Summary of Shoals Technologies Group Q1 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $141 million, up 75% year-over-year, exceeding guidance.

Backlog: Record backlog of $758 million, an 18% increase year-over-year, with $628 million expected to ship within the next four quarters.

Gross Profit: $41 million, with an adjusted gross profit margin of 29.6%, slightly below expectations due to product mix, tariffs, and temporary labor inefficiencies.

SG&A Expenses: $31 million, or 22% of revenue, down from 27% the previous year, indicating improved operating leverage.

Adjusted EBITDA: Approximately $21 million, a 56% increase year-over-year, at the high end of guidance.

Net Loss: $297,000, compared to a loss of $282,000 in the prior year, impacted by legal expenses related to ongoing litigation.

Cash Position: Ended the quarter with $1.9 million in cash and equivalents; net debt increased to $179.9 million.

2Strategic Updates and Business Highlights

Strong performance in the core utility-scale solar market, with over $1 billion in quote volume.

Continued growth in international markets, particularly Australia, contributing to a diversified backlog of nearly $100 million.

The community, commercial, and industrial (CC&I) segment showed positive performance, although it remains a small part of the overall mix.

Battery Energy Storage Systems (BESS) backlog increased to $75 million, with a notable partnership with ON.energy for AI data center projects.

Management expressed confidence in the company's competitive position and operational capabilities, citing successful transitions to a new facility and capacity expansions.

3Forward Guidance and Outlook

Q2 2026 Guidance: Revenue expected between $150 million and $170 million, representing 44% year-over-year growth at the midpoint; adjusted EBITDA projected between $28 million and $33 million.

Full Year 2026 Guidance: Revenue revised to a range of $600 million to $640 million (30% growth at midpoint); adjusted EBITDA expected between $118 million and $132 million (26% growth).

Anticipated cash flow from operations remains unchanged at $65 million to $85 million.

4Bad News, Challenges, or Points of Concern

Gross profit margins were impacted by product mix, tariffs, and increased freight costs, with Q1 being viewed as the low point for margins.

Legal expenses related to ongoing litigation remain a concern, with a significant impact on net loss.

The transition to a new facility caused temporary disruptions and inefficiencies, affecting operational performance.

Potential risks from ongoing geopolitical tensions and their impact on logistics and commodity prices were noted.

5Notable Q&A Insights

Management indicated that the tax equity pause in the market has not yet affected order bookings, maintaining strong demand.

Future gross margins are expected to improve in the latter half of the year as operational efficiencies are realized post-transition to the new facility.

The BESS segment is gaining traction, with strong interest in AI data center applications, although revenue recognition for new products is not expected until 2027.

Concerns regarding tariffs were addressed, with management expressing optimism about recent changes being favorable for the company. Overall, Shoals Technologies Group reported a strong quarter with significant year-over-year growth, while also navigating challenges related to margins and operational transitions. The company remains optimistic about future growth driven by strong demand in both domestic and international markets.