Else Nutrition

Shoals Technologies Group Reports Financial Results for Fourth Quarter 2021

10 March 2022
  • Record Revenue and Gross Profit for Full Year 2021 –
  • System Solutions Revenue Increased 29% Year-Over-Year in the Fourth Quarter –
  • Gross Margin of 38.8% for the Full Year 2021 –
  • Backlog and Awarded Orders Nearly Doubled Year-Over-Year to a Record $299.0 million –
  • Revenue Growth Expected to Accelerate in 2022 –

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 fourth quarter ended December 31, 2021.

“Despite the challenges posed by the COVID-19 pandemic and unprecedented supply chain disruptions, Shoals delivered record revenue and gross profit in 2021. Revenue and gross profit grew 21% and 24%, respectively, and gross margin increased to 38.8%. Adjusted EBITDA increased modestly year-over-year as a result of investments we made in human capital infrastructure to support our growth initiatives, including international expansion, our new EV business unit, expanded storage offerings, and new product development, as well as public company costs,” said Jason Whitaker, Chief Executive Officer of Shoals.

Mr. Whitaker added, “The hard work we did in 2021 to convert more customers to BLA, introduce new products, establish a presence in Europe and launch our EV business is going to accelerate our growth in 2022. We now have four times as many BLA customers as we did twelve months ago. Last month we received our IEC certification in Europe, which was the last regulatory hurdle before we could sell our products across the EU. We began shipping our Phase 1 wire management solutions last year, started manufacturing the first order of our Phase 2 IV curve benchmarking product in the fourth quarter, and remain on schedule to introduce BLA 2.0 and high capacity plug-and-play wire harnesses later this year. Lastly, we have made tremendous progress over the past six months in our new EV business, including commercializing our first products, signing our first MSA with a charge point operator and opening our eMobility Innovation Center, which serves as a showcase to demonstrate our technology to prospective customers.”

“Our backlog and awarded orders of $299.0 million at year end 2021 is nearly twice what it was at the end of 2020 and underscores the momentum that is building across our business. To support our growth, we continue to expand our engineering and sales teams and will be opening an additional manufacturing facility which will more than double our production capacity,” said Mr. Whitaker.

“While demand for our products is accelerating, the current environment is dynamic and we are closely monitoring our supply chain, labor costs, materials costs and logistics availability,” concluded Mr. Whitaker.

Fourth Quarter 2021 Financial Results

Revenue was $48.0 million, compared to $38.8 million for the prior-year period, an increase of 24%, driven by an increase of 29% in System Solution revenue and a 15% increase in Components revenue.

The growth in System Solutions reflects strong demand for the Company’s combine-as-you-go system. System Solutions represented 68% of revenue in the quarter versus 65% in the prior-year period.

Gross profit increased 7% to $15.9 million, compared to $14.8 million in the prior-year period. Gross profit as a percentage of revenue was 33.1% compared to 38.3% in the prior-year period, due to approximately $1.0 million of higher material and logistics costs. The Company expects additional costs of approximately $3.0 million in the first half of 2022, with gross margin expected to normalize at levels in line with what the Company has achieved historically.

General and administrative expenses were $11.0 million, compared to $5.6 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 new public company costs.

Income from operations was $2.7 million, compared to $7.2 million during the same period in the prior year.

Net loss was $2.2 million, compared to net income of $4.2 million during the same period in the prior year. This change was primarily due to higher general and administrative expenses and higher interest expense partially offset by a tax benefit. Net income for 2021 is not directly comparable to 2020 because prior to its IPO, the Company was organized as a tax flow-through partnership rather than a corporation and did not record income taxes. Basic and diluted loss per share was $(0.04).

Adjusted EBITDA was $11.3 million, compared to $14.1 million for the prior-year period.

Adjusted net income was $0.9 million, compared to $9.0 million during the same period in the prior year. Adjusted diluted earnings per share was $0.01.

Backlog and Awarded Orders

The Company’s backlog and awarded orders on December 31, 2021 were $299.0 million, representing a new record for the company and an increase of 94% and 10% versus the same time last year and September 30, 2021, respectively. The increase in backlog and awarded orders reflects continued robust demand for the company’s products.

First Quarter 2022 and Full Year 2022 Outlook

The Company is updating its outlook for the quarter ended March 31, 2022. It is not the Company’s intention to provide quarterly guidance on an ongoing basis. Based on current market conditions, business trends and other factors, for the quarter ended March 31, 2022, the Company expects:

  • Revenues to be in the range of $68 million to $74 million
  • Adjusted EBITDA to be in the range of $16 million to $20 million
  • Adjusted net income to be in the range of $10 to $13 million

Based on current business conditions, business trends and other factors, for the full year 2022 ending December 31, 2022, the Company expects:

  • Revenues to be in the range of $300 million to $350 million
  • Adjusted EBITDA to be in the range of $79 million to $97 million
  • Adjusted net income to be in the range of $54 to $69 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 March 10, 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 10018280. The replay will be available until 11:59 p.m. Eastern Time on March 24, 2021.

About Shoals Technologies Group, Inc.

Shoals Technologies Group, Inc. is a leading provider of electrical balance of system (“EBOS”) solutions for solar, battery storage and electric vehicle charging infrastructure. The Company’s mission is to provide innovative products that reduce the cost of installation while improving system performance, reliability and safety. At least one Shoals’ product was used on more than half of the solar energy projects installed in the U.S. in 2020. To learn more about Shoals Technologies, please visit the company’s website at https://www.shoals.com.

Investor Relations Contact
Shoals Technologies Group, Inc.
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Phone: 615-323-9836

Forward-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 EPS

We define Adjusted EBITDA as net income (loss) plus (i) interest expense, net, (ii) income taxes expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) payable pursuant to the tax receivable agreement liability 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) plus (i) amortization of intangibles, (ii) payable pursuant to the tax receivable agreement liability adjustment, (iii) loss on debt repayment, (iv) amortization of deferred financing costs, (v) equity-based compensation, (vi) acquisition-related expenses (vii) COVID-19 expenses and (viii) 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.
Consolidated Balance Sheets
(in thousands, except shares)

 December 31,
  2021   2020 
Assets   
Current Assets   
Cash and cash equivalents$5,006  $10,073 
Accounts receivable, net 31,499   27,004 
Unbilled receivables 13,533   3,794 
Inventory, net 38,368   15,121 
Other current assets 5,042   155 
Total Current Assets 93,448   56,147 
Property, plant and equipment, net 15,574   12,763 
Goodwill 69,436   50,176 
Other intangible assets, net 65,236   71,988 
Deferred tax assets 176,958    
Other assets 5,762   4,236 
Total Assets$426,414  $195,310 
    
Liabilities and Stockholders’ Deficit / Members’ Deficit   
Current Liabilities   
Accounts payable$19,985  $14,634 
Accrued expenses 9,569   5,967 
Long-term debt—current portion 2,000   3,500 
Total Current Liabilities 31,554   24,101 
Revolving line of credit 55,140   20,000 
Long-term debt, less current portion 189,913   335,332 
Payable pursuant to the tax receivable agreement 156,374    
Other long-term liabilities 931    
Total Liabilities 433,912   379,433 
Commitments and Contingencies   
Stockholders’ Deficit / Members’ Deficit   
Members’ deficit    (184,123)
Preferred stock, $0.00001 par value - 5,000,000 shares authorized; none issued and outstanding as of December 31, 2021     
Class A common stock, $0.00001 par value - 1,000,000,000 shares authorized; 112,049,981 shares issued and outstanding as of December 31, 2021 1    
Class B common stock, $0.00001 par value - 195,000,000 shares authorized; 54,794,479 shares issued and outstanding as of December 31, 2021 1    
Additional paid-in capital 95,684    
Accumulated deficit (93,133)   
Total stockholders’ equity attributable to Shoals Technologies Group, Inc. / members' equity (deficit) 2,553   (184,123)
Non-controlling interests (10,051)   
Total stockholders’ deficit / members’ deficit (7,498)  (184,123)
Total Liabilities and Stockholders’ Deficit / Members’ Deficit$426,414  $195,310 

Shoals Technologies Group, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)

 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2021 2020 2021 2020
Revenue$48,046   38,753  $213,912  $175,518 
Cost of revenue32,123  23,911  130,567  108,972 
Gross profit15,923  14,842  82,645  66,546 
Operating Expenses       
General and administrative expenses11,028  5,618  37,893  21,008 
Depreciation and amortization2,215  2,068  8,520  8,262 
Total Operating Expenses13,243  7,686  46,413  29,270 
Income from Operations2,680  7,156  36,232  37,276 
Interest expense, net(3,638) (2,909) (14,549) (3,510)
Payable pursuant to the tax receivable agreement adjustment2,015    (1,663)  
Loss on debt repayment    (15,990)  
Income before income taxes1,057  4,247  4,030  33,766 
Income tax expense(3,209)   (86)  
Net income (loss)(2,152) 4,247  3,944  33,766 
Less: net income (loss) attributable to non-controlling interests(315)   1,596   
Net income (loss) attributable to Shoals Technologies Group, Inc.$(1,837)  4,247  $2,348  $33,766 
        
 Three Months
Ended

December 31,
2021
   Period from
January 27,
2021 to

December 31,
2021
  
Loss per share of Class A common stock:       
Basic$(0.04)   $0.00   
Diluted$(0.04)   $0.00   
Weighted average shares of Class A common stock outstanding:       
Basic106,233    99,269   
Diluted106,233    99,269   

Shoals Technologies Group, Inc.
Consolidated Statements of Cash Flows
(in thousands)

 Twelve Months Ended
December 31,
  2021   2020 
Cash Flows from Operating Activities   
Net income$3,944  $33,766 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:   
Depreciation and amortization 10,053   9,405 
Amortization/write off of deferred financing costs 5,969   351 
Equity-based compensation 11,286   8,251 
Provision for slow-moving inventory (1,418)  188 
Deferred taxes (1,476)   
Payable pursuant to the TRA adjustment 1,663    
Gain on sale of assets 52    
Changes in assets and liabilities, net of business acquisition:   
Accounts receivable 818   288 
Unbilled receivables (9,739)  (1,289)
Inventory (17,188)  (6,475)
Other assets 341   643 
Accounts payable (3,877)  4,251 
Accrued expenses (4,511)  4,703 
Net Cash Provided by (Used in) Operating Activities (4,083)  54,082 
Cash Flows Used In Investing Activities   
Purchases of property, plant and equipment (4,126)  (3,236)
Acquisition of a business, net of cash acquired (12,909)   
Net Cash Used in Investing Activities (17,035)  (3,236)
Cash Flows from Financing Activities   
Member / non-controlling interest distributions (4,837)  (376,046)
Employee withholding taxes related to net settled equity awards (137)   
Deferred financing costs (94)  (11,821)
Proceeds from term loan facility    350,000 
Payments on term loan facility (152,750)   
Proceeds from revolving credit facility 49,140   20,000 
Repayments of revolving credit facility (14,000)   
Proceeds from issuance of Class A common stock sold in an IPO 278,833    
Purchase of LLC Interests with proceeds from IPO (124,312)   
Proceeds from issuance of Class A common stock in follow-on offering, net of underwriting discounts and commissions 281,064   
Purchase of LLC Interests with proceeds from follow-on offering (281,064)   
Payment of debt assumed in acquisition (1,537)   
Deferred offering costs (9,704)  (3,738)
Payments on senior debt - term loan    (26,250)
Proceeds from senior debt - revolving line of credit     
Payments on senior debt - revolving line of credit     
Proceeds from delayed draw term loan facility    20,000 
Payments on delayed draw term loan facility    (20,000)
Net Cash Provided by (Used in) Financing Activities 20,602   (47,855)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash (516)  2,991 
Cash, Cash Equivalents and Restricted Cash—Beginning of Period 10,073   7,082 
Cash, Cash Equivalents and Restricted Cash—End of Period$9,557  $10,073 

Shoals Technologies Group, Inc.
Adjusted EBITDA and Adjusted Net Income Reconciliation (Unaudited)
(in thousands)

Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands):

 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2021 2020 2021 2020
Net income (loss)$(2,152) $4,247  $3,944  $33,766 
Interest expense, net3,638  2,909  14,549  3,510 
Income tax expense3,209    86   
Depreciation expense436  391  1,701  1,420 
Amortization of intangibles2,272  1,997  8,352  7,985 
Payable pursuant to the TRA adjustment (a)(2,015)   1,663   
Loss on debt repayment    15,990   
Equity-based compensation4,382  1,032  11,286  8,251 
Acquisition-related expenses652    2,349   
COVID-19 expenses(b)70  884  339  2,890 
Non-recurring and other expenses(c)777  2,633  2,598  3,077 
Adjusted EBITDA$11,269  $14,093  $62,857  $60,899 

(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
December 31,
 Twelve Months Ended
December 31,
 2021 2020 2021 2020
Net income (loss) attributable to Shoals Technologies Group, Inc.$(1,837 ) $4,247   $2,348   $33,766  
Net income (loss) impact from pro forma conversion of Class B common stock to Class A common stock (a)(315 ) —   1,596   —  
Adjustment to the provision for income tax (b)20  (862) (456) (7,327)
Tax effected net income (loss)(2,132 ) 3,385   3,488   26,439  
Amortization of intangibles2,272   1,997   8,352   7,985  
Amortization of deferred financing costs277   320   1,230   351  
Payable pursuant to TRA adjustment(c)(2,015 ) —   1,663   —  
Loss on debt repayment—   —   15,990   —  
Equity-based compensation4,382   1,032   11,286   8,251  
Acquisition-related expenses652   —   2,349   —  
COVID-19 expenses (d)70   884   339   2,890  
Non-recurring and other expenses (e)777   2,633   2,598   3,077  
Tax impact of adjustments (f)(3,409) (1,266) (11,381) (3,104)
Adjusted Net Income$874   $8,985   $35,914   $45,889  

(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.

  Twelve Months Ended
December 31,
  2021
 2020 
Statutory U.S. Federal income tax rate 21.0% 21.0%
State and local taxes (net of federal benefit) 6.4% 0.7%
Permanent items, including valuation adjustment 1.2% %
Effective income tax rate for Adjusted Net Income 28.6% 21.7%

(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
December 31,
 Twelve Months Ended
December 31,
 2021 2020 2021
 2020
Diluted weighted average shares of Class A common shares outstanding, excluding Class B common shares106,606  N/A (b) 99,507  N/A (b)
Assumed pro forma conversion of Class B common shares to Class A common shares60,611  N/A (b) 67,429  N/A (b)
Adjusted diluted weighted average shares outstanding167,217  N/A (b) 166,936  N/A (b)
        
Adjusted Net Income (a)$874  N/A (b) $35,914  N/A (b)
Adjusted Diluted EPS$0.01  N/A (b) $0.22  N/A (b)

(a)  Represents Adjusted Net Income for the full period presented.

(b)  This Non-GAAP measure is not applicable for this period, as the reorganization transactions had not yet occurred.


Sign Up To Get Daily Green Stock News In Your Inbox

Please review our Disclaimer and Privacy Policy before subscribing.

STOCK QUOTE

FEATURED GREEN STOCK

GreenPower Motor

GreenPower Motor designs, builds and distributes a full suite of high-floor and low-floor all-electric medium and heavy-duty vehicles, including transit buses, school buses, shuttles, cargo van, and a cab and chassis...

CLICK TO LEARN MORE

FEATURED GREEN STOCK

DevvStream

DevvStream provides upfront capital for sustainability projects in exchange for carbon credit rights. Through these rights, the company generates and manages carbon credits by utilizing the most technologically advanced...

CLICK TO LEARN MORE

COPYRIGHT ©2022 GREEN STOCK NEWS