Shoals Technologies Group, Inc. Reports Financial Results for Third Quarter 2024
Shoals Technologies Group, Inc. (“Shoals” or the “Company”) (Nasdaq: SHLS), a leading provider of electrical balance of system (“EBOS”) solutions for the energy transition market, announced results for its third quarter ended September 30, 2024.
“I’m pleased with the robust engagement we experienced in the third quarter. Customers remain cautious yet constructive as we head into the end of 2024 and look into 2025. Quoting volume across our customer base is at record levels, increasing almost 50% from the prior year period, and we are encouraged by strong interest from new customers,” said Brandon Moss, CEO of Shoals.
“Uncertainty and volatility driven by persistently high interest rates, a long interconnection queue, labor availability, and supply chain disruptions, have elongated our sales cycle all year. And while the timing of project awards and construction is difficult to predict, we’re increasingly confident in our competitive position in the marketplace, especially as labor costs rise and quality is front and center. As we shared with you at our recent Investor Day, the transformation you see occurring at Shoals today is setting us up exceptionally well to lead our markets in the coming years and we remain very excited about the opportunity ahead,” added Mr. Moss.
Third Quarter 2024 Financial Results
Revenue decreased 24%, to $102.2 million, compared to $134.2 million for the prior-year period. The year over year decline in net revenue was largely driven by project delays which the Company has previously discussed.
Gross profit increased to $25.4 million, compared to $14.2 million in the prior-year period. The increase was due to $13.3 million of wire insulation shrink back expense in the current period, compared to $50.2 million in the prior year period. Gross profit percentage was 24.8% compared to 10.5% in the prior-year period. The increase in gross profit percentage from the prior-year period was primarily due to the decrease in wire insulation shrinkback expenses, partially offset by higher labor costs and reduced leverage on fixed costs.
General and administrative expenses were $18.7 million, compared to $22.6 million during the prior-year period. This decrease was primarily the result of lower stock based and incentive compensation expense.
Income from operations was $4.5 million, compared to loss from operations of $10.6 million during the prior-year period.
Net loss was $0.3 million compared to $9.8 million during the prior-year period.
Net loss attributable to Shoals Technologies Group, Inc. was $0.3 million compared to $9.8 million during the prior-year period. Basic and diluted net loss per share was $0.00 compared to basic and diluted net loss per share of $0.06 in the prior-year period.
Adjusted gross profit* for the quarter was $38.7 million, reflecting a 37.9% adjusted gross profit percentage*.
Adjusted EBITDA* decreased $23.5 million to $24.5 million compared to $48.0 million for the prior-year period.
Adjusted net income* decreased $19.5 million to $13.9 million compared to $33.4 million during the prior-year period. Adjusted diluted earnings per share* were $0.08 compared to $0.20 in the prior-year period.
* A reconciliation of the Company’s non-GAAP measures to the most closely comparable U.S. generally accepted accounting principles (“GAAP”) measures are found within this release.
Backlog and Awarded Orders
The Company’s backlog and awarded orders as of September 30, 2024, were $596.6 million, representing a 5.8% decrease compared to the prior-year period and a 7.1% sequential decrease from June 30, 2024. The decrease in backlog and awarded orders was driven by the timing of orders received. International markets comprise more than 13% of backlog and awarded orders.
Backlog represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders are orders we are in the process of documenting a contract but for which a contract has not yet been signed.
Fourth Quarter 2024 Outlook
The Company is providing an outlook for the fourth quarter given the near-term uncertainty in the utility scale solar market, which has resulted in shifting order patterns. Based on current business conditions, business trends and other factors, for the quarter ending December 31, 2024, the Company expects:
- Revenue to be in the range of $97 to $107 million
- Adjusted EBITDA to be in the range of $23 to $28 million
Full Year 2024 Outlook
Based on current business conditions, business trends and other factors, for the full year 2024, the Company expects:
- Revenue to be in the range of $390 to $400 million
- Adjusted EBITDA* to be in the range of $96 to $101 million
- Adjusted net income* to be in the range of $58 to $62 million
- Cash Flow from operations to be in the range of $70 to $80 million
- Capital expenditures to be in the range of $8 to $12 million
- Interest expense to be in the range of $12 to $16 million
A reconciliation of Adjusted EBITDA guidance and Adjusted net income guidance, which are forward-looking measures that are non-GAAP measures, to the most closely comparable GAAP measures is not provided because we are unable to provide such reconciliation without unreasonable effort. The inability to provide a quantitative reconciliation is due to the uncertainty and inherent difficulty in predicting the occurrence, the financial impact and the periods in which the components of the applicable GAAP measures and non-GAAP adjustments may be recognized. The GAAP measures may include the impact of such items as non-cash share-based compensation, amortization of intangible assets and the tax effect of such items, in addition to other items we have historically excluded from Adjusted EBITDA and Adjusted net income. We expect to continue to exclude these items in future disclosures of these non-GAAP measures and may also exclude other similar items that may arise in the future.
Shoals Technologies Group | https://www.shoals.com.