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Shoals Technologies Group, Inc. (SHLS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered record revenue of $135.8M (+32.9% y/y; +22.5% q/q), beating S&P Global consensus by ~$5.0M (~3.8%); adjusted diluted EPS was $0.12 vs $0.125 cons. (slight miss), and GAAP EPS was $0.07 . Consensus values marked with asterisks are from S&P Global.*
  • Book-to-bill was 1.4 with record BLAO (backlog + awarded orders) of $720.9M (+21% y/y; +7.4% q/q), supporting continued growth into 2026 .
  • Management raised FY25 revenue outlook to $467–$477M (from $450–$470M last quarter); FY25 adjusted EBITDA is now $105–$110M (narrowed from $100–$115M) .
  • Margin upside expected in 2H did not materialize due to tariffs (including Section 232 aluminum and country-specific actions) negating planned cost-outs (100–200 bps) and mix shift toward lower-margin Long Tail BLA; legal expense for shrinkback litigation also elevated .

What Went Well and What Went Wrong

  • What Went Well

    • Revenue beat: $135.8M vs ~$130.8M S&P Global consensus, driven by demand and share capture; “revenue above the high end” of guide . Consensus from S&P Global.*
    • Commercial momentum: Record BLAO $720.9M; $575M scheduled to ship over next four quarters; quote volume >$900M in Q3; book-to-bill 1.4 .
    • Strategic diversification: BESS traction (two MSAs, ~$18M BESS in BLAO; initial shipments expected to begin in Q2’26), international projects in LATAM and Australia recognized ~$6M revenue in Q3 .

  • What Went Wrong

    • Margins vs internal expectations: Gross margin 37.0% (in range) but upside was capped; tariffs undid 100–200 bps of expected cost-out; mix shift to lower-margin Long Tail BLA weighed on percentage margins .
    • Elevated legal/G&A: G&A $29.4M (+$10.7M y/y), including ~$6.8M shrinkback-related litigation expense; legal costs pressured EPS/EBITDA .
    • EBITDA vs S&P consensus: S&P Global EBITDA consensus ~$32.7M* vs S&P actual ~$28.9M* (note definitional differences vs company’s Adjusted EBITDA of $32.0M) . S&P Global values.*

Financial Results

Q3 2025 headline performance vs prior quarter and prior year

MetricQ3 2024 (Oldest)Q2 2025Q3 2025 (Newest)
Revenue ($M)$102.165 $110.841 $135.804
GAAP Diluted EPS$(0.00) $0.08 $0.07
Adjusted Diluted EPS$0.08 $0.10 $0.12
Gross Margin %24.8% 37.2% 37.0%
Operating Income ($M)$4.524 $15.998 $18.671
Adjusted EBITDA ($M)$24.533 $24.472 $31.974

Q3 2025 vs S&P Global consensus

MetricS&P Global ConsensusActual Q3 2025Surprise
Revenue ($M)$130.824*$135.804 +$4.980M (~+3.8%) (from S&P est.* and 8-K actual )
Primary EPS (Adj)$0.1252*$0.12 (~$0.005 miss) (from S&P est.* and 8-K adj. EPS )
EBITDA ($M)$32.701*$28.864*(~$3.8M miss; note S&P vs company “Adjusted EBITDA” $31.974M )

Note: Values marked with asterisks (*) retrieved from S&P Global.

Key KPIs and balance sheet

KPIQ3 2024Q2 2025Q3 2025
Backlog + Awarded Orders (BLAO) ($M)$595.9 (implied y/y ref)$671.3 $720.9
Book-to-Bill—1.2 1.4
Backlog Portion of BLAO ($M)—$260.9 $298
BLAO sched. next 4Q ($M)—$540.3 $575
International % of BLAO—13.2% >11.5%
Quote volume (quarter)——>$900M
BESS in BLAO ($M)——~$18
Free Cash Flow ($M)—($26) in Q2 (call commentary) $9 (Q3)
Net debt / Adjusted EBITDA (x)—1.4x 1.2x
Warranty liability – current ($M)—$15.102 $4.556
Warranty liability – LT ($M)—$4.685 $3.041
Cash from Operations (YTD) ($M)—$1.737 (H1) $21.154 (9M)

Segment/mix: Shoals does not disclose formal revenue by segment; notable mix items include Long Tail BLA (lower gross margin %) and growth areas (BESS, OEM, CC&I) noted qualitatively .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$450–$470M (Q2 guide) $467–$477M Raised
Adjusted EBITDAFY 2025$100–$115M (Q2) $105–$110M Narrowed (midpoint slightly up)
Cash Flow from OpsFY 2025$15–$25M (Q2) $15–$25M Maintained
Capital ExpendituresFY 2025$30–$40M (Q2) $30–$40M Maintained
Interest ExpenseFY 2025$8–$12M (Q2) $8–$12M Maintained
RevenueQ4 2025$135–$145M implied (from Q2 call) $140–$150M Raised (formalized)
Adjusted EBITDAQ4 2025$35–$40M implied (from Q2 call) $35–$40M Maintained

Note: Q1 FY25 guide was $410–$450M revenue and CFO $30–$45M; both were subsequently updated (Q2/Q3) .

Earnings Call Themes & Trends

TopicQ1 2025 (Prev-2)Q2 2025 (Prev-1)Q3 2025 (Current)Trend
AI/data centers & BESSHyperscaler win; three BESS go-to-market paths; ASPs $40–80k per unit; BESS TAM large and multi-year BESS pipeline increasingly tied to data center AI; quoting “up 100x y/y” Two MSAs signed; ~$18M BESS in BLAO; revenue start expected early Q2’26; dedicating ~15% floor space to BESS Accelerating
Supply chain & tariffsDomestic mfg investments; flexible supply chain; limited near-term exposure Strategic pricing; mix; monitoring tariffs; productivity to come after facility consolidation Section 232 aluminum + country-specific tariffs negated 100–200 bps expected savings; pass-through possible, but timing impacted Headwind persisted
Product/margin mix35% GM; mix and pricing to win new EPCs; path to 40%+ LT GM GM 37.2%; mix (combiner/home-run vs BLA) and promotional pricing; legal costs elevated GM 37.0%; Long Tail BLA expands wallet but lower % margin; legal/G&A elevated Stable GM; mix drag
International expansionMOU with UGT/Sun Africa (up to 12 GW); export leverage (EXIM) Expect multiple international projects in 2025; acceleration in 2026 >$6M recognized from LATAM/Australia; Australia team buildout; EXIM-funded export projects in 2026 Building
Wire shrinkback remediationYTD $9.5M in Q1; liability $30.4M current portion $25M Q2 remediation $11.2M; current liability $14.5M Q3 remediation $11.9M; warranty current $4.556M; LT $3.041M Progressing/declining liability
Facility consolidationNew 635k sq ft plant; productivity to come Move-in late Q3; benefits 2026 CO issued; moving underway; 540 truckloads moved while producing record output Executing

Management Commentary

  • “We delivered record revenue of $135.8 million… and a book to bill of 1.4… We remain encouraged by the strong customer reception of new products and capabilities” — Brandon Moss, CEO .
  • “Our GAAP gross profit percentage was 37.0%… within our expected range of mid to upper 30s… Tariffs undid 100–200 bps of expected margin improvement” — Dominic Bardos, CFO .
  • “At the end of Q3, we had approximately $18 million of BESS in our backlog and awarded orders… we have already signed two MSAs… revenue beginning to materialize in the beginning of second quarter [2026]” — Brandon Moss, CEO .
  • “Backlog and awarded orders ended the third quarter at a record $721 million… $575 million… have planned delivery dates in the coming four quarters” — Dominic Bardos, CFO .

Q&A Highlights

  • Data center/BESS commercialization: Sales cycles vary (C&I ~<6 months vs grid/data center 12–18 months); signed MSAs lack fixed volume targets but POs are moving into backlog; initial revenue expected from Q2’26 .
  • Margin dynamics: Mix (Long Tail BLA) lowers percentage margin but expands gross profit dollars/share of wallet; tariffs erased 100–200 bps of anticipated cost-out; facility consolidation benefits yet to be realized .
  • International profitability: In-region builds (LATAM/Australia) slightly lower margins; EXIM-funded export work to be U.S.-manufactured and margin-comparable to domestic utility-scale .
  • Demand/backlog visibility: $575M of BLAO scheduled next four quarters; fewer project delays than 2024; strong quote volume supports 2026–27 pipeline .

Estimates Context

  • Q3 2025: Revenue $135.804M vs S&P Global consensus $130.824M*; Primary EPS (Adj) $0.12 vs $0.1252*; S&P EBITDA $28.864M* vs S&P consensus $32.701M*; note S&P EBITDA definition differs from company Adjusted EBITDA ($31.974M) . Values marked with asterisks are retrieved from S&P Global.
  • Implications: Street will likely raise FY revenue models toward the $467–$477M guide and fine-tune margins given persistent tariff headwinds and mix, while acknowledging visibility from record BLAO .

Key Takeaways for Investors

  • Topline momentum intact with a clear beat on revenue and record BLAO/book-to-bill; visibility into the next four quarters improved ($575M scheduled) .
  • The margin algorithm remains mid-to-high 30s GM near-term; upside deferred by tariffs and product mix (Long Tail BLA), with operating leverage expected as consolidation benefits materialize in 2026 .
  • BESS is emerging as a real second act: ~$18M now in BLAO, two MSAs signed, and data-center/grid firming use-cases expanding TAM; first revenue contribution from these MSAs expected from Q2’26 .
  • Legal/warranty overhang diminishing: remediation progressing (current warranty liability down to $4.556M; LT $3.041M), though shrinkback litigation expense remains elevated near-term .
  • FY25 revenue raised, Q4 guide set; EBITDA range narrowed (mix/legal), suggesting focus on profitable growth and cash conversion while absorbing transitional costs .
  • Actionable: Position for continued revenue outperformance and 2026 margin/FCF improvement as (1) tariff impacts normalize/pass-through, (2) consolidation efficiencies flow, and (3) BESS ramps from prototypes/MSAs to shipments .
  • Watch items: tariff policy volatility (e.g., Section 232), litigation cadence/costs, BESS design wins and timing, and international mix margin profile .

Appendix: Additional detail

  • Selected cash flow/balance sheet highlights: 9M25 CFO $21.2M; cash $8.6M; revolver $126.8M; net debt/Adj. EBITDA 1.2x .
  • Non-GAAP reconciliations: Adjusted EBITDA $32.0M; Adjusted net income $21.0M; Adjusted diluted EPS $0.12 .

Footnote: Values marked with asterisks (*) in estimate tables are retrieved from S&P Global.