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Shoals Technologies Group, Inc. (SHLS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $80.4M was above the company’s Q4 guide ($70–$80M) but down 11.5% YoY; gross margin compressed to 35.0% on strategic pricing and mix, and GAAP diluted EPS was $(0.00) .
  • Backlog and awarded orders rose to $645.1M (+5% YoY), with ~$500M scheduled for delivery over the next four quarters; book-to-bill was 1.13 on ~$91M bookings .
  • FY25 guidance was maintained (revenue $410–$450M; adjusted EBITDA $100–$115M; CFO reiterated mid/high-30s gross margin near term, aiming for ~40% long-term) and Q2 2025 guide set at revenue $100–$110M and adjusted EBITDA $20–$25M .
  • Consensus context: revenue beat S&P Global Wall Street consensus while EPS and EBITDA (SPGI definition) missed; maintained FY25 outlook amid tariff headlines and improving project calendars is the key stock narrative catalyst*.

What Went Well and What Went Wrong

What Went Well

  • Revenue came in above the guided range for Q1, supported by ~$91M in new orders and a book-to-bill of 1.13; backlog and awarded orders increased to $645.1M with ~$500M scheduled over the next four quarters .
  • Management highlighted commercial traction and diversification (international, CC&I, BESS, OEM), with CEO stating: “The strategic initiatives that are driving increased market penetration and diversification are progressing very well” .
  • International pipeline strengthened via MOU with UGT Renewables/Sun Africa (up to 12GW) and EXIM-financed projects in Angola (~600MW), reinforcing Shoals’ domestic manufacturing advantage .

What Went Wrong

  • YoY revenue declined 11.5% and gross margin fell to 35.0% (from 40.2% YoY), driven by strategic pricing actions, volume discounts, customer/product mix, and reduced fixed cost absorption .
  • Adjusted EBITDA decreased to $12.8M from $20.5M YoY; net loss was $(0.3)M vs. $4.8M prior year, reflecting margin pressure and litigation costs .
  • Wire insulation shrinkback remediation/legal spend weighed on cash and G&A: $9.5M remediation in Q1 and ~$2.5M litigation expenses; current warranty liability stood at ~$30.4M (current portion $25.0M) as of 3/31/25 .

Financial Results

Quarterly Comparison (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$102.2 $107.0 $80.6
GAAP Diluted EPS ($)$(0.00) $0.05 $(0.00)
Gross Margin % (GAAP)24.8% 37.6% 35.0%
Adjusted EBITDA ($USD Millions)$24.5 $26.4 $12.8
Adjusted EBITDA Margin %—24.7% 15.9%

YoY Comparison (Q1)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$90.8 $80.6
GAAP Diluted EPS ($)$0.03 $(0.00)
Gross Margin % (GAAP)40.2% 35.0%
Adjusted EBITDA ($USD Millions)$20.5 $12.8

KPIs

KPIQ3 2024Q4 2024Q1 2025
Backlog & Awarded Orders ($USD Millions)$596.6 $634.7 $645.1
BLAO scheduled next 4 quarters ($USD Millions)—$439.3 ~$500.0
Book-to-Bill (x)—1.4 1.13

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$410–$450M $410–$450M Maintained
Adjusted EBITDAFY 2025$100–$115M $100–$115M Maintained
Cash Flow from OperationsFY 2025$30–$45M $30–$45M Maintained
Capital ExpendituresFY 2025$25–$35M $25–$35M Maintained
Interest ExpenseFY 2025$8–$12M $8–$12M Maintained
RevenueQ2 2025N/A$100–$110M New
Adjusted EBITDAQ2 2025N/A$20–$25M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macroQ3: favorable initial ITC ruling vs Voltage; macro uncertainty; adjusted margin context ; Q4: unusual seasonality; cautious outlook; tariff risk scenarios discussed Management sees limited direct tariff exposure due to domestic manufacturing; customers not delaying projects; monitoring IRA/PTC/ITC headlines Improving execution despite headline risk
Supply chain & laborQ4: equipment availability and labor bottlenecks, elongated timelines EPCs’ calendars full; labor remains tight; more preplanning and geographic sequencing to retain crews Tight labor persists; better planning
Product performance/new offeringsQ4: >12 new products; 2kV solutions; OEM alignment; CC&I traction New products driving wins; BESS strategy with 3 go-to-market channels; hyperscaler win; OEM partnership momentum Expanding mix; accretive opportunities
Regional/international trendsQ4: wins in Australia/Chile; ~$86M international BLAO MOU with UGT/Sun Africa (up to 12GW); Angola ~600MW EXIM-financed; domestic content advantage International ramping
Regulatory/legalQ4: appeal of ITC ALJ reversal; new ITC case (patents 375/376) IP protection continues; wire shrinkback litigation progressing; depositions/discovery in 3Q25 Ongoing litigation; risk managed
R&D executionQ4: Shoals Innovation Field for real-world testing; new state-of-the-art factory consolidation Factory move by end Q3 2025; automation/lean expected to improve productivity Execution underway

Management Commentary

  • CEO: “We began the year with a strong start, delivering revenue above our guided range… I’m proud of the robust backlog and awarded orders of $645 million, with approximately $500 million scheduled for the coming four quarters” .
  • CEO: “While… tariffs and domestic energy policy… may impact our business, we believe Shoals has limited direct exposure… we do not participate in 45X credits and we have a robust supply chain with strong domestic partners” .
  • CFO: “Adjusted gross profit percentage… at 35%… driven by product mix, strategic pricing actions and a loss of fixed costs leverage… Adjusted EBITDA was $12.8 million” .
  • CFO: “We spent $9.5 million on wire insulation shrinkback remediation and had a remaining warranty liability… $30.4 million… $25 million current portion” .

Q&A Highlights

  • Tariffs/competitive landscape: Management emphasized domestic manufacturing and quality/service over tariff-driven demand; believes Shoals is positioned versus import-exposed peers .
  • BESS traction and hyperscaler win: Three GTM paths (EPC, OEM skid partners, direct to developers/owners); hyperscaler project uses large DC combiners/recombiners with ASPs ~$40k–$80k per unit .
  • Margin trajectory: Near-term mid/high-30s gross margin, building toward 40%+ via mix, volume, efficiency; focus on operating profit/shareholder returns .
  • Project delays/book-and-turn: Visibility improved; book-and-turn expected to offset delays; customers’ 2025 calendars full; fewer delays than 2024 .
  • Labor dynamics: EPCs face tight labor; increased preplanning/packaging of projects to retain crews in specific geographies .

Estimates Context

Q1 2025 Actual vs S&P Global Wall Street Consensus

MetricConsensusActual
Revenue ($USD Millions)$74.54*$80.63
Primary EPS ($)$0.0388*$(0.00)
EBITDA ($USD Millions, SPGI)$12.16*$7.60*
  • Revenue beat consensus; EPS missed; SPGI EBITDA missed. Company’s adjusted EBITDA of $12.8M was within its $10–$15M Q1 guide .
  • FY25 outlook maintained; if delays remain below 2024 levels, results could skew toward the high end of guidance per CFO .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue upside to Q1 guide with strong bookings and backlog suggests improving execution despite macro headlines; watch for Q2 ramp (revenue $100–$110M) and seasonal back-half weighting .
  • Margin compression is deliberate near term (pricing/mix to win new customers/markets); management targeting efficiency and product mix to trend back toward ~40% gross margin over time .
  • BESS is a meaningful multi-year growth vector (EPC, OEM skid partners, direct hyperscaler/industrial), likely accretive; expect ongoing updates on partnerships and wins .
  • Domestic manufacturing and supply chain flexibility mitigate tariff risk; potential competitive tailwind if tariffs on imports expand .
  • Litigation/remediation remains a cash and P&L headwind near term; wire shrinkback warranty liability is being worked down; monitor litigation milestones in 2H25 .
  • International expansion (UGT/Sun Africa MOU; EXIM-financed Angola) and CC&I/OEM diversification broaden revenue base and improve pipeline visibility .
  • Trading setup: near-term gross margin pressure vs improving order flow and maintained FY25 guide; stock likely sensitive to tariff developments, BESS announcements, and evidence of back-half margin expansion .

Appendix: Additional Data (Company-Reported)

  • Cash from operations: $15.6M in Q1, aided by collections/timing; capex $3.2M .
  • Balance sheet: Cash $35.6M; revolving credit facility $141.8M; net debt to adjusted EBITDA 1.2x .
  • Non-GAAP definitions and reconciliations provided in the release (Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Gross Profit) .