– Reports Record Quarterly Revenue, Gross Profit, Adjusted EBITDA and Adjusted Net Income –
– Revenue Grew 52% Year-Over-Year to
– System Solutions Revenue Grew 80% Year-Over-Year to
– Third Quarter Gross Margin Expanded More Than 330 bps Year Over Year to 39.7% –
– Backlog and Awarded Orders Up 74% Year-Over-Year to a Record
– Raising Low End of 2022 Outlook to Reflect Recent Performance and Improving Business Conditions –
“Shoals had an exceptionally strong third quarter, delivering record revenue, gross profit and adjusted EBITDA. We grew revenues 52% year-over-year, with System Solutions revenue increasing 80% compared to the year-ago period which drove significantly higher gross margin,” said
“Demand for our products has continued to grow faster than the overall market, which is underscored by the 74% year-over-year increase in our backlog and awarded orders this quarter. Customer demand for our combine-as-you-go solution is particularly robust, with four new customers converting to our system during the quarter, bringing the total number of BLA customers to 33. We are also building backlog of our EV System Solutions after making our first shipments of these products during the quarter. We anticipate another step change in our growth next year as our EV charging products gain acceptance in the market and our BLA 2.0 and high-capacity plug-and-play wire harnesses receive UL certification, which we remain on track to obtain by year’s end,” added
“At the same time as we are taking share and introducing new products, conditions in our core solar market are improving. The two-year tariff exemption for Chinese solar panels, the recently passed Inflation Reduction Act and higher energy prices have given our customers and end-users the confidence to reinitiate previously delayed projects, make multi-year commitments to invest in solar generation and prioritize product availability and performance over price. As a result of the improving solar market conditions and our recent performance, we are raising the low end of our 2022 outlook. I am proud of what our team has achieved and could not be more excited about the future,” concluded
Third Quarter 2022 Financial Results
Revenue grew 52%, to
Gross profit increased 66% to
General and administrative expenses were
Income from operations was
Net income was
Adjusted EBITDA increased 57% to
Adjusted net income grew 43% to
Backlog and Awarded Orders
The Company’s backlog and awarded orders as of
Full Year 2022 Outlook
Based on current business conditions, business trends and other factors, for the year ending
- Revenue to be in the range of
$310 million to$325 million up from$300 million to$325 million - Adjusted EBITDA to be in the range of
$80 million to$86 million up from$77 million to$86 million - Adjusted net income to be in the range of
$48 million to$53 million up from$45 million to$53 million
A reconciliation of the Company’s non-GAAP measures to the applicable
Webcast and Conference Call Information
Company management will host a webcast and conference call on
Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company’s website at https://investors.shoals.com.
The conference call can be accessed live over the phone by dialing 1-855-327-6837 (domestic) or +1-631-891-4304 (international). A telephonic replay will be available approximately two hours after the call by dialing 1-844-512-2921 or for international callers, +1-412-317-6671. The conference ID for the live call and pin number for the replay is 10019583. The telephonic replay will be available until
About
Investor Relations Contact
Email: investors@shoals.com
Phone: 615-323-9836
Forward-Looking Statements
This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, financing and investment plans, dividend policy, competitive position, industry and regulatory environment, potential growth opportunities and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” "seek," “should,” “will,” “would” or similar expressions and the negatives of those terms.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include, among others, lower growth than anticipated in demand for solar energy projects and EV charging infrastructure; existing governmental policies and regulations, and any subsequent changes, which may present technical, regulatory and economic barriers; macroeconomic events, including heightened inflation, rise in interest rates and a potential recession; changes in
Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Non-GAAP Financial Measures
A reconciliation of Adjusted EBITDA and Adjusted net income guidance, which are forward-looking measures that are not prepared in accordance with GAAP, to the most directly comparable GAAP financial measures, is not provided because we are unable to provide such reconciliation without unreasonable effort. The inability to provide a quantitative reconciliation is due to the uncertainty and inherent difficulty in predicting the occurrence, the financial impact and the periods in which the components of the applicable GAAP measures and non-GAAP adjustments may be recognized. The GAAP measures may include the impact of such items as non-cash share-based compensation, amortization of intangible assets and the tax effect of such items, in addition to other items we have historically excluded from Adjusted EBITDA and Adjusted net income. We expect to continue to exclude these items in future disclosures of these non-GAAP measures and may also exclude other similar items that may arise in the future.
Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share (“EPS”)
We define Adjusted EBITDA as net income (loss) plus (i) interest expense, net, (ii) income tax expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) payable pursuant to the Tax Receivable Agreement (“TRA”) liability adjustment, (vi) loss on debt repayment, (vii) equity-based compensation, (viii) acquisition-related expenses, (ix) COVID-19 expenses and (x) non-recurring and other expenses. We define Adjusted Net Income as net income (loss) attributable to
Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, GAAP. We present Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS: (i) as factors in evaluating management’s performance when determining incentive compensation; (ii) to evaluate the effectiveness of our business strategies; and (iii) because our credit agreement uses measures similar to Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS to measure our compliance with certain covenants.
Among other limitations, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS do not reflect our cash expenditures, future requirements for capital expenditures, contractual commitments or the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations. Adjusted EBITDA does not reflect income tax expense or benefit for periods prior to the reorganization conducted at the time of the initial public offering. Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS may be calculated by other companies in our industry differently than we do or not at all, which may limit their usefulness as comparative measures. Because of these limitations, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP.
You should review the reconciliation of net income to Adjusted EBITDA, and net income attributable to
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except shares and par value)
2022 | 2021 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 11,202 | $ | 5,006 | |||
Accounts receivable, net | 71,652 | 31,499 | |||||
Unbilled receivables | 11,561 | 13,533 | |||||
Inventory, net | 81,158 | 38,368 | |||||
Other current assets | 7,608 | 5,042 | |||||
Total Current Assets | 183,181 | 93,448 | |||||
Property, plant and equipment, net | 16,596 | 15,574 | |||||
69,941 | 69,436 | ||||||
Other intangible assets, net | 58,606 | 65,236 | |||||
Deferred tax assets | 177,112 | 176,958 | |||||
Other assets | 24,456 | 5,762 | |||||
Total Assets | $ | 529,892 | $ | 426,414 | |||
Liabilities and Stockholders' Equity (Deficit) | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 21,383 | $ | 19,985 | |||
Accrued expenses and other | 43,407 | 9,569 | |||||
Current portion of payable pursuant to the tax receivable agreement | 3,583 | — | |||||
Long-term debt—current portion | 2,000 | 2,000 | |||||
Total Current Liabilities | 70,373 | 31,554 | |||||
Revolving line of credit | 85,640 | 55,140 | |||||
Long-term debt, less current portion | 189,289 | 189,913 | |||||
Payable pursuant to the tax receivable agreement, less current portion | 157,420 | 156,374 | |||||
Other long-term liabilities | 4,500 | 931 | |||||
Total Liabilities | 507,222 | 433,912 | |||||
Commitments and Contingencies | |||||||
Stockholders’ Equity (Deficit) | |||||||
Preferred stock, | — | — | |||||
Class A common stock, | 1 | 1 | |||||
Class B common stock, | 1 | 1 | |||||
Additional paid-in capital | 104,539 | 95,684 | |||||
Accumulated deficit | (78,133 | ) | (93,133 | ) | |||
Total stockholders’ equity attributable to | 26,408 | 2,553 | |||||
Non-controlling interests | (3,738 | ) | (10,051 | ) | |||
Total stockholders' equity (deficit) | 22,670 | (7,498 | ) | ||||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 529,892 | $ | 426,414 |
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Revenue | $ | 90,823 | $ | 59,840 | $ | 232,289 | $ | 165,166 | |||||||
Cost of revenue | 54,776 | 38,071 | 141,357 | 98,444 | |||||||||||
Gross profit | 36,047 | 21,769 | 90,932 | 66,722 | |||||||||||
Operating Expenses | |||||||||||||||
General and administrative expenses | 13,853 | 10,031 | 41,037 | 26,865 | |||||||||||
Depreciation and amortization | 2,229 | 2,175 | 6,939 | 6,305 | |||||||||||
Total Operating Expenses | 16,082 | 12,206 | 47,976 | 33,170 | |||||||||||
Income from Operations | 19,965 | 9,563 | 42,956 | 33,552 | |||||||||||
Interest expense, net | (4,754 | ) | (3,582 | ) | (12,760 | ) | (10,911 | ) | |||||||
Payable pursuant to the tax receivable agreement adjustment | — | (2,014 | ) | — | (3,678 | ) | |||||||||
Loss on debt repayment | — | — | — | (15,990 | ) | ||||||||||
Income before income taxes | 15,211 | 3,967 | 30,196 | 2,973 | |||||||||||
Income tax benefit (expense) | (2,452 | ) | 1,309 | (5,485 | ) | 3,123 | |||||||||
Net income | 12,759 | 5,276 | 24,711 | 6,096 | |||||||||||
Less: net income attributable to non-controlling interests | 4,801 | 2,790 | 9,711 | 1,911 | |||||||||||
Net income attributable to | $ | 7,958 | $ | 2,486 | $ | 15,000 | $ | 4,185 | |||||||
Three Months Ended | Nine Months Ended | Period from to | |||||||||||||
2022 | 2021 | ||||||||||||||
Earnings per share of Class A common stock: | |||||||||||||||
Basic | $ | 0.07 | $ | 0.02 | $ | 0.13 | $ | 0.02 | |||||||
Diluted | $ | 0.07 | $ | 0.02 | $ | 0.13 | $ | 0.02 | |||||||
Weighted average shares of Class A common stock outstanding: | |||||||||||||||
Basic | 112,975 | 101,890 | 112,561 | 96,354 | |||||||||||
Diluted | 113,584 | 102,251 | 112,816 | 96,527 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Nine Months Ended | |||||||
2022 | 2021 | ||||||
Cash Flows from Operating Activities | |||||||
Net income | $ | 24,711 | $ | 6,096 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 8,001 | 7,345 | |||||
Amortization/write off of deferred financing costs | 1,023 | 5,692 | |||||
Equity-based compensation | 11,887 | 6,404 | |||||
Provision for obsolete or slow-moving inventory | 443 | 435 | |||||
Deferred taxes | 5,299 | 640 | |||||
Payable pursuant to the tax receivable agreement adjustment | — | 3,678 | |||||
Gain on sale of assets | — | 61 | |||||
Changes in assets and liabilities, net of business acquisition: | |||||||
Accounts receivable | (40,084 | ) | (12,271 | ) | |||
Unbilled receivables | 1,972 | (6,760 | ) | ||||
Inventory | (43,601 | ) | (8,505 | ) | |||
Other assets | (381 | ) | (6,904 | ) | |||
Accounts payable | 1,186 | (5,198 | ) | ||||
Accrued expenses and other | 34,558 | 2,608 | |||||
Net Cash Provided by (Used in) Operating Activities | 5,014 | (6,679 | ) | ||||
Cash Flows Used In Investing Activities | |||||||
Purchases of property, plant and equipment | (2,393 | ) | (2,483 | ) | |||
Acquisition of a business, net of cash acquired | — | (12,909 | ) | ||||
Other | (503 | ) | — | ||||
(2,896 | ) | (15,392 | ) | ||||
Cash Flows from Financing Activities | |||||||
Distributions to non-controlling interest | (7,762 | ) | (4,837 | ) | |||
Employee withholding taxes related to net settled equity awards | (1,297 | ) | (137 | ) | |||
Deferred financing costs | — | (94 | ) | ||||
Payments on term loan facility | (1,500 | ) | (152,250 | ) | |||
Proceeds from revolving credit facility | 46,000 | 40,140 | |||||
Repayments of revolving credit facility | (15,500 | ) | — | ||||
Proceeds from issuance of Class A common stock sold in an IPO, net of underwriting discounts and commissions | — | 154,521 | |||||
Proceeds from issuance of Class A common stock in follow-on offering, net of underwriting discounts and commissions | — | 281,064 | |||||
Purchase of LLC Interests with proceeds from follow-on offering | — | (281,064 | ) | ||||
Payment of debt assumed in acquisition | — | (1,537 | ) | ||||
Deferred offering costs | — | (9,619 | ) | ||||
Net Cash Provided By Financing Activities | 19,941 | 26,187 | |||||
Net Increase in Cash, Cash Equivalents and Restricted Cash | 22,059 | 4,116 | |||||
Cash, Cash Equivalents and Restricted Cash—Beginning of Period | 9,557 | 10,073 | |||||
Cash, Cash Equivalents and Restricted Cash—End of Period | $ | 31,616 | $ | 14,189 |
Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share (“EPS”) (Unaudited)
Reconciliation of Net Income to Adjusted EBITDA (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Net income | $ | 12,759 | $ | 5,276 | $ | 24,711 | $ | 6,096 | |||||
Interest expense, net | 4,754 | 3,582 | 12,760 | 10,911 | |||||||||
Income tax benefit (expense) | 2,452 | (1,309 | ) | 5,485 | (3,123 | ) | |||||||
Depreciation expense | 478 | 449 | 1,371 | 1,265 | |||||||||
Amortization of intangibles | 2,121 | 2,088 | 6,630 | 6,080 | |||||||||
Payable pursuant to the TRA adjustment(a) | — | 2,014 | — | 3,678 | |||||||||
Loss on debt repayment | — | — | — | 15,990 | |||||||||
Equity-based compensation | 3,991 | 2,732 | 11,887 | 6,904 | |||||||||
Acquisition-related expenses | 20 | 1,697 | 32 | 1,697 | |||||||||
COVID-19 expenses(b) | — | 108 | — | 269 | |||||||||
Non-recurring and other expenses(c) | — | 243 | — | 1,821 | |||||||||
Adjusted EBITDA | $ | 26,575 | $ | 16,880 | $ | 62,876 | $ | 51,588 |
(a) Represents an adjustment to eliminate the remeasurement of the payable pursuant to the TRA.
(b) Represents costs incurred as a direct impact from the COVID-19 pandemic, disinfecting and reconfiguration of facilities, medical professionals to conduct daily screenings of employees and direct legal costs associated with the pandemic.
(c) Represents certain costs associated with non-recurring professional services, our prior private equity owners’ expenses and other costs.
Reconciliation of Net Income Attributable to
Three Months Ended | Nine Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net income attributable to | $ | 7,958 | $ | 2,486 | $ | 15,000 | $ | 4,185 | |||||||
Net income impact from pro forma conversion of Class B common stock to Class A common stock(a) | 4,801 | 2,790 | 9,711 | 1,911 | |||||||||||
Adjustment to the provision for income tax(b) | (1,134 | ) | (668 | ) | (2,293 | ) | (476 | ) | |||||||
Tax effected net income | 11,625 | 4,608 | 22,418 | 5,620 | |||||||||||
Amortization of intangibles | 2,121 | 2,088 | 6,630 | 6,080 | |||||||||||
Amortization of deferred financing costs | 339 | 278 | 1,023 | 953 | |||||||||||
Payable pursuant to the TRA adjustment(c) | — | 2,014 | — | 3,678 | |||||||||||
Loss on debt repayment | — | — | — | 15,990 | |||||||||||
Equity-based compensation | 3,991 | 2,732 | 11,887 | 6,904 | |||||||||||
Acquisition-related expenses | 20 | 1,697 | 32 | 1,697 | |||||||||||
COVID-19 expenses(d) | — | 108 | — | 269 | |||||||||||
Non-recurring and other expenses(e) | — | 243 | — | 1,821 | |||||||||||
Tax impact of adjustments(f) | (1,529 | ) | (2,166 | ) | (4,621 | ) | (7,972 | ) | |||||||
Adjusted Net Income | $ | 16,567 | $ | 11,602 | $ | 37,369 | $ | 35,040 |
(a) Reflects net income to Class A common shares from pro forma exchange of corresponding shares of our Class B common shares held by our founder and management.
(b) Shoals Technologies Group, Inc. is subject to
Three Months Ended | Nine Months Ended | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Statutory | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | |||
Permanent adjustments | 0.1 | % | 0.1 | % | 0.1 | % | 1.0 | % | |||
State and local taxes (net of federal benefit) | 2.5 | % | 2.9 | % | 2.5 | % | 2.9 | % | |||
Effective income tax rate for Adjusted Net Income | 23.6 | % | 24.0 | % | 23.6 | % | 24.9 | % |
(c) Represents an adjustment to eliminate the remeasurement of the payable pursuant to the TRA.
(d) Represents costs incurred as a direct impact from the COVID-19 pandemic, disinfecting and reconfiguration of facilities, medical professionals to conduct daily screenings of employees, and direct legal costs associated with the pandemic.
(e) Represents certain costs associated with non-recurring professional services, our prior private equity owners and other costs.
(f) Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (in thousands, except per share):
Three Months Ended | Nine Months Ended | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Diluted weighted average shares of Class A common shares outstanding, excluding Class B common shares | 113,584 | 102,251 | 112,816 | 96,527 | |||||||
Assumed pro forma conversion of Class B common shares to Class A common shares | 54,253 | 64,813 | 54,579 | 70,285 | |||||||
Adjusted diluted weighted average shares outstanding | 167,837 | 167,064 | 167,395 | 166,812 | |||||||
Adjusted Net Income(a) | $ | 16,567 | $ | 11,602 | $ | 37,369 | $ | 35,040 | |||
Adjusted Diluted EPS | $ | 0.10 | $ | 0.07 | $ | 0.22 | $ | 0.21 |
(a) Represents Adjusted Net Income for the full period presented.
Source:
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