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Shoals Technologies Group, Inc. Reports Financial Results for Second Quarter 2022
ソース: Nasdaq GlobeNewswire / 15 8 2022 16:05:02 America/New_York
– Revenue Grew 23% Year-Over-Year to Record $73.5 million in the Second Quarter –
– Record Gross Profit of $28.6 million –
– Backlog and Awarded Orders Up 63% Year-Over-Year to a Record $327.2 million –
– System Solutions Represented 77% of Revenue in the Second Quarter –
– Reaffirms 2022 Outlook –
PORTLAND, Tenn., Aug. 15, 2022 (GLOBE NEWSWIRE) -- Shoals Technologies Group, Inc. (“Shoals” or the “Company”) (Nasdaq: SHLS), a leading provider of electrical balance of system (“EBOS”) solutions for solar, battery storage and electric vehicle charging infrastructure, today announced results for its second quarter ended June 30, 2022.
“Shoals navigated the significant challenges and uncertainty the industry faced during the second quarter to deliver record revenue and gross profit, while maintaining gross margin within our targeted range,” said Jason Whitaker, Chief Executive Officer of Shoals.
“We continue to see robust growth across our business, with backlog and awarded orders up 63% year-over-year and 8% sequentially. Demand for our combine-as-you-go solution continues to grow. During the quarter we converted four additional customers, bringing the total BLA customers to 29. Customer interest in our recently introduced products is strong, particularly within battery storage, wire management, and EV charging. Further, we remain on track to have our BLA 2.0 and high-capacity plug-and-play wire harnesses certified later this year. Finally, the two-year tariff exemption for solar panels announced by the White House was a turning point in customer sentiment, and we have seen order patterns normalize as a result,” concluded Mr. Whitaker.
Second Quarter 2022 Financial Results
Revenue grew 23%, to $73.5 million, compared to $59.7 million for the prior-year period, driven by increases of 97% in Components and 11% in System Solutions. The growth in Components revenue was driven by increases in shipments of battery storage products as well as shipments of solar products to a significant number of new customers. New customers typically purchase Components first, before transitioning to System Solutions. The growth in System Solutions revenue reflected strong demand for the Company’s combine-as-you-go system. System Solutions represented 77% of revenue in the quarter versus 86% in the prior-year period and 69% in the prior quarter.Gross profit increased 9% to $28.6 million, compared to $26.2 million in the prior-year period. Gross profit as a percentage of revenue was 38.9% compared to 43.8% in the prior-year period, due to a higher mix of Components sales in the quarter which carry lower margins than System Solutions as well as higher raw material and logistics costs.
General and administrative expenses were $13.3 million, compared to $10.0 million during the same period in the prior year. This change was primarily a result of higher non-cash stock-based compensation, planned increases in payroll expense due to higher headcount to support growth and new product initiatives, and public company costs.
Income from operations was $13.0 million, compared to $14.1 million during the same period in the prior year.
Net income was $7.3 million compared to $9.2 million during the same period in the prior year. The change was primarily due to higher general and administrative expenses, interest expense and taxes in the current period. Basic and diluted net income per share was $0.04 compared to basic and diluted net income per share of $0.05 in the prior-year period.
Adjusted EBITDA was $19.8 million compared to $20.6 million for the prior-year period.
Adjusted net income was $11.8 million compared to $14.7 million during the same period in the prior year. Adjusted diluted earnings per share was $0.07 compared to $0.09 in the prior-year period.
Backlog and Awarded Orders
The Company’s backlog and awarded orders on June 30, 2022 were $327.2 million, representing a 63% increase versus the same time last year and an 8% sequential increase from March 31, 2022. The increase in backlog and awarded orders reflects continued robust demand for the Company’s products.Full Year 2022 Outlook
Based on current business conditions, business trends and other factors, for the year ending December 31, 2022, the Company continues to expect:- Revenues to be in the range of $300 million to $325 million
- Adjusted EBITDA to be in the range of $77 million to $86 million
- Adjusted net income to be in the range of $45 million to $53 million
A reconciliation of the Company’s non-GAAP measures to the applicable GAAP measures are found within this release.
Webcast and Conference Call Information
Company management will host a webcast and conference call on August 15, 2022, at 5:00 p.m. Eastern Time, to discuss the Company's financial results.Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://investors.shoals.com.
The conference call can be accessed live over the phone by dialing 1-855-327-6837 (domestic) or +1-631-891-4304 (international). A telephonic replay will be available approximately two hours after the call by dialing 1-844-512-2921 or for international callers, +1-412-317-6671. The conference ID for the live call and pin number for the replay is 10019579. The replay will be available until 11:59 p.m. Eastern Time on August 29, 2022.
About Shoals Technologies Group, Inc.
Shoals Technologies Group, Inc. is a leading provider of electrical balance of systems (EBOS) solutions for solar, storage, and electric vehicle charging infrastructure. Since its founding in 1996, the Company has introduced innovative technologies and systems solutions that allow its customers to substantially increase installation efficiency and safety while improving system performance and reliability. Shoals Technologies Group, Inc. is a recognized leader in the renewable energy industry whose solutions are deployed on over 20 GW of solar systems globally. For additional information, please visit: https://www.shoals.com.Investor Relations Contact
Shoals Technologies Group, Inc.
Email: investors@shoals.com
Phone: 615-323-9836Forward-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. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report with the understanding that our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Non-GAAP Financial Measures
(1) A reconciliation of projected adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, 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 per share. 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 (collectively, "non-GAAP adjustments").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 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 Shoals Technologies Group, Inc. plus (i) net income impact from pro forma conversion of Class B common stock to Class A common stock, (ii) amortization of intangibles, (iii) payable pursuant to the tax receivable agreement adjustment, (iv) loss on debt repayment, (v) amortization of deferred financing costs, (vi) equity-based compensation, (vii) acquisition-related expenses, (viii) COVID-19 expenses and (ix) non-recurring and other expenses, 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 shares outstanding for the applicable period, which assumes the pro forma exchange of all outstanding Class B common shares for Class A common shares.Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, GAAP. We present Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS: (i) as factors in evaluating management’s performance when determining incentive compensation; (ii) to evaluate the effectiveness of our business strategies; and (iii) because our credit agreement uses measures similar to Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS to measure our compliance with certain covenants.
Among other limitations, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; in the case of Adjusted EBITDA, does not reflect income tax expense or benefit for periods prior to the reorganization; and may be calculated by other companies in our industry differently than we do or not at all, which may limit their usefulness as comparative measures.
Because of these limitations, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. You should review the reconciliation of net income to Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS below and not rely on any single financial measure to evaluate our business.
Shoals Technologies Group, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except shares and par value)June 30,
2022December 31,
2021Assets Current Assets Cash and cash equivalents $ 10,094 $ 5,006 Accounts receivable, net 57,827 31,499 Unbilled receivables 14,580 13,533 Inventory, net 64,961 38,368 Other current assets 8,827 5,042 Total Current Assets 156,289 93,448 Property, plant and equipment, net 16,830 15,574 Goodwill 69,941 69,436 Other intangible assets, net 60,727 65,236 Deferred tax assets 175,059 176,958 Other assets 17,771 5,762 Total Assets $ 496,617 $ 426,414 Liabilities and Stockholders' Equity (Deficit) Current Liabilities Accounts payable $ 24,258 $ 19,985 Accrued expenses and other 25,297 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 55,138 31,554 Revolving line of credit 85,140 55,140 Long-term debt, less current portion 189,515 189,913 Payable pursuant to the tax receivable agreement, less current portion 153,591 156,374 Other long-term liabilities 4,793 931 Total Liabilities 488,177 433,912 Stockholders’ Equity (Deficit) Preferred stock, $0.00001 par value - 5,000,000 shares authorized; none issued and outstanding as of June 30, 2022 and December 31, 2021 — — Class A common stock, $0.00001 par value - 1,000,000,000 shares authorized; 112,667,006 and 112,049,981 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 1 1 Class B common stock, $0.00001 par value - 195,000,000 shares authorized; 54,534,591 and 54,794,479 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 1 1 Additional paid-in capital 101,243 95,684 Accumulated deficit (86,091 ) (93,133 ) Total stockholders’ equity attributable to Shoals Technologies Group, Inc. 15,154 2,553 Non-controlling interests (6,714 ) (10,051 ) Total stockholders' equity (deficit) 8,440 (7,498 ) Total Liabilities and Stockholders’ Equity (Deficit) $ 496,617 $ 426,414
Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenue $ 73,490 $ 59,722 $ 141,466 $ 105,326 Cost of revenue 44,897 33,543 86,581 60,373 Gross profit 28,593 26,179 54,885 44,953 Operating Expenses General and administrative expenses 13,265 10,018 27,184 16,834 Depreciation and amortization 2,344 2,062 4,710 4,130 Total Operating Expenses 15,609 12,080 31,894 20,964 Income from Operations 12,984 14,099 22,991 23,989 Interest expense, net (4,170 ) (3,620 ) (8,006 ) (7,329 ) Payable pursuant to the tax receivable agreement adjustment — (1,664 ) — (1,664 ) Loss on debt repayment — — — (15,990 ) Income (loss) before income taxes 8,814 8,815 14,985 (994 ) Income tax benefit (expense) (1,511 ) 339 (3,033 ) 1,814 Net income 7,303 9,154 11,952 820 Less: net income (loss) attributable to non-controlling interests 2,901 4,596 4,910 (879 ) Net income attributable to Shoals Technologies Group, Inc. $ 4,402 $ 4,558 $ 7,042 $ 1,699 Three Months Ended June 30, Six Months Ended
June 30, 2022Period from January 27, 2021
to June 30, 20212022 2021 Earnings (loss) per share of Class A common stock: Basic $ 0.04 $ 0.05 $ 0.06 $ (0.01 ) Diluted $ 0.04 $ 0.05 $ 0.06 $ (0.01 ) Weighted average shares of Class A common stock outstanding: Basic 112,489 93,544 112,350 93,542 Diluted 112,616 166,827 112,428 93,542 Shoals Technologies Group, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)Six Months Ended June 30, 2022 2021 Cash Flows from Operating Activities Net income $ 11,952 $ 820 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 5,402 4,808 Amortization/write off of deferred financing costs 684 5,415 Equity-based compensation 7,896 4,172 Provision for obsolete or slow-moving inventory 443 — Deferred taxes 2,847 (524 ) Gain on sale of assets — 61 Changes in assets and liabilities: Accounts receivable (26,259 ) (15,973 ) Unbilled receivables (1,047 ) (3,003 ) Inventory (27,404 ) (6,151 ) Other assets (2,059 ) (4,631 ) Accounts payable 4,060 (410 ) Accrued expenses and other 16,742 (362 ) Net Cash Used in Operating Activities (6,743 ) (14,114 ) Cash Flows Used In Investing Activities Purchases of property, plant and equipment (2,149 ) (1,736 ) Net Cash Used in Investing Activities (2,149 ) (1,736 ) Cash Flows from Financing Activities Distributions to non-controlling interest (4,566 ) (2,973 ) Employee withholding taxes related to net settled equity awards (1,297 ) (137 ) Deferred financing costs — (94 ) Payments on term loan facility (1,000 ) (151,750 ) Proceeds from revolving credit facility 38,000 34,000 Proceeds from issuance of Class A common stock sold in an IPO, net of underwriting discounts and commissions — 278,833 Purchase of LLC Interests with proceeds from IPO — (124,312 ) Deferred offering costs — (9,619 ) Net Cash Provided By Financing Activities 23,137 18,948 Net Increase in Cash, Cash Equivalents and Restricted Cash 14,245 3,098 Cash, Cash Equivalents and Restricted Cash—Beginning of Period 9,557 10,073 Cash, Cash Equivalents and Restricted Cash—End of Period $ 23,802 $ 13,171
Shoals Technologies Group, Inc.
Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share (“EPS”) (Unaudited)
(in thousands)Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands):
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income $ 7,303 $ 9,154 $ 11,952 $ 820 Interest expense, net 4,170 3,620 8,006 7,329 Income tax benefit (expense) 1,511 (339 ) 3,033 (1,814 ) Depreciation expense 470 411 893 816 Amortization of intangibles 2,238 1,996 4,509 3,992 Payable pursuant to the TRA adjustment (a) — 1,664 — 1,664 Loss on debt repayment — — — 15,990 Equity-based compensation 4,063 2,780 7,896 4,172 Acquisition-related expenses 12 — 12 — COVID-19 expenses (b) — 106 — 161 Non-recurring and other expenses (c) — 1,239 — 1,578 Adjusted EBITDA $ 19,767 $ 20,631 $ 36,301 $ 34,708 (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, premium pay during the pandemic to hourly workers in 2020 and direct legal costs associated with the pandemic.
(c) Represents certain costs associated with non-recurring professional services, Oaktree’s expenses and other costs.
Reconciliation of Net Income (Loss) Attributable to Shoals Technologies Group, Inc. to Adjusted Net Income (in thousands):
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income attributable to Shoals Technologies Group, Inc. $ 4,402 $ 4,558 $ 7,042 $ 1,699 Net income impact from pro forma conversion of Class B common stock to Class A common stock (a) 2,901 4,596 4,910 (879 ) Adjustment to the provision for income tax (b) (686 ) (942 ) (1,159 ) 192 Tax effected net income 6,617 8,212 10,793 1,012 Amortization of intangibles 2,238 1,996 4,509 3,992 Amortization of deferred financing costs 408 305 684 675 Payable pursuant to the TRA adjustment (c) — 1,664 — 1,664 Loss on debt repayment — — — 15,990 Equity-based compensation 4,063 2,780 7,896 4,172 Acquisition-related expenses 12 — 12 — COVID-19 expenses (d) — 106 — 161 Non-recurring and other expenses (e) — 1,239 — 1,578 Tax impact of adjustments (f) (1,588 ) (1,635 ) (3,093 ) (5,806 ) Adjusted Net Income $ 11,750 $ 14,667 $ 20,801 $ 23,438 (a) Reflects net income (loss) 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 U.S. Federal income taxes, in addition to state and local taxes with respect to its allocable share of any net taxable income of Shoals Parent LLC. The adjustment to the provision for income tax reflects the effective tax rates below, assuming Shoals Technologies Group, Inc. owns 100% of the units in Shoals Parent LLC.
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Statutory U.S. Federal income tax rate 21.0 % 21.0 % 21.0 % 21.0 % Permanent adjustments 0.1 % 2.0 % 0.1 % 2.0 % State and local taxes (net of federal benefit) 2.5 % (2.5 )% 2.5 % (1.1 )% Effective income tax rate for Adjusted Net Income 23.6 % 20.5 % 23.6 % 21.9 % (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, premium pay during the pandemic to hourly workers in 2020 and direct legal costs associated with the pandemic.
(e) Represents certain costs associated with non-recurring professional services, Oaktree’s expenses 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Diluted weighted average shares of Class A common shares outstanding, excluding Class B common shares 112,616 93,760 112,428 93,650 Assumed pro forma conversion of Class B common shares to Class A common shares 54,635 73,067 54,585 73,067 Adjusted diluted weighted average shares outstanding 167,251 166,827 167,013 166,717 Adjusted Net Income (a) $ 11,750 $ 14,667 $ 20,801 $ 23,438 Adjusted Diluted EPS $ 0.07 $ 0.09 $ 0.12 $ 0.14 (a) Represents Adjusted Net Income for the full period presented.
