- Revenue: $80.4 million, a decline of 11.5% year over year.
- Bookings: Approximately $91 million in new orders.
- Backlog and Awarded Orders (BLAO): $645.1 million, with $500 million scheduled for shipment in the next four quarters.
- Gross Profit: $28.1 million, down from $36.5 million in the prior year period.
- Gross Margin: 35.0%, compared to 40.2% in the prior year period.
- Adjusted EBITDA: $12.8 million, compared to $20.5 million in the prior year period.
- Net Loss: $0.3 million, compared to net income of $4.8 million in the prior year period.
- Adjusted Net Income: $5.2 million, compared to $12.6 million in the prior year period.
- Cash Flow from Operations: $15.6 million.
- Free Cash Flow: $12.4 million, excluding remediation and legal expenses, would have been $24.4 million.
- Capital Expenditures: $3.2 million.
- Net Debt: $106.1 million, with a net debt to adjusted EBITDA ratio of 1.2 times.
- Revenue Guidance for Q2 2025: $100 million to $110 million.
- Adjusted EBITDA Guidance for Q2 2025: $20 million to $25 million.
- Full Year 2025 Revenue Guidance: $410 million to $450 million.
- Full Year 2025 Adjusted EBITDA Guidance: $100 million to $115 million.
- Full Year 2025 Cash Flow from Operations Guidance: $30 million to $45 million.
- Full Year 2025 Capital Expenditures Guidance: $25 million to $35 million.
- Full Year 2025 Interest Expense Guidance: $8 million to $12 million.
Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shoals Technologies Group Inc (SHLS, Financial) reported first-quarter revenue of $80.4 million, slightly above the high end of their expected range.
- The company secured approximately $91 million in new orders, resulting in a robust backlog and awarded orders (BLAO) of $645.1 million.
- Shoals Technologies Group Inc (SHLS) is making progress on strategic growth initiatives, including international expansion and new product launches.
- The company has a strong domestic manufacturing footprint, which is resonating well with customers amid geopolitical uncertainties.
- Shoals Technologies Group Inc (SHLS) is seeing increased interest in their battery energy storage solutions (BESS), with notable partnerships and market opportunities identified.
Negative Points
- Net revenue declined by 11.5% year over year, driven by product mix, strategic pricing actions, and customer mix.
- Gross profit decreased to $28.1 million from $36.5 million in the prior year period, with a decline in gross profit percentage from 40.2% to 35.0%.
- The company reported a net loss of $0.3 million compared to net income of $4.8 million in the prior year period.
- Adjusted EBITDA was $12.8 million, down from $20.5 million in the prior year period, with a margin decrease from 22.5% to 15.9%.
- Shoals Technologies Group Inc (SHLS) is facing ongoing litigation costs related to wire insulation shrink back, impacting financial performance.
Q & A Highlights
Q: How has the competitive landscape shifted given the uncertainty around tariffs?
A: Brandon Moss, CEO, explained that while tariffs have increased customer inquiries, most conversations focus on Shoals' quality, service, and engineering capabilities. The company is excited about its commercial execution and expects positive outcomes.
Q: Can you provide more details on the two big projects in the BESS product line?
A: Brandon Moss highlighted the significant market opportunity in BESS, which is comparable in size to the core domestic utility-scale solar market. Shoals is winning business across three channels: solar EPCs, industrial markets like data centers and AI, and OEM partnerships. The company is optimistic about future growth in this area.
Q: How does Shoals' US manufacturing and supply chain position it in the market compared to competitors with exposure to China tariffs?
A: Brandon Moss emphasized that Shoals has been investing in US manufacturing and supply chain for over a year, unlike competitors who are just starting due to tariffs. Shoals' domestic supply chain gives it a competitive advantage, and customer engagement is driven by service and market changes rather than tariffs.
Q: What is the outlook for Shoals' gross margins, and what factors will help achieve the target of 40%-plus margins?
A: Dominic Bardos, CFO, noted that while current margins are in the mid to high 30% range, the company expects to achieve 40%-plus margins through product mix, customer mix, and efficiency improvements. New products and increased volume demand will also contribute to margin growth.
Q: How is Shoals' international portfolio evolving, and what traction is being gained outside core markets?
A: Brandon Moss stated that international projects, such as those in Africa, Australia, and Chile, have longer lead times but use similar designs to US projects. Shoals' solutions-based products and domestic content requirements position it well for international growth.
Q: What is the impact of the 145% China tariff on Shoals' BESS business and related solar projects?
A: Brandon Moss mentioned that while there is potential volatility in raw materials for battery storage, Shoals is not currently seeing an impact on project timelines. The company is starting from a low market share in BESS, allowing for growth in any market climate.
Q: Can you provide more details on the contract with a hyperscalar and its significance for Shoals?
A: Brandon Moss explained that Shoals is supplying large DC combiners and recombiners for data centers, which are similar to products used in solar and storage projects. This opportunity leverages Shoals' core competencies and is expected to drive growth in the BESS space.
Q: How is Shoals addressing the ongoing wire insulation shrink back litigation costs?
A: Dominic Bardos stated that the litigation is progressing, with fact-based depositions and data discovery phases underway. Legal expenditures will continue, with a trial date set for 2026 if mediation is unsuccessful.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
