Revolving Credit Facility bears interest at a rate equal to, at the Company’s election, either adjusted term SOFR or base rate (each, as defined in the Senior Secured Credit Agreement) plus an applicable interest rate margin, based upon the consolidated first lien secured leverage ratio. The applicable interest rate margin varies from 2.25 % to 3.00 % per annum for term benchmark loans and 1.25 % to 2.00 % per annum for base rate loans.
As of March 31, 2026, the interest rate on the Revolving Credit Facility ranged from 6.75 % to 6.81 %, which represented SOFR plus 3.00 %. As of March 31, 2026, there were $181.8 million of outstanding borrowings, $2.8 million of outstanding letters of credit, and $15.4 million of availability under the Revolving Credit Facility.
The Senior Secured Credit Agreement contains affirmative and negative covenants that are customary for financings of this type, including covenants that restrict our incurrence of indebtedness, incurrence of liens, dispositions, investments, acquisitions, restricted payments, and transactions with affiliates. The Senior Secured Credit Agreement also includes customary events of default, including the occurrence of a change of control.
As discussed above, the Revolving Credit Facility also includes a consolidated leverage ratio financial covenant that is tested on the last day of each fiscal quarter. As of March 31, 2026, the Company was in compliance with all the required covenants.
10. Earnings (Loss) per Share ("EPS")
Basic EPS of Class A common stock is computed by dividing net income by the weighted average number of shares of Class A common stock outstanding during the period (which does not include treasury stock). Diluted EPS of Class A common stock is computed similarly to basic EPS except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents using the treasury stock method, if dilutive. The Company’s restricted/performance stock units are considered common stock equivalents for this purpose.
Basic and diluted EPS of Class A common stock have been computed as follows (in thousands, except per share amounts):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) - basic and diluted | $ | ( | $ | ( | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average shares of Class A common stock outstanding - basic | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Restricted / performance stock units | |||||||||||||||||||||||
| Weighted average shares of Class A common stock outstanding - diluted | |||||||||||||||||||||||
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Notes to Condensed Consolidated Financial Statements (Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Loss per share of Class A common stock - basic | $ | ( | $ | ( | |||||||||||||||||||
| Loss per share of Class A common stock - diluted | $ | ( | $ | ( | |||||||||||||||||||
The Company generated a net loss for the three months ended March 31, 2026 and 2025, so the effect of dilutive securities was not considered because their effect would be antidilutive.
11. Equity-Based Compensation
2021 Long-Term Incentive Plan
The Shoals Technologies Group, Inc. 2021 Long-Term Incentive Plan (the “2021 Incentive Plan”) became effective on January 26, 2021. The 2021 Incentive Plan authorized 8,768,124 new shares, subject to adjustment pursuant to the 2021 Incentive Plan. On February 26, 2026, the Company filed a registration statement on Form S-8 to register an additional 7,208,912 shares of our common stock issuable under the 2021 Incentive Plan.
Restricted Stock Units
During the three months ended March 31, 2026, the Company granted 715,587 restricted stock units (“RSUs") to certain employees, officers and directors of the Company. The RSUs granted during 2026 have grant date fair values ranging from $5.96 to $10.70 per unit and vest ratably over 3 years, except director grants, which vest over 1 year.
Activity under the 2021 Incentive Plan for RSUs was as follows:
| Three Months Ended March 31, 2026 | |||||||||||
| Restricted Stock Units | Weighted Average Price | ||||||||||
| Outstanding, December 31, 2025 | $ | ||||||||||
| Granted | $ | ||||||||||
| Vested | ( | $ | |||||||||
| Forfeited | ( | $ | |||||||||
| Outstanding, March 31, 2026 | $ | ||||||||||
Performance Stock Units
During the three months ended March 31, 2026, the Company granted an aggregate of 432,943 Performance Stock Units ("PSUs") to certain executives. The PSUs granted during 2026 cliff vest after 3 years based upon the level of achievement of certain revenue and adjusted diluted EPS targets during the performance period commencing January 1, 2026 and ending on December 31, 2028, and contain a total shareholder return modifier which could increase or decrease the ultimate number of Class A common stock issued to the executives. The PSUs were valued based on assumed vesting at target and using the market value of the Class A common stock on the grant dates with a value of 10.70 .
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Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Activity under the 2021 Incentive Plan for PSUs was as follows:
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||
| Performance Stock Units | Weighted Average Price | ||||||||||||||||||||||
| Outstanding, December 31, 2025 | $ | ||||||||||||||||||||||
| Granted | $ | ||||||||||||||||||||||
| Vested | $ | ||||||||||||||||||||||
| Forfeited | ( | $ | |||||||||||||||||||||
| Outstanding, March 31, 2026 | $ | ||||||||||||||||||||||
The Company recognized equity-based compensation of $3.3 million and $2.7 million, respectively, for the three months ended March 31, 2026 and 2025. As of March 31, 2026, the Company had $23.1 million of unrecognized compensation costs which is expected to be recognized over a weighted average period of 2.3 years.
12. Stockholders’ Equity
Common Stock Economic and Voting Rights
13. Commitments and Contingencies
Litigation
The Company is from time to time subject to legal proceedings and claims, which arise in the normal course of its business. In the opinion of management and legal counsel, except as disclosed below, the amount of losses or gains that may be sustained, if any, would not have a material effect on the financial position, results of operations or cash flows of the Company. The Company records legal costs associated with loss contingencies, including fees and costs associated with preservation of evidence in connection with the wire insulation shrinkback litigation, as incurred.
Intellectual Property Litigation
The 2023 IP Litigations. On May 4, 2023, the Company filed a patent infringement complaint with the U.S. International Trade Commission (“ITC”) against Hikam America, Inc., a corporation based in Chula Vista, California, and its related foreign entities (together, “Hikam”), and Voltage LLC, a limited liability company based in Chapel Hill, North Carolina, and a related foreign entity (together, “Voltage”). The complaint primarily requests that the ITC (i) investigate unlawful imports of certain photovoltaic connectors and components that the Company alleges infringe on two valid and enforceable patents owned by the Company related to improved connectors for solar panel arrays and (ii) issue a limited exclusion order and a cease and desist order against the Hikam respondents and the Voltage respondents to bar them from importing, marketing, distributing, selling, offering for sale, licensing, advertising, transferring, or otherwise using the infringing photovoltaic connectors and components in and into the United States. Also on May 4, 2023, the Company filed complaints against Hikam in the U.S. District Court for the Southern District of California, and against Voltage in the U.S.
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Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
District Court for the Middle District of North Carolina on the same subject matter. The District Court actions seek injunctive relief and monetary damages. The District Court actions have been stayed pending the final disposition of the ITC investigation. On August 30, 2024, the Administrative Law Judge issued a Final Initial Determination finding that Voltage violated Section 337 of the Tariff Act of 1930, as amended, by importing infringing LYNX trunk bus products into the United States. However, on January 14, 2025, the ITC reversed the Administrative Law Judge’s Final Initial Determination and issued a Notice of a Commission Final Determination Finding No Violation of Section 337. The Company appealed the ITC’s decision to the Federal Circuit on February 11, 2025. The appeal is pending. On February 11, 2026, the Company and Hikam filed a voluntary, joint-dismissal that will end the legal proceedings as they pertain to Hikam. The Company’s case against Voltage remains stayed pending a ruling in the appeal.
The 2025 IP Litigations. On January 9, 2025, the Company filed a patent infringement complaint at the ITC against Voltage. This complaint cites two new patents (the ‘375 and ‘376 Patents) that cover the Company’s BLA solutions. Also on January 9, 2025, the Company filed a complaint against Voltage in the U.S. District Court for the Middle District of North Carolina “(the District Court case”) on the same subject matter. These complaints seek injunctive relief and, in the District Court case, damages for reasonable royalty and lost profits.
On February 6, 2026, an Administrative Law Judge at the ITC issued an Initial Determination finding that Voltage’s products infringed on the Company’s ‘375 and ‘376 patents. The ITC is expected to issue a Final Determination by June 2026.
In the District Court case, a bench trial on certain equitable defenses raised by Voltage was held February 25 - March 5, 2027. A jury trial to resolve the Company’s infringement claims and other remaining matters is scheduled for August 2026. On February 17, 2026, the Company filed a motion for preliminary injunction seeking additional, immediate relief to prevent the alleged infringing activities from continuing while the case is pending.
The Company is vigorously pursuing these 2023 IP Litigations and the 2025 IP Litigations. However, at this stage, the Company is unable to predict the outcome or impact on its business and financial results. The Company is accounting for these matters as a gain contingency, and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450, Contingencies.
Wire Insulation Shrinkback Litigation
On October 31, 2023, the Company filed a complaint against Prysmian in the U.S. District Court for the Middle District of Tennessee, Nashville Division. The Company filed an amended complaint on December 4, 2024. The amended complaint alleges that the Company suffered damages caused by defective wire Prysmian sold to the Company from approximately 2019 through approximately 2022. The amended complaint alleges that the wire at issue in the litigation has presented unacceptable levels of wire insulation shrinkback. The amended complaint includes, among other causes of action, product liability, breach of contract, breach of warranty, indemnity, and negligence claims. Mediation in this case is ongoing.
The Company seeks compensatory and punitive damages, recovery of all costs and expenses incurred by the Company in connection with the identification, repair and replacement of the Prysmian wire alleged to be defective, and other legal and equitable relief. The Company is vigorously pursuing its amended complaint, and as the Company continues to assess this matter, it may, from time to time, amend, update or supplement the amended complaint to, among other things, increase the damages sought for various purposes, including in accordance with increases to the Company’s estimated warranty liability and related expenses related to this matter. At this stage, the Company is unable to predict the outcome of this litigation or the impact on its business and financial results. The Company is accounting for this matter as a gain contingency, and will
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Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450, Contingencies.
Securities Litigation
On March 21, 2024, a purported stockholder filed a putative securities class action against the Company and certain of its current and former executive officers in the United States District Court for the Middle District of Tennessee, Nashville Division, captioned Westchester Putnam Counties Heavy & Highway Laborers Local 60 Benefits Fund v. Shoals Technologies Group, Inc., et al. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, based on allegedly false and misleading statements and omissions relating to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, recovery of fees and costs, and other relief that the court may find appropriate. On May 8, 2024 and May 15, 2024, respectively, similar class action complaints were filed in the same court against the Company and certain current and former officers, but these complaints also named as defendants the Company’s Board of Directors, and the selling stockholders and underwriters of the Company’s secondary public offering. While the allegations are largely similar to the first complaint, these new complaints also alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. These cases were captioned Oklahoma Police Pension and Retirement System v. Shoals Technologies Group, Inc. and Kissimmee Utility Authority Employees Retirement Plan v. Shoals Technologies Group, Inc.
On May 24, 2024, all of these cases were consolidated into one action captioned In re Shoals Technologies Group, Inc. Securities Litigation. Plaintiff Erste Asset Management GmbH has been appointed Lead Plaintiff. On December 9, 2024, Lead Plaintiff and plaintiff Kissimmee Utility Authority Employees’ Retirement Plan filed a consolidated complaint, and on February 4, 2025, Plaintiffs filed an amended complaint. The Company filed a motion to dismiss the amended complaint on February 18, 2025. Plaintiffs filed an opposition to the motion to dismiss on April 21, 2025. On September 30, the court issued its ruling on the motion to dismiss, granting it in part and denying it in part. On January 21, 2025, Plaintiffs filed a motion for class certification, appointment of class representatives, and approval of class counsel. Defendants’ opposition to Plaintiffs’ motion is due April 6, 2026. Plaintiffs’ reply brief in support of their motion is due May 21, 2026. In December 2025 and January 2026, the Company and the Plaintiffs engaged in court-ordered mediation. On April 28, 2026, the Company and the Plaintiffs submitted a Stipulation and Agreement of Settlement to the United States District Court for the Middle District of Tennessee, Nashville Division. On May 4, 2026, the District Court granted preliminary approval of the settlement. A settlement hearing for final approval is scheduled for September 2026. The preliminary settlement amount is $70.0 million, of which $64.8 million is fully covered by the Company’s insurance. Accordingly, the Company has recorded an accrual for litigation settlement and corresponding insurance receivable on the Consolidated Balance Sheet as of March 31, 2026. The Company has recorded a settlement expense of $5.3 million on the Consolidated Statement of Operations for the three months ended March 31, 2026.
Derivative Litigation
On May 16, 2024, a derivative stockholder action was filed against certain current and former officers and directors of the Company in the United States District Court for the Middle District of Tennessee, Nashville Division, captioned Corwin v. Forth, et al. The complaint asserts claims for breach of fiduciary duty relating to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, restitution, the adoption of certain governance reforms, recovery of fees and costs, and other relief that the court may find appropriate. The Company is named as a nominal defendant only. On July 24, 2024, another derivative stockholder action was filed against certain current and former officers and directors of the Company in the same court, captioned Ouellet v. Whitaker et al. The complaint asserts, among others, claims for breach of fiduciary duty, gross mismanagement, abuse of control, waste of corporate assets, unjust enrichment, and
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Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
violations of Section 14(a) of the Exchange Act, and insider trading, all of which relate to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, restitution, the adoption of certain governance reforms, recovery of fees and costs, and other relief that the court may find appropriate. The Company is named as a nominal defendant only. On August 21, 2024, these derivative stockholder actions were consolidated into a single action captioned In re Shoals Technologies Group, Inc. Derivative Litigation (the “Tennessee Derivative Action”).
On March 26, 2025, another derivative stockholder action was filed against certain current and former officers and directors of the Company in the same court as the consolidated action, captioned Norman v. Whitaker, et al. The complaint asserts, among others, claims for violations of Sections 14(a) and 20(a) of the Exchange Act, breach of fiduciary duty, insider trading, and unjust enrichment, all of which relate to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, restitution, the adoption of certain governance reforms, recovery of fees and costs, and other relief that the court may find appropriate. The Company is named as a nominal defendant only. On April 11, 2025, the Norman action was consolidated with the Tennessee Derivative Action. On January 19, 2026, the parties in the Tennessee Derivative Action filed a stipulation to stay the Tennessee Derivative Action until 60 days following the conclusion of the January 2026 mediation in the Securities Litigation.
On December 2, 2025, another derivative stockholder action was filed against certain current and former officers and directors of the Company in the Delaware Court of Chancery, captioned Gipsman v. Whitaker, et al. (the “Delaware Derivative Action”). The Delaware Derivative Action asserts claims for breach of fiduciary duty, insider trading, unjust enrichment, and corporate waste, all of which relate to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, restitution, the adoption of certain governance reforms, recovery of fees and costs, and other relief that the court may find appropriate. The Company is named as a nominal defendant only.
Although the Company intends to continue to vigorously defend against these claims, there is no guarantee that the Company will prevail. Accordingly, the Company is unable to determine the ultimate outcome of the derivative litigation or determine the amount or range of potential losses associated with the lawsuit.
Guarantees and Surety Bonds
The Company has provided financial guarantees to support payment obligations of a vendor. The Company has not recorded any liabilities for these financial guarantees in its consolidated balance sheets, because the Company has calculated the estimated fair value of the guarantee and determined it to be immaterial based upon the current facts and circumstances that would trigger a payment obligation.
The Company provides surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee the Company’s performance in accordance with contractual or legal obligations. As of March 31, 2026, the maximum potential payment obligation with regard to surety bonds was $51.4 million.
14. Income Taxes
In calculating the provision for interim income taxes, in accordance with ASC Topic 740, an estimated annual effective tax rate is applied to year-to-date ordinary income. The resulting provision is adjusted for the
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Notes to Condensed Consolidated Financial Statements (Unaudited)
tax effect of discrete items required to be recorded during the period. At the end of each interim period, the Company adjusts its estimate of the effective tax rate expected to be applicable for the full fiscal year.
15. Revenue Recognition
Disaggregation of revenue
Based on ASC Topic 606 provisions, the Company disaggregates its revenue from contracts with customers based on product type. Revenue by product type is disaggregated between system solutions and components. System solutions are contracts under which the Company provides multiple products typically in connection with the design and specification of an entire EBOS system. Components represents sales of individual components.
The following table presents the Company’s revenue disaggregated by product type (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| System solutions | $ | $ | |||||||||||||||||||||
| Components | |||||||||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||||||||
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, retainage, and deferred revenue on the condensed consolidated balance sheets, recorded on a contract-by-contract basis at the end of each reporting period.
The Company’s contract balances consist of the following (in thousands):
| Location on the Condensed Consolidated Balance Sheets | March 31, 2026 | December 31, 2025 | ||||||||||||
| Billed accounts receivable | Accounts receivable, net | $ | $ | |||||||||||
| Retainage | Accounts receivable, net | $ | $ | |||||||||||
| Contract liabilities | Accrued expenses and other | $ | $ | |||||||||||
| Unbilled receivables | Unbilled receivables | $ | $ | |||||||||||
| Deferred revenue | Deferred revenue | $ | $ | |||||||||||
| Accrued rebates | Accrued expenses and other | $ | $ | |||||||||||
The majority of the Company’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project. Billing sometimes occurs subsequent to revenue recognition, resulting in unbilled receivables. The
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Table of Contents
Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
changes in unbilled receivables relate to fluctuations in the timing of billings for the Company’s revenue recognized over time.
Certain contracts contain retainage provisions. Retainage represents a contract asset for the portion of the contract price earned by the Company for work performed but held for payment by the customer as a form of security until the Company obtains specified milestones. The Company typically bills retainage amounts as work is performed. Retainage provisions are not considered a significant financing component because they are intended to protect the customer in the event that some or all of the obligations under the contract are not completed. The changes in retainage relate to fluctuations in the timing of retainage billings and achievement of specified milestones.
For certain contracts, we provide customers with incentives upon entering into multi-year agreements or volume specific commitments. Any up-front incentives to customers that are not made in exchange for distinct goods and services are capitalized as a contract asset, which are subsequently recognized as a reduction to revenue over the term of the customer arrangements.
The Company also receives deferred revenue in the form of customer deposits. The customer deposits are short term as the related performance obligations are typically fulfilled within 12 months. The changes in deferred revenue relate to fluctuations in the timing of customer deposits and completion of performance obligations. During the three months ended March 31, 2026, $17.8 million of deferred revenue recorded as of December 31, 2025 was recognized in revenue. During the three months ended March 31, 2025, $10.3 million of deferred revenue recorded as of December 31, 2024 was recognized in revenue.
16. Segment Reporting
The Company is organized and operates as one
The accounting policies of the consolidated segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance of the Company and decides how to allocate resources based on income from operations and net income that is also reported on the consolidated income statement. The CODM is involved in determining and reviewing projected net income and income from operations as part of the annual operating plan process. Throughout the year, the CODM considers forecast to actual results and variances on a monthly and quarterly basis to allocate resources for the Company.
The following table presents selected financial information with respect to the Company’s single operating segment for the three months ended March 31, 2026 and 2025:
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Table of Contents
Shoals Technologies Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Revenue | $ | $ | |||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
Non-operating income/(expense) (1) | ( | ( | |||||||||||||||||||||
| Income tax expense | ( | ||||||||||||||||||||||
Net loss | $ | ( | $ | ( | |||||||||||||||||||
All of the Company's long-lived tangible assets, as well as the Company's operating lease right-of-use assets recognized on the Condensed Consolidated Balance Sheets are located within the United States.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our consolidated financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”) and this Quarterly Report on Form 10-Q (“Form 10-Q”). In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections of our 2025 Form 10-K and this Form 10-Q captioned “Forward-Looking Statements” and “Risk Factors”.
This MD&A contains the presentation of Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share, which are not presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share are being presented because management believes they provide investors and readers of this Form 10-Q with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share to be substitutes for any GAAP financial information. Readers of this Form 10-Q should use Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share only in conjunction with Gross Profit, and Net Income, the most closely comparable GAAP financial measures, as applicable. Reconciliations of Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share to the respective most closely comparable GAAP measure, as well as a calculation of Adjusted Gross Profit Percentage and Adjusted Diluted Weighted Average Shares Outstanding, are provided below, in “—Non-GAAP Financial Measures.”
Overview
Shoals Technologies Group is a leading design-engineering company and manufacturer of advanced electrical infrastructure solutions for mission‑critical applications across solar photovoltaic (PV), battery energy storage solutions (BESS), and data center power systems. Our solutions also support original equipment manufacturers (“OEMs”). EBOS encompasses all of the components that are necessary to carry the electric current produced by solar panels or stored by a BESS solution to an inverter and ultimately to the power grid. Since electrical infrastructure is the backbone of a solar or BESS project, our products play a mission-critical role in the quality, safety, reliability, and efficiency of energy projects, which the industry prioritizes over price when selecting EBOS solutions.
We design, manufacture and sell a variety of products used by the solar and battery storage industries, including Solar BLA Solutions; Homeruns, Interconnection and Extension Solutions; Combiners and Re-Combiners; Load Break Disconnects and Transition Solutions; Wireless Performance Monitoring; and BESS. We refer to complete EBOS solutions that use products manufactured by us, typically in connection with the design and specification of an entire EBOS system, as “system solutions”. When we sell a system solution, we work with our customers to design, specify and engineer their system solution to provide a complete customized EBOS solution consisting of individualized products that maximizes reliability and energy production while minimizing cost. We also provide technical support during installation and the transition to operations and maintenance. We refer to individual, often custom and proprietary, products we sell as “components”. We believe our system solutions are unique in our industry because they integrate design and
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engineering support, proprietary components and innovative installation methods into a single offering that would otherwise be challenging for a customer to obtain from a single provider or at all.
Traditionally, and for the three months ended March 31, 2026, we primarily sold our EBOS solutions and OEM components to customers in the United States, while also fulfilling orders for international utility-scale solar projects. Specifically, we primarily sold to engineering, procurement and construction firms (“EPCs”) for use in large solar and BESS projects designed to generate electricity and feed it directly into the electric grid, typically with a generation capacity of 1 megawatt or greater. These EPCs work with owners and developers of solar assets to build energy infrastructure projects. However, given the mission-critical nature of EBOS, the decision to use our products typically involves input from both the EPC and the owner/developer of the energy infrastructure energy project.
We have a focus in two end-markets: (1) clean, grid connected energy and (2) data center and mission-critical electrical infrastructure. This market diversification seeks to capitalize on the growing global demand for energy and the need to accelerate electrification.
We derived 78.8% of our revenue from the sale of system solutions for the three months ended March 31, 2026. For the same period, we derived substantially all of our revenue from customers in the U.S. As of March 31, 2026, we had $758.0 million of backlog and awarded orders. Backlog of $390.3 million represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders of $367.7 million are orders we are in the process of documenting a contract for but for which a contract has not yet been signed. As of March 31, 2026, we believe approximately $375.5 million of backlog and $252.1 million of awarded orders have delivery dates in the next twelve months. Additionally, more than 13.1% of our March 31, 2026 backlog and awarded orders related to international projects. As of March 31, 2026, backlog and awarded orders increased by 17.5% relative to the same date last year and increased by 1.4% relative to December 31, 2025.
Trends and Uncertainties
Trade Regulation and Import Tariffs
Our business activities are subject to numerous laws and regulations in the jurisdictions in which we operate. Our exports and imports are subject to complex trade and customs laws, tax requirements, and tariffs established through governmental actions or international agreements. Changes in tax policies or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products, including reciprocal tariffs, could have an adverse effect on our business and results of operations.
In recent years, the U.S. presidential administration (the “Administration”) implemented broad tariff measures affecting a wide range of imports. These actions included a 10% tariff on most imports and various reciprocal tariffs on certain trading partners. Tariff policy remained fluid, with frequent adjustments to tariff percentages and product coverage, as well as ongoing negotiations with global trading partners. These measures contributed to significant volatility and uncertainty in the global trade environment.
On February 20, 2026, the U.S. Supreme Court invalidated the Administration’s tariff measures, ruling that the International Emergency Economic Powers Act did not authorize their imposition. While the ruling halted those specific tariff programs, the longer‑term implications for U.S. trade policy remain uncertain. Future regulatory or legislative actions resulting from the ruling could impact our operations, supply chain, and cash flow.
On March 4, 2026, the Court of International Trade issued an order requiring Customs and Border Protection (“CBP”) to process certain tariff‑refund claims in accordance with the Supreme Court’s ruling.
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Because litigation remains ongoing and CBP’s refund process is still under development, significant uncertainty remains regarding the timing, scope, and ultimate recoverability of any potential refunds
Tariff actions have negatively affected our gross margins due to both direct tariff payments and higher supplier prices reflecting secondary tariff costs. Although we have expanded our domestic capabilities, strengthened supply chain resiliency, and increased domestic manufacturing capacity, these measures may not fully offset the impact of future trade policy changes. Any significant new tariffs, retaliatory actions by trading partners, or rapid shifts in trade regulations could increase raw material costs—including steel, copper, and aluminum—and may limit our ability to source key materials efficiently. Additionally, retaliatory tariffs could affect exports of our manufactured products and potentially lead customers to seek alternative suppliers.
We continue to monitor supply chain conditions and evaluate procurement strategies to reduce potential adverse effects on our business, financial condition, and results of operations. We also continue to optimize inventory levels in preparation for future production demands.
Energy‑Related Incentives
Federal, state, local, and foreign governmental bodies offer incentives to owners, end users, distributors, and manufacturers of solar energy systems to promote the development of solar electricity. The range and duration of these incentives vary widely by geographic market.
The 2022 Inflation Reduction Act (“IRA”) introduced significant long‑term tax incentives to promote solar energy deployment in the United States. Under the IRA, taxpayers investing in solar projects may qualify for Investment Tax Credits (“ITC”) or elect to claim Production Tax Credits (“PTC”) for eligible facilities.
In 2025, H.R. 1, the One Big Beautiful Bill Act, modified several energy‑related tax provisions of the IRA. These changes include an accelerated phaseout or termination of the ITC and PTC for solar projects placed in service after 2027, as well as restrictions related to “foreign entities of concern,” which render certain projects owned or controlled by prohibited foreign entities ineligible for specific tax credits.
Reductions or uncertainty surrounding these incentives may diminish the financial attractiveness of solar projects, which could decrease demand for our products. Additionally, ongoing uncertainty around the duration, eligibility criteria, and future legislative changes affecting these incentives may cause delays in project financing and execution, which could impact our sales volume and growth trajectory.
The Solar Market and Critical Power Infrastructure
The domestic utility‑scale solar market has previously experienced volatility driven by a combination of permitting delays, supply‑chain constraints, labor shortages, project‑financing challenges, interconnection bottlenecks, and uncertainty stemming from federal trade and tax policy changes. We believe long‑term demand fundamentals remain strong; however, new circumstances may emerge and could affect future project timing, pricing dynamics, and customer mix. We continue to monitor market conditions and manage these uncertainties through proactive commercial strategies, inventory planning, and close engagement with customers and suppliers.
The market for critical power infrastructure is expanding as electricity demand increases and energy systems grow more complex; however, this growth is accompanied by uncertainty arising from shifting policy frameworks, technological change, and varying levels of industry participation. These conditions may result in inconsistent coordination across stakeholders, policy fragmentation, and differing degrees of market readiness, each of which could influence project execution, capital allocation, and technology deployment. We will continue to assess how volatility in the industries in which we operate may affect our operations, capital expenditures, and cash flows.
Other Macroeconomic Pressures
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Inflationary pressures persisted through 2025 and into 2026, driven in part by tariff‑related cost increases that elevated prices for imported and domestic goods. Forecasts indicate that while inflation is expected to gradually ease, it remains above the desired targets, with ongoing price pressures anticipated into 2026. Interest rates, though off their historic highs, remain elevated relative to long‑term averages, and forecasters expect only modest declines in 2026. Higher borrowing costs, coupled with uncertainty created by shifting tariff regimes and evolving monetary policy, may continue to affect capital markets and increase our cost of financing.
Sourcing raw materials and securing inbound logistics continues to present challenges, reflecting persistent global supply chain disruptions, trade‑policy volatility, and geopolitical conflict. Tariff‑driven increases in import prices have raised costs across multiple inputs, contributing to higher procurement and logistics costs. Ongoing geopolitical instability, including the conflict in the Middle East involving Iran, Israel, and the United States, may disrupt the availability of certain materials and contribute to increased global freight and input costs. We expect these sourcing and logistics pressures to persist through 2026 as trade uncertainty and geopolitical tensions remain unresolved.
Key Components of Our Results of Operations
The following discussion describes certain line items in our condensed consolidated statements of operations.
Revenue
We generate revenue from the sale of EBOS solutions and components for solar, BESS, and OEM offerings. Our customers include EPCs, utilities, solar developers, independent power producers, and solar module manufacturers. We derive the majority of our revenue from selling system solutions. When we sell a system solution, we enter into a contract with our customers covering the price, specifications, delivery dates and warranty for the products being purchased, among other things. Our contractual delivery period for system solutions can vary from one to three months whereas manufacturing typically requires a shorter time frame. Contracts for system solutions can range in value from several hundred thousand to several million dollars.
Our revenue is affected by changes in the price, volume and mix of system solutions and components purchased by our customers. The price and volume of our system solutions and components is driven by the demand for our energy infrastructure system solutions and components, volume based discounts and rebate incentives, changes in product mix, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products.
Our revenue growth is dependent on continued growth in the amount of projects to support energy infrastructure constructed each year and our ability to increase our share of demand in the geographies where we currently compete and plan to compete in the future, as well as our ability to continue to develop and commercialize new and innovative products that address the changing technology and performance requirements of our customers.
Cost of Revenue and Gross Profit
Cost of revenue consists primarily of system solutions and components costs, including purchased raw materials, as well as costs related to importing and tariffs, shipping, customer support, product warranty, personnel and depreciation of manufacturing and testing equipment. Personnel costs in cost of revenue include both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer. Our product costs are affected by the underlying cost of raw materials, including copper and aluminum; component costs, including fuses, resin, enclosures, and cable; technological innovation; economies of scale resulting in lower component costs; and improvements in production processes and automation. We do not currently hedge against changes in the price of raw materials. Some of these costs, primarily indirect personnel and depreciation of manufacturing and testing equipment, are not directly affected
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by sales volume. Gross profit may vary from year to year and is primarily affected by our sales volume, product prices, product costs, product mix, customer mix, geographical mix, shipping method and warranty expense.
Operating Expenses
Operating expenses consist of general and administrative expenses as well as depreciation and amortization expense. Personnel-related costs are the most significant component of our operating expenses and include salaries, equity-based compensation, benefits, payroll taxes and commissions. The number of our full-time employees increased from 171 to 199 from March 31, 2025 to March 31, 2026, and we expect to hire new employees in the future to support our growth. The timing of these additional hires could materially affect our operating expenses in any particular period, both in absolute dollars and as a percentage of revenue.
General and Administrative Expenses
General and administrative expenses consist primarily of legal and professional fees, salaries, equity-based compensation expense, employee benefits and payroll taxes related to our executives, and our sales, finance, human resources, information technology, engineering and legal organizations, travel expenses, facilities costs, marketing expenses, insurance, bad debt expense and fees for professional services. Professional services consist of audit, tax, accounting, legal, internal controls, information technology, investor relations and other costs. We expect to increase our sales and marketing personnel as we expand into new geographic markets. Substantially all of our sales are currently in the U.S. We currently have a sales presence in the U.S., Asia-Pacific, Europe, Latin America, and Africa. We intend to grow our sales presence and marketing efforts in current geographic markets and expand to additional countries in the future.
Depreciation
Depreciation in our operating expenses consists of costs associated with property, plant and equipment (“PP&E”) not used in manufacturing our products. We expect that as we increase both our revenue and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation expense.
Amortization
Amortization of intangibles consists of amortization of customer relationships, developed technology, trade names, backlog and noncompete agreements over their expected period of use.
Non-operating Expenses
Interest Expense
Interest expense consists of interest and other charges paid in connection with our Senior Secured Credit Agreement.
Interest income
Interest income is related to interest on bank deposits.
Litigation settlement expense, net of recoveries
Litigation settlement expenses related to the amounts owed, net of applicable insurance recoveries, to settle matters of litigation.
Gain (loss) on sale of asset
Gain on sale of asset represents consideration received in excess of the net book value of assets sold.
Foreign currency gain (loss), net
Foreign currency gains and losses arise from the remeasurement of transactions in a currency other than the function currency of the Company based on exchange rate fluctuations.
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Income Tax Benefit (expense)
Shoals Technologies Group, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions.
Results of Operations
The following table summarizes our results of operations (dollars in thousands):
| Three Months Ended March 31, | Increase / (Decrease) | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 140,557 | $ | 80,361 | $ | 60,196 | 74.9 | % | |||||||||||||||||||||||||||||||||
| Cost of revenue | 99,547 | 52,221 | 47,326 | 90.6 | % | ||||||||||||||||||||||||||||||||||||
| Gross profit | 41,010 | 28,140 | 12,870 | 45.7 | % | ||||||||||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 31,014 | 21,693 | 9,321 | 43.0 | % | ||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 2,278 | 2,135 | 143 | 6.7 | % | ||||||||||||||||||||||||||||||||||||
| Total operating expenses | 33,292 | 23,828 | 9,464 | 39.7 | % | ||||||||||||||||||||||||||||||||||||
| Income from operations | 7,718 | 4,312 | 3,406 | 79.0 | % | ||||||||||||||||||||||||||||||||||||
| Interest expense | (2,903) | (2,415) | 488 | 20.2 | % | ||||||||||||||||||||||||||||||||||||
| Interest income | 59 | 118 | (59) | (50.0) | % | ||||||||||||||||||||||||||||||||||||
| Litigation settlement expense, net of recoveries | (5,250) | — | (5,250) | (100.0) | % | ||||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of assets | (2) | — | (2) | (100.0) | % | ||||||||||||||||||||||||||||||||||||
| Foreign currency gain (loss) | (8) | — | (8) | (100.0) | % | ||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | (386) | 2,015 | (2,401) | (119.2) | % | ||||||||||||||||||||||||||||||||||||
| Income tax benefit (expense) | 89 | (2,297) | (2,386) | (103.9) | % | ||||||||||||||||||||||||||||||||||||
| Net loss | $ | (297) | $ | (282) | $ | (15) | (5.3) | % | |||||||||||||||||||||||||||||||||
Comparison of the Three Months Ended March 31, 2026 and 2025
Revenue
Revenue increased by $60.2 million, or 74.9%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, driven by strong underlying demand of products, the impact of market share capture initiatives, and an increase in volume of projects in the current year.
Cost of Revenue and Gross Profit
Cost of revenue increased by $47.3 million, or 90.6%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, driven by the increase in revenue. Gross profit as a percentage of revenue was 29.2% during the three months ended March 31, 2026, and 35.0% during the three months ended March 31, 2025. The decrease in margin is attributable to $3.8 million in additional tariffs paid in comparison to the prior year quarter, an increase in $1.4 million in right-of-use asset amortization arising from the opening of our consolidated operations facility, along with an increase in material costs.
Operating Expenses
General and Administrative
General and administrative expenses increased $9.3 million, or 43.0%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase in general and administrative expenses was the result of a $6.2 million increase in legal expenses for ongoing matters related
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to wire insulation shrinkback, intellectual property, and shareholder litigation matters along with $1.6 million in increased cash and share-based incentive compensation expense due to increased headcount in comparison to the prior year period.
Depreciation and Amortization
Depreciation and amortization expenses increased by $0.1 million, or 6.7%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Levels of intangible assets and property, plant, and equipment associated with operating expenses remained consistent period over period.
Interest Expense
Interest expense, increased by $0.5 million, or 20.2%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This increase was due to an increase in the total weighted average outstanding balance of the Revolving Credit Facility during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Litigation settlement expense, net of recoveries
Litigation settlement expense, net of recoveries increased by $5.3 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This is due to the accrual for the expected settlement amount, net of insurance recoveries related to the Company’s Securities litigation. See Note 13 - Commitments and Contingencies, in our condensed consolidated financial statements included in this Form 10-Q for more information.
Income tax benefit (expense)
Income tax benefit totaled $0.1 million for the three months ended March 31, 2026, as compared to income tax expense of $2.3 million for the three months ended March 31, 2025. Our effective income tax rate for the three months ended March 31, 2026 and 2025 was 23.1% and 114.0%, respectively. The change in our effective income tax rate was due to changes in various discrete items, particularly RSU and PSU shortfalls during the three months ended March 31, 2026.
Non-GAAP Financial Measures
Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share (“EPS”)
We define Adjusted Gross Profit as gross profit plus plant optimization expenses. We define Adjusted Gross Profit Percentage as Adjusted Gross Profit divided by revenue. We define Adjusted EBITDA as net loss plus/(minus) (i) interest expense, (ii) interest income, (iii) income tax expense/(benefit), (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) gain (loss) on sale of asset (viii) wire insulation shrinkback litigation expenses, (ix) plant optimization expenses, (x) shareholder litigation expenses, and (xi) litigation settlement expense, net of insurance recoveries. We define Adjusted Net Income as net income plus (i) amortization of intangibles, (ii) amortization / write-off of deferred financing costs, (iii) equity-based compensation, (iv) gain (loss) on sale of asset (v) wire insulation shrinkback litigation expenses, (vi) plant optimization expenses, (vii) shareholder litigation expenses, and (viii) litigation settlement expenses, net of insurance recoveries, 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.
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Beginning with the three months ended March 31, 2026, we revised our definition of Adjusted EBITDA to exclude shareholder litigation costs, which are reflected in General and Administrative expenses on our Consolidated Statements of Operations. Comparative amounts for prior periods have been recast to conform to the current period presentation. Management believes this revised definition provides a more meaningful representation of the Company’s ongoing operating performance as the costs are not reflective of our core operations.
Adjusted Gross Profit, Adjusted Gross Profit Percentage, 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 Gross Profit, Adjusted Gross Profit Percentage, 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 Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS: (i) as factors in evaluating management’s performance when determining incentive compensation, as applicable; (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 Gross Profit, Adjusted Gross Profit Percentage, 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 Gross Profit, Adjusted Gross Profit Percentage, 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 gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage, net income Adjusted EBITDA, and net income to Adjusted Net Income and Adjusted Diluted EPS below and not rely on any single financial measure to evaluate our business.
Reconciliation of Gross Profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Revenue | $ | 140,557 | $ | 80,361 | |||||||||||||||||||
| Cost of revenue | 99,547 | 52,221 | |||||||||||||||||||||
| Gross profit | $ | 41,010 | $ | 28,140 | |||||||||||||||||||
| Gross profit percentage | 29.2 | % | 35.0 | % | |||||||||||||||||||
Plant optimization expense (b) | $ | 621 | $ | — | |||||||||||||||||||
| Adjusted gross profit | $ | 41,631 | $ | 28,140 | |||||||||||||||||||
| Adjusted gross profit percentage | 29.6 | % | 35.0 | % | |||||||||||||||||||
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Reconciliation of Net Income to Adjusted EBITDA (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net loss | $ | (297) | $ | (282) | |||||||||||||||||||
| Interest expense | 2,903 | 2,415 | |||||||||||||||||||||
| Interest income | (59) | (118) | |||||||||||||||||||||
| Income tax expense (benefit) | (89) | 2,297 | |||||||||||||||||||||
| Depreciation expense | 2,199 | 1,391 | |||||||||||||||||||||
| Amortization of intangibles | 1,902 | 1,896 | |||||||||||||||||||||
| Equity-based compensation | 3,317 | 2,661 | |||||||||||||||||||||
| (Gain) loss on sale of asset | 2 | — | |||||||||||||||||||||
Wire insulation shrinkback litigation expenses (a) | 3,707 | 2,529 | |||||||||||||||||||||
Plant optimization expenses (b) | 621 | — | |||||||||||||||||||||
Shareholder litigation expenses (c) | 1,656 | 716 | |||||||||||||||||||||
Litigation settlement expense (c) | 5,250 | — | |||||||||||||||||||||
| Adjusted EBITDA | $ | 21,112 | $ | 13,505 | |||||||||||||||||||
Reconciliation of Net Income to Adjusted Net Income (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Net loss | $ | (297) | $ | (282) | ||||||||||||||||||||||
| Amortization of intangibles | 1,902 | 1,896 | ||||||||||||||||||||||||
| Amortization / write-off of deferred financing costs | 156 | 156 | ||||||||||||||||||||||||
| Equity-based compensation | 3,317 | 2,661 | ||||||||||||||||||||||||
| (Gain) loss on sale of asset | 2 | — | ||||||||||||||||||||||||
Wire insulation shrinkback litigation expenses (a) | 3,707 | 2,529 | ||||||||||||||||||||||||
Plant optimization expenses (b) | 621 | — | ||||||||||||||||||||||||
Shareholder litigation expenses (c) | 1,656 | 716 | ||||||||||||||||||||||||
Litigation settlement expense (c) | 5,250 | — | ||||||||||||||||||||||||
Tax impact of adjustments (d) | (4,169) | (1,942) | ||||||||||||||||||||||||
| Adjusted Net Income | $ | 12,145 | $ | 5,734 | ||||||||||||||||||||||
(a) For the three months ended March 31, 2026 and 2025, represents $3.7 million and $2.5 million, respectively, of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire. We consider this litigation distinct from ordinary course legal matters given the expected magnitude of the expenses, the nature of the allegations in the Company’s complaint, the amount of damages sought, and the impact of the matter underlying the litigation on the Company’s financial results. In the future, we also intend to exclude from our non-GAAP measures the benefit of recovery, if any. We believe excluding expenses from these discrete litigation events provides investors with a better view of the operating performance of our business and allows for comparability through periods. See Note 13 - Commitments and Contingencies, in our condensed consolidated financial statements included in this Form 10-Q for more information.
(b) For the three months ended March 31, 2026 and 2025, represents $0.6 million and zero of expenses incurred in connection with actions taken to consolidate our operations into a newly constructed facility, including items such as professional fees, relocation, facility set-up and other costs. We believe excluding
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expenses from these events provides investors with a better view of the operating performance of our business and allows for comparability through periods.
(c) For the three months ended March 31, 2026, represents $1.6 million of expenses incurred in connection with the Company’s defense of certain derivative and class action litigation and $5.3 million in settlement expenses associated with this litigation. For the three months ended March 31, 2025, represents $0.7 million of expenses incurred in connection with the Company’s defense of certain derivative and class action litigation. We consider expenses incurred in connection with these legal matters distinct from normal matters and expenses within the operation of our business.
(d) Shoals Technologies Group, Inc. is subject to U.S. Federal income taxes, in addition to state and local taxes. Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax. The adjustment to the provision for income tax reflects the effective tax rates below.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Statutory U.S. Federal income tax rate | 21.0 | % | 21.0 | % | |||||||||||||||||||
| Permanent adjustments | 1.7 | % | 0.6 | % | |||||||||||||||||||
| State and local taxes (net of federal benefit) | 2.4 | % | 2.8 | % | |||||||||||||||||||
| Effective income tax rate for Adjusted Net Income | 25.1 | % | 24.4 | % | |||||||||||||||||||
Calculation of Adjusted Diluted Earnings per Share (in thousands, except per share amounts):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Diluted weighted average shares outstanding | 167,555 | 166,960 | |||||||||||||||||||||
| Adjusted Net Income | $ | 12,145 | $ | 5,734 | |||||||||||||||||||
| Adjusted Diluted EPS | $ | 0.07 | $ | 0.03 | |||||||||||||||||||
Liquidity and Capital Resources
We finance our operations primarily with operating cash flows and short and long-term borrowings. Our ability to generate positive cash flow from operations is dependent on the strength of our gross profits as well as our ability to quickly turn our working capital. Conversely, lower than expected gross margins or an inability to quickly turn our working capital, together with an inability to incur additional short and long-term borrowings, would reduce cash flows and could have a material adverse effect on our liquidity, financial condition and results of operations. Based on our past performance and current expectations, we believe that operating cash flows and availability under our Revolving Credit Facility will be sufficient to meet our near and long-term future cash needs.
Cash used in operating activities was $41.4 million during the three months ended March 31, 2026, as compared to cash provided by operating activities of $15.6 million during the three months ended March 31, 2025. As of March 31, 2026, our cash and cash equivalents were $1.9 million, a decrease from $7.3 million as of December 31, 2025. As of March 31, 2026 we had outstanding borrowings of $181.8 million, a $45.0 million increase from outstanding borrowings of $136.8 million as of December 31, 2025. As of March 31, 2026, we also had $15.4 million available for additional borrowings under our $200.0 million Revolving Credit Facility.
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During the three months ended March 31, 2026, we also used approximately $2.1 million of cash to pay for expenses related to the identification, repair and replacement of the wire harnesses impacted in connection with the wire insulation shrinkback matter. Future amounts of cash to be spent in connection to this matter are uncertain. For more information, see Note 8 - Warranty Liability in our condensed consolidated financial statements.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net Cash Provided by (Used in) Operating Activities | $ | (41,448) | $ | 15,558 | |||||||
| Net Cash Used in Investing Activities | (7,648) | (3,209) | |||||||||
Net Cash Provided by (Used in) Financing Activities | 43,653 | (251) | |||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | $ | (5,443) | $ | 12,098 | |||||||
Operating Activities
For the three months ended March 31, 2026, cash used in operating activities was $41.4 million, due to operating results that included $0.3 million of net loss, which included $10.3 million of non-cash expense, along with cash inflows in unbilled receivables of $7.0 million, accounts payable of $15.2 million, and accrued expenses of $2.5 million. These cash inflows were offset by cash outflows of $69.6 million in inventory, $6.7 million in deferred revenue, $2.5 million of warranty liability, and $2.2 million in other assets.
For the three months ended March 31, 2025, cash provided by operating activities was $15.6 million, primarily due to operating results that included $0.3 million of net loss, which included $8.9 million of non-cash expense, along with cash inflows in accounts receivable and unbilled receivables of $20.9 million and accounts payable and accrued expenses of $6.3 million. These cash inflows were offset by cash outflows of $9.8 million related to the warranty liability as well as an increase in inventory of $5.4 million, an increase in other assets of $1.5 million, and a decrease of $3.5 million in deferred revenue.
Investing Activities
For the three months ended March 31, 2026, net cash used investing activities was $7.6 million, which was attributable to purchases of property and equipment.
For the three months ended March 31, 2025, net cash used in investing activities was $3.2 million, which was attributable to the purchases of property and equipment.
Financing Activities
For the three months ended March 31, 2026, net cash used in financing activities was $43.7 million, due to $45.0 million in borrowings on the Revolving Credit Facility, and $1.3 million in taxes paid related to net share settled equity awards.
For the three months ended March 31, 2025, net cash used in financing activities was $0.3 million, due to $20.0 million in payments on the Revolving Credit Facility, offset by $20.0 million in borrowings, and $0.3 million in taxes related to net share settled equity awards.
Debt Obligations
For a discussion of our debt obligations see Note 9 - Long-Term Debt in our condensed consolidated financial statements included in this Form 10-Q.
Surety Bonds
For a discussion of our surety bond obligations see Note 13 - Commitments and Contingencies in our condensed consolidated financial statements included in this Form 10-Q.
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Product Warranty
For a discussion of our product warranties see Note 8 - Warranty Liability in our condensed consolidated financial statements included in this Form 10-Q.
Critical Accounting Policies and Accounting Estimates
For a description of the application of our critical accounting policies or estimation procedures, see our 2025 Form 10-K. There were no material changes to the information previously disclosed.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
During the three months ended March 31, 2026, there were no material changes in our market risk exposure. For a description of our analysis of quantitative and qualitative market risk, see Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in litigation relating to claims that arise out of our operations and businesses and that cover a wide range of matters, including, among others, intellectual property matters, contract and employment claims, personal injury claims, product liability claims and warranty claims. Except as described under Litigation in Note 13 - Commitments and Contingencies, there are no claims or proceedings to which we are party that we believe would have a material adverse effect on our business, financial condition, results of operations or cash flows. However, the results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of litigation.
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Item 1A. Risk Factors
For a discussion of the material factors that affect our business, financial condition or results of operations, please see the risk factors disclosed in our 2025 Form 10-K and the other information set forth in this Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(c) Insider Trading Arrangements
During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted terminated
Item 6. Exhibits
| EXHIBIT INDEX | ||||||||||||||||||||||||||
| Incorporated by Reference | ||||||||||||||||||||||||||
| Number | Description of Document | Form | Filing Date | Exhibit No. | ||||||||||||||||||||||
| 3.1 | Amended and Restated Certificate of Incorporation of Shoals Technologies Group, Inc., dated January 28, 2021 | 8-K | 1/29/2021 | 3.1 | ||||||||||||||||||||||
| 3.2 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Shoals Technologies Group, Inc., dated January 28, 2021 | 10-Q | 8/6/2024 | 3.2 | ||||||||||||||||||||||
| 3.3 | Second Amended and Restated Bylaws of Shoals Technologies Group, Inc., dated February 20, 2025 | 10-K | 2/25/2025 | 3.3 | ||||||||||||||||||||||
| 31.1* | Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) | |||||||||||||||||||||||||
| 31.2* | Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) | |||||||||||||||||||||||||
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| EXHIBIT INDEX | ||||||||||||||||||||||||||
| Incorporated by Reference | ||||||||||||||||||||||||||
| Number | Description of Document | Form | Filing Date | Exhibit No. | ||||||||||||||||||||||
| 32.1** | Certification of the Chief Executive Officer and Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||||||||||||||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||||||||||||||||||||
________
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Shoals Technologies Group, Inc. | |||||||||||||||||||||||
| Date: | May 5, 2026 | By: | /s/ Brandon Moss | ||||||||||||||||||||
| Name: | Brandon Moss | ||||||||||||||||||||||
| Title: | Chief Executive Officer | ||||||||||||||||||||||
| Date: | May 5, 2026 | By: | /s/ Dominic Bardos | ||||||||||||||||||||
| Name: | Dominic Bardos | ||||||||||||||||||||||
| Title: | Chief Financial Officer | ||||||||||||||||||||||
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FAQ
How did Shoals Technologies Group (SHLS) perform financially in Q1 2026?
Shoals reported Q1 2026 revenue of $140.6 million, up 74.9% year over year, driven by higher project volumes. Gross margin was 29.2%, and the company recorded a small net loss of $0.3 million, while Adjusted EBITDA increased to $21.1 million.
What is the status of Shoals Technologies Group’s backlog and awarded orders?
As of March 31, 2026, Shoals reported $758.0 million in backlog and awarded orders. This includes $390.3 million of backlog and $367.7 million of awarded orders, with about $375.5 million of backlog and $252.1 million of awarded orders expected to be delivered within 12 months.
How is Shoals Technologies Group’s wire insulation shrinkback issue reflected in Q1 2026?
Shoals continues to estimate total losses from the wire insulation shrinkback matter at $73.0 million, of which $71.8 million has been incurred. The remaining related warranty liability was $1.2 million at March 31, 2026, and the company is pursuing litigation against its wire supplier.
What litigation settlement did Shoals Technologies Group record in Q1 2026?
In Q1 2026, Shoals recorded a $70.0 million preliminary settlement in securities litigation, with $64.8 million covered by insurance. The remaining $5.3 million was recognized as litigation settlement expense, alongside an equal insurance receivable and settlement liability on the balance sheet.
How did tariffs and trade policy affect Shoals Technologies Group’s Q1 2026 margins?
Shoals’ gross margin fell to 29.2% in Q1 2026, partly due to $3.8 million in additional tariff costs compared with the prior-year quarter. The company notes that evolving trade regulations and import tariffs have raised raw material and supplier costs, pressuring profitability.
What is Shoals Technologies Group’s leverage and liquidity position after Q1 2026?
At March 31, 2026, Shoals had $181.8 million outstanding on its revolving credit facility, $2.8 million in letters of credit, and $15.4 million of remaining availability. Cash and cash equivalents were $1.9 million, following a $41.4 million operating cash outflow in the quarter.