Executive Summary

Q4 2024 revenue was $107.0M and GAAP EPS $0.05; adjusted EBITDA was $26.4M. Revenue fell 18% YoY on project delays and competitive dynamics, while adjusted gross margin was 37.6% (GAAP gross margin 37.6%) .
Bookings were strong (book-to-bill 1.4), with Backlog & Awarded Orders (BLAO) at $634.7M, including ~$440M slated for the next four quarters; management guided to an unusually back-half–weighted 2025 (40% H1 / 60% H2) with Q1 revenue $70–80M and FY25 revenue $410–450M and adjusted EBITDA $100–115M .
Management cited price/mix pressure and new-customer onboarding as near-term margin headwinds but reiterated long-term 40% gross margin ambition, underpinned by new products (BESS, 2kV), CC&I, OEM, and international traction; international BLAO was ~$86M at year-end with ~$15M expected to convert in 2025 .
Legal backdrop turned mixed: after the ITC overturned the initial favorable ALJ ruling in January, Shoals appealed to the Federal Circuit and a new ITC investigation was instituted on two additional patents, sustaining IP uncertainty as a 2025–26 catalyst alongside potential tariff actions that could advantage domestic producers like SHLS .

What Went Well and What Went Wrong

What Went Well

Healthy bookings and visibility: Q4 book-to-bill was 1.4; BLAO ended at $634.7M with ~$440M targeted for the next four quarters, supporting a 2H-weighted FY25 outlook .
Commercial progress and diversification: management highlighted wins in CC&I (~$10M 2024 revenue), OEM alignment with the leading U.S. module maker, and ~$8M of new international project wins in Q4; international BLAO ended ~ $86M with ~$15M expected in 2025 .
Operational initiatives: a state-of-the-art Tennessee factory consolidation and productivity programs are expected to improve leverage over time; CEO reaffirmed the long-run 40% gross margin target despite near-term pressure .

What Went Wrong

Demand/mix pressure and competition: Q4 revenue declined 18% YoY to $107.0M on project delays, competitive dynamics, volume discounts and customer mix; GAAP and adjusted gross margin were 37.6%, down from 42.5% a year ago .
Margins under pressure near term: adjusted EBITDA margin of ~24.7% in Q4 reflected lower volumes and mix; management expects Q1 to be the low point with improvement through the year, but did not commit to 40% in 2025 given facility move effects .
Legal/IP uncertainty: the ITC did not uphold the prior favorable initial determination; Shoals filed an appeal and a new ITC complaint on two new patents, extending the legal timeline (12–18 months typical) .

Financial Results

Management-highlighted comparisons

Q4 2024 vs prior year: Revenue down 18% to $106.987M vs $130.436M; GAAP gross margin 37.6% vs 42.5%; GAAP EPS $0.05 vs $0.10; adjusted EBITDA $26.409M vs $39.119M .
Sequential: Q4 revenue increased ~4.7% from Q3 ($102.165M → $106.987M) .

Quarterly comparison (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$99.249	$102.165	$106.987
GAAP Gross Margin %	40.3%	24.8%	37.6%
Adjusted Gross Profit Margin %	40.8%	37.9%	37.6%
GAAP Net Income ($M)	$11.802	$(0.267)	$7.818
GAAP Diluted EPS ($)	$0.07	$0.00	$0.05
Adjusted EBITDA ($M)	$27.685	$24.533	$26.409

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Backlog & Awarded Orders ($M)	$642.3	$596.6	$634.7
Book-to-Bill	—	—	1.4
BLAO scheduled next 4 quarters ($M)	—	—	$439.3
International BLAO ($M)	~>12% of BLAO	>13% of BLAO	~$86; ~$15 expected 2025 revenue
Warranty Liability (Total, $M)	—	$54.7 (34.743 current + 20.000 LT)	$41.0 (29.602 current + 11.392 LT)
Net Debt / Adjusted EBITDA (x)	—	—	~1.2x

Notes: CFO cited ~$39.9M warranty liability at 12/31/24, while the balance sheet totals ~$41.0M (current + non-current), likely reflecting rounding/timing of charges and classifications .

Estimates vs Actuals

S&P Global (Capital IQ) consensus data could not be retrieved via the tool at this time (request limit exceeded). Therefore, we cannot quantify beat/miss vs Street for Q4 2024 results at this time. Consensus values unavailable via S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q1 2025	—	$70–80M	New
Adjusted EBITDA	Q1 2025	—	$10–15M	New
Revenue	FY 2025	—	$410–450M	New
Adjusted EBITDA	FY 2025	—	$100–115M	New
Cash Flow from Operations	FY 2025	—	$30–45M	New
Capital Expenditures	FY 2025	—	$25–35M	New
Interest Expense	FY 2025	—	$8–12M	New

Context/validation: Q3 2024 outlook for Q4 2024 was revenue $97–107M and adj. EBITDA $23–28M; actuals came in at the high end on revenue ($106.987M) and within range for adjusted EBITDA ($26.409M) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Pricing/Margins	Q2 GM 40.3%; adj GM 40.8% . Q3 adj GM 37.9%; competitive/mix headwinds .	Q4 GM 37.6%; adjusted 37.6%; price/mix pressure; long-term 40% target reiterated	Margin dipped Q3, recovered Q4: 40.3% → 24.8% → 37.6%
Orders/BLAO/Seasonality	Q2 BLAO $642.3M, +18% y/y . Q3 BLAO $596.6M (seq. down) .	Q4 BLAO $634.7M; book-to-bill 1.4; 40%/60% H1/H2 revenue skew guided	Re-acceleration into Q4; 2H-Weighted FY25
International	>12% of BLAO (Q2) . >13% of BLAO (Q3) .	~$86M international BLAO; ~$15M expected 2025 revenue	Growing pipeline and expected revenue conversion
New Products/Adjacencies (BESS, CC&I, OEM, 2kV)	Q2: new product intros; OEM alignment noted . Q3: continued transformation .	CC&I ~$10M 2024 revenue; BESS suite quoted >$30M; pilot for 2kV; OEM growth aligned with leading U.S. module maker	Product breadth and adjacencies gaining traction
Supply Chain/Labor/Macro	Q2: uncertainty from political cycle/tariffs/interest rates . Q3: elongated sales cycles, project delays .	Labor remains tight; EPCs “fully booked” for 2025; regulatory/tariff uncertainty persists	Persistent labor constraints; cautious outlook
Regulatory/Legal (ITC/tariffs)	Q3: initial favorable ITC ruling .	ITC reversal appealed; new ITC case instituted on ’375/’376; potential tariffs (China/Mexico/Canada) could aid domestic producers	Legal visibility lower; tariff path a potential tailwind

Management Commentary

CEO Brandon Moss: “We executed well in the period, delivering revenue of $107 million…Bookings continued at a healthy pace…book to bill of 1.4…While adjusted gross profit percentage continues to see pressure in the short term, we believe we have put in place effective productivity measures…proud of…CC&I and BESS” .
Long-run margin: “We continue to believe that adjusted gross profit percentage at or above 40% is appropriate in the long-term” .
Growth levers: “Quoted over $2.5B of projects in 2024…more than 10% of 2024 revenue coming from customers who purchased less than $1M combined in 2023…more than $8M of new international projects…approximately $86M of international backlog and awarded orders” .
IP protection: “We filed a new case with the ITC…two new patents…We…have appealed [the ITC reversal]…This is not a quick process, but a necessary one” .

Q&A Highlights

Pricing dynamics: management used selective pricing to win/expand relationships and secure long-term agreements; mix shift to component products with new/re-engaged customers pressured margins; long-term 40% gross margin reiterated .
Seasonality and working capital: 2025 expected to be 40% H1 / 60% H2; first half lighter necessitating higher working capital ahead of 2H ramp; cash from operations guided $30–45M for FY25 .
Margin cadence: margins likely softer in Q1 given lowest revenue and OEM mix, then improve into 2H; facility move could cause inefficiencies, so 40% this year not guided but targeted .
Tariffs/competitiveness: as a domestic manufacturer with largely domestic supply chain, Shoals expects to weather tariffs better than import-reliant peers; potential tariffs could directly help SHLS .
ITC/appeal timing: Federal Circuit appeal filed; new ITC case instituted; typical timelines ~12–18 months .

Estimates Context

S&P Global (Capital IQ) consensus estimates for Q4 2024 and Q1 2025 could not be retrieved via the tool (request limit exceeded). As a result, we cannot quantify revenue/EPS/EBITDA beats or misses versus Street for Q4 2024 at this time. Consensus values unavailable via S&P Global.
Modeling implications from guidance: Management’s explicit 40%/60% H1/H2 revenue skew and Q1 revenue guide of $70–80M suggest Street models likely need to reduce 1H and shift revenue/margins into 2H to align with project schedules .

Key Takeaways for Investors

Quality of orders improving; BLAO at $634.7M with ~$440M slated for the next 12 months provides line-of-sight, but delivery remains subject to permitting, labor, and equipment timing—monitor conversion and seasonality cadence (40%/60%) .
Near-term margin pressure reflects price/mix and volume, but long-run 40% GM framework remains intact with productivity initiatives, product mix shift back to full EBOS solutions, and factory consolidation—watch Q2–Q4 trajectory .
Diversification is taking root (CC&I, BESS, OEM, international); ~$10M CC&I revenue in 2024 and ~$86M international BLAO with ~$15M expected in 2025 support medium-term growth beyond U.S. utility-scale solar .
Legal/IP is a two-sided catalyst: the Federal Circuit appeal and new ITC case could tighten competitive dynamics if favorable, but timelines are extended—position sizing should account for prolonged uncertainty .
Tariffs are an asymmetric potential positive: higher import duties could advantage SHLS’ domestic footprint; management noted ability to mitigate exposure via domestic alternates .
Balance sheet and liquidity remain sound; net debt/adjusted EBITDA ~1.2x; however, working capital needs will rise in 1H ahead of the 2H ramp—watch cash conversion and inventory build .
For trading, the setup hinges on execution against the 2H weighting, stabilization of margins, and any tariff/IP developments; upside if delays abate faster than modeled and book-and-turn offsets slippage, downside if project pushouts resemble 2024 .

Appendix: Additional Q4 Context (GAAP vs Non-GAAP and charges)

Q4 GAAP gross margin and adjusted gross margin were both 37.6%, as there were no wire insulation shrinkback adjustments in Q4 (vs heavy adjustments in prior periods) .
Full-year 2024 still reflected $13.8M of wire insulation shrinkback expenses and $7.3M of related litigation expenses; these items explain the divergence between GAAP and adjusted profitability on a year basis .
Warranty liability at 12/31/24 totaled ~$41.0M per the balance sheet; CFO noted ~$39.9M remaining with ~$28.4M current, highlighting ongoing remediation cash needs .

Shoals Technologies Group, Inc. (SHLS)·Q4 2024 Earnings Summary