Shoals Technologies Group, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue increased 43.8% year-over-year to $195.3 million for the quarter ended September 30, 2026, compared to $135.8 million in the prior-year period.
• Gross profit was $62.4 million, up from $50.3 million in the prior year; gross profit margin declined to 31.9% from 37.0% year-over-year.
• Income from operations was $29.0 million, compared to $18.7 million in the prior-year period.
• Net income was $17.9 million, compared to $11.9 million in the prior-year period; earnings per share (EPS) was $0.11 versus $0.07.
• Adjusted EBITDA was $39.8 million, compared to $32.2 million in the prior-year period.
• Adjusted Net Income was $24.5 million, compared to $21.2 million in the prior-year period; Adjusted Diluted EPS was $0.14 versus $0.13.
• General and administrative expenses were $31.0 million, up from $29.4 million in the prior year, driven by a $5.4 million increase in cash and share-based incentive compensation and increased headcount, offset by $4.1 million in decreased legal spending.
• Cash and cash equivalents were $7.7 million as of September 30, 2026, compared to $7.3 million as of December 31, 2025.
• Total liabilities were $340.6 million as of September 30, 2026, compared to $304.1 million as of December 31, 2025.
• Revolving line of credit balance was $163.8 million as of September 30, 2026, compared to $136.8 million as of December 31, 2025.
• Deferred revenue was $56.2 million as of September 30, 2026, compared to $37.0 million as of December 31, 2025.

Guidance and Future Outlook:

• Raised full-year 2026 revenue guidance to a range of $665 million to $685 million.
• Raised full-year 2026 Adjusted EBITDA guidance to a range of $129 million to $133 million.
• Provided full-year 2026 cash flow from operations guidance of $55 million to $65 million.
• Provided full-year 2026 capital expenditures guidance of $20 million to $30 million.
• Provided full-year 2026 interest expense guidance of $11 million to $13 million.
• Provided fourth quarter 2026 revenue guidance of $165 million to $185 million.
• Provided fourth quarter 2026 Adjusted EBITDA guidance of $36 million to $40 million.

Business Segments and Product Lines:

• Backlog and awarded orders totaled $791.7 million as of September 30, 2026, representing a 9.8% increase year-over-year and a 1.2% sequential decrease from June 30, 2026.
• Growth in backlog reflects consistent demand for innovative products and expansion in emerging battery energy storage markets.
• Gross margin compression was attributed to operational inefficiencies during the ramp-up and transition into a new manufacturing facility, product mix changes, and costs associated with product quality matters including rework and corrective actions.
• Incremental lease accounting amortization contributed to the decline in gross profit percentage.

Market and Competitive Landscape:

• The company describes itself as a global leader in electrical infrastructure solutions for the energy transition market, serving utility-scale solar, battery storage, and data center power systems.
• Management cited strong underlying demand, market share capture initiatives, and increased project volume as drivers for revenue growth.
• The market for the company's products is competitive, with new and existing competitors introducing EBOS system solutions and components.

Risks and Challenges:

• Risks include the completion of the proposed merger with ARRAY Technologies, Inc., including obtaining regulatory approvals and potential integration difficulties.
• Potential adverse impacts from the wire insulation shrinkback matter, including litigation expenses and potential losses if costs cannot be recovered from suppliers.
• Supply chain disruptions due to interruptions in raw material flows from international vendors, tariffs, and trade restrictions.
• Risks related to product defects, performance problems, and safety issues leading to equipment failure, reputational damage, or loss of customers.
• Risks associated with patent infringement litigation and the ability to enforce intellectual property rights.
• Macroeconomic factors such as high inflation, high interest rates, and geopolitical instability.
• Dependency on production facilities in Tennessee and risks associated with vendor concentration.

Management Commentary and Tone:

• CEO Brandon Moss expressed pleasure with strong results, noting productivity improvements drove revenue and Adjusted EBITDA above expected ranges.
• Management stated the strategy is working, with a focus on customer delivery, quality solutions, and market-leading service following the completion of the move to a new facility.
• Management highlighted an unmatched market position, world-class manufacturing, and a breakthrough innovation pipeline as foundations for future opportunities.
• The tone indicates confidence in the long-term health of the market and the company's position to continue momentum into 2027 and beyond.

Other Key Points:

• The Company entered into an Agreement and Plan of Merger and Reorganization with ARRAY Technologies, Inc.
• The third quarter 2026 earnings call was conducted as a joint analyst call with ARRAY Technologies, Inc. on November 4, 2026, due to the transaction announcement.
• The Company incurred $1.0 million in litigation settlement expenses and $0.7 million in wire insulation shrinkback litigation expenses during the quarter.
• Plant optimization expenses related to consolidating operations into a new facility were $0.1 million for the quarter and $1.2 million for the nine months ended September 30, 2026.
• Transaction, integration, and restructuring costs related to the ARRAY Technologies deal were $0.7 million for the quarter and nine months ended September 30, 2026.
• Shareholder litigation expenses were $0.1 million for the quarter and $2.3 million for the nine months ended September 30, 2026.
• Inventory increased to $148.3 million as of September 30, 2026, from $89.9 million as of December 31, 2025.
• Accounts receivable increased to $159.8 million as of September 30, 2026, from $128.8 million as of December 31, 2025.