Shoals Technologies Gr Q2 2026 Earnings Call: Complete Transcript

On Tuesday, Shoals Technologies Gr (NASDAQ: SHLS ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Shoals Technologies Gr reported Q2 revenue of $163 million, a 47% increase year-over-year, with strong order additions totaling $207 million. The company achieved a record backlog and awarded orders of $801 million, with $700 million expected to ship in the next four quarters. 6%, with SG&A expenses decreasing to 17% of revenue. Shoals Technologies Gr is optimistic about market evolution and continues to expand production capacity while implementing lean manufacturing processes.

They announced a partnership with TerraFlow for energy storage solutions targeting 5 GW annual deployment starting in 2027. Q2 saw growth in their OEM segment and BESS business, the latter generating $20 million in revenue. The company reaffirmed its full-year 2026 guidance with expected revenue growth of 30% and adjusted EBITDA growth of 26%. Shoals Technologies Gr's product mix and factory efficiencies are expected to drive margin improvements.

Shoals Technologies Gr successfully prevailed in an ITC case against Voltage, with a district court case on damages upcoming. The company is expanding into international markets, with international backlog and awarded orders now at $102 million. Full Transcript OPERATOR Good morning and welcome to the Shoals Technologies Gr second quarter 2026 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q and A.

At this time I would like to turn the conference over to Matt Tractenberg, Vice President of Finance and Investor Relations for Shoals Technologies Gr. Thank you. You may begin. Matthew Tractenberg, IRC — Vice President, Finance & Investor Relations Thank you, Warren, and thank you everyone for joining us today.

Hosting the call with me is our CEO, Brandon Moss, and our CFO, Dominic Bardos. On this call, management will be making projections or other forward-looking statements based on current expectations and assumptions which are subject to risks and uncertainties and should not be considered guarantees of performance or results. Actual results could differ materially. Those risks and uncertainties are listed for investors in our most recent SEC filings.

Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the Company's second quarter press release for definitional information and reconciliations of historical non-GAAP measures to the nearest comparable GAAP financial measures. com. With that, let me turn the call over to Brandon.

Brandon Moss, Chief Executive Officer Thank you, Matt, and thanks to everyone joining us on the call. Second quarter revenue was within our guided range at $163 million, up 47% over the prior year period. 3. This drove another company record backlog and awarded orders, or BLAO, of $801 million, an increase of 19% year over year.

As of quarter end, approximately $700 million of our BLAO has shipment dates in the upcoming four quarters through Q2 of 2027. 6%. We expect to continue making progress in margin improvement driven by positive mix and productivity gains and supported by the strong underlying demand environment. SG&A, including all legal expense, was $28 million, representing 17% of revenue, a 400 basis point decline as compared to 21% last year.

6 million came in within our guided range and grew approximately 28% year over year. As you've seen, we also prevailed in our 2025 ITC case against Voltage. S. innovation in general.

We look forward to resolving the matter of damages in our upcoming district court case. We are very optimistic in how we see the market evolving. In our competitive position of strength, we continue to expand production at a measured pace to ensure we deliver products with the speed and quality customers expect from us. Factory consolidations are never an easy task, but we've made steady progress and continue to identify opportunities for improvement.

While I'm encouraged by the consistent weekly and monthly improvement as we deploy new lean manufacturing processes, we still have work to do. The operational improvements we will realize from this strategic initiative will drive value for all stakeholders in future periods. Briefly turning to our various business lines, the second quarter was another strong period of growth within our core utility-scale solar market. Once again, our quote volume in the quarter exceeded a billion dollars of unique projects, adding to our strong pipeline.

I'm also encouraged by the progress we're making in key international markets like Australia, as evidenced by our increased quote activity and customer engagement. International BLAO now stands at $102 million, driving continued growth and diversification in 2027 and beyond. Our community, commercial and industrial business, or CCI business, which remains a small piece of our overall mix, continues to perform well. Our OEM business is providing a stable and visible revenue stream, growing at 51% on a year-over-year basis.

And finally, we produced approximately $20 million of BESS revenue in the quarter and secured approximately $10 million of additional orders. BESS BLAO now stands at $65 million. As previously stated, BESS orders will be episodic and are dependent on how customers manage construction schedules. I'm also excited to announce a partnership with TerraFlow, a leading grid-scale developer of long-duration energy storage infrastructure.

Under the agreement, Shoals will support TerraFlow's growing energy storage portfolio with our Power Hub Recombiner solution for utility-scale and data center applications. The MOU is intended to support TerraFlow's future deployment plan of up to 5 GW annually. Overall, the quarter played out as anticipated and the year is tracking to our expectations. We are executing well, have finished the move into our new facility, and are expanding capacity and capabilities at a measured pace.

Underlying demand remains intact and our competitive position is strengthened. We're very excited about what we see ahead of us. Dom, I'll hand it over to you for a deeper dive into our financial performance and guidance. Dominic Bardos, Chief Financial Officer Thanks, Brandon, and greetings to everyone on the call.

4 million. S. utility-scale solar market, and our BESS business segment contributing meaningfully in the period. 2 million in the prior year period, an increase of 20%.

6%, within our expectations. As Brandon stated, we believe we will continue to expand gross profit percentage as we realize the benefit of our new factory and positive product mix, all supported by a robust demand environment. Ultimately, we are focused on driving incremental profit dollars to the P&L, a strategy which will create value for all stakeholders. 4 million higher than the prior year period.

4 million in payroll and employee expenses due to increased headcount and achievement of variable compensation targets relative to the prior year. Legal expenses declined slightly versus the prior year as our ITC and class action litigation matters came to a close. Our district court case to determine damages against Voltage is expected to be completed in the third quarter. 0% year over year.

0 million during the prior year period. 9 million during the prior year period. 1 million gain on the sale of a manufacturing facility in the prior year period. 1 million in the prior year period.

9% growth year over year. 02 higher than the prior year period. 8 million of cash in the second quarter, driven by an increase in both deferred revenue and accrued liabilities. 6 times.

1 million, an increase over the prior quarter. Since we last spoke, we also temporarily expanded the capacity of our revolving credit facility by $50 million, providing us the flexibility we need to grow our business. 4 million. 1 million of the total BLAO, providing us with a confidence that the growth projections we have for the upcoming periods can be achieved.

Congratulations to the commercial team on another strong bookings quarter. 7 million beyond that. Turning to guidance, for the quarter ending September 30, 2026, the Company expects revenue to be in the range of $150 to $170 million, representing 18% year-over-year growth at the midpoint, and adjusted EBITDA to be in the range of $32 to $37 million, representing 8% year-over-year growth at the midpoint.

For the full year 2026, we are reaffirming our prior guidance and continue to expect revenue to be between $600 and $640 million, representing year-over-year growth of 30% at the midpoint, and adjusted EBITDA to be in the range of $118 to $132 million, representing year-over-year growth of 26% at the midpoint. In addition, for the full year we still expect cash flow from operations in the range of $65 to $85 million, capital expenditures in the range of $20 to $30 million, and interest expense in the range of $8 to $12 million. With that, I'll turn it back over to Brandon for closing remarks. Brandon Moss, Chief Executive Officer Thank you, Dominic.

S. market continues to be robust, and we are focused on improving productivity each month. The need for energy from all sources has never been as strong as it is today, and we believe Shoals is increasingly well positioned to deliver sustainable growth. As our strategic and operational initiatives translate into measurable progress, we are strengthening our core markets and reinforcing our competitive position.

We have accelerated innovation to deliver more differentiated products and greater customer value. We're expanding into attractive new markets that increase our total addressable opportunity. We are diversifying our market and customer exposure to create a more resilient business. We've invested in automation and technology to drive productivity, support margin expansion over time, and we are building the leadership depth needed to execute our transformation and deliver on our long-term objectives.

We want to thank our shareholders and customers for their continued trust and our employees for their hard work and dedication. Operator, we are now ready to take questions. OPERATOR We will now begin the question and answer session. Please limit yourself to one question and one follow up.

If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device.

Please stand by while we compile the Q and A roster. Your first question comes from the line of Philip Shen with Roth Capital Partners. Your line is open. Please go ahead.

Philip Shen, Analyst at Roth Capital Partners Hey guys, thanks for taking my questions. First one is on the TerraFlow MOU signed and announced yesterday. Was wondering if you could give us some more color on the 5 gigawatts of annual storage deployments. What's the expected timeline for first meaningful volume, and how does this partnership complement or differ from the On Energy relationship?

Thanks. Brandon Moss, Chief Executive Officer Phil. Good morning. Thanks for the question.

We are very excited about the TerraFlow MOU. We are in the process right now of starting our engineering cycle with, with, with those guys to, to help develop an engineered solution for deployment. I would probably model that revenue will begin in 2027. We will not see an impact in 2026.

I think you had a question also related to on energy. You know, these guys obviously are trying to build a solution that can be deployed in renewable sites and data centers. They come at the solution with a different approach using vanadium and effectively can create a both short and long cycle duration battery solution with very similar goals of reducing frequency energy spikes. All the necessary things that are needed to manage the energy flow in a data center today.

So couldn't, couldn't be more excited about the partnership with those guys, you know and it's a meaningful step for us to continue to diversify our customer base which is, which is very important obviously. Philip Shen, Analyst at Roth Capital Partners Great. Thanks for the color. Shifting over to your recent bookings in addition to backlog, was wondering if you might be able to comment on, you know, especially given the ITC case and that positive outcome for you and what could be coming with the district court case.

Can you talk about pricing and margins of your newer orders versus what's been delivered? Meaning should we see a little bit of expansion in the margin or is it steady or is it a little bit, is the margin a little more compressed in the bookings given some of the new business that you're taking on and the product mix shift that you guys have seen recently. Brandon Moss, Chief Executive Officer Yeah, thanks Phil. Probably won't get real specific on this.

You know, the demand environment obviously is very strong as evidenced by our record backlog and awarded orders and, you know, billion dollars of discrete project quotes. So I would say in general, the pricing behavior is responding to that accordingly. Just as a reminder, you know, we've got a long sales cycle so things that are happening today won't transpire for another, you know, 12 months, give or take. So we're pleased with the pricing environment.

It's incorporated in our guidance. As we've communicated, we expect margins to improve throughout the year. And again that, that is, that is factored into our guide. Matthew Tractenberg, IRC — Vice President, Finance & Investor Relations Thanks, Phil.

Warren, next question please. OPERATOR Your next question comes from the line of Julian Dumoulin Smith with Jefferies LLC. Your line is open. Please go ahead.

Julian Dumoulin-Smith, Analyst at Jefferies Hey, hey guys. Thank you very much. Appreciate the opportunity to chat here. I just want to follow up on the guidance here real quickly here.

Can you talk a little bit about the factors that would give you sort of momentum to raise here? I mean, obviously reaffirming, but obviously looking at a number of the factors here trending year to date, how would you think about the puts and takes here both referring today but perspectively, what could put you in a better position here? Brandon Moss, Chief Executive Officer Yeah, certainly. Good, good to hear from you, Julian.

Just, just maybe a reminder and you probably recall we raised our full year guidance on the Q1 call. So again, as you mentioned, we have affirmed our guidance for the full year. Today our goal is to give you guidance that's reasonable and achievable. We have got 30% growth factored into the midpoint of our guidance on the top line and 26 from an EBITDA standpoint.

And I think strong guidance for Q3 as well, up about 18% on the top line. Look, we're excited about the market backdrop. Again as I mentioned on Phil's question, a billion dollars in discrete projects. We have got a very strong book of business and we look forward to executing on that through the back part of the year.

Maybe touching on just, just our BESS bookings, great production growth in Q2 where we produced $20 million, we added $10 million in the quarter, could still potentially book some business there for the remainder of the year. And maybe most importantly, as we've talked about our bookings related to BESS and it would be sort of chunky in the early stages of our business. We did book a handful of projects after quarter close that we're excited about. So our focus is execution through the back end of the year, producing as much product as we can at this new mega facility and making it as efficient as possible.

And if we do that, that will give us more confidence in how the full year plays out.