Shoals Technologies Group, Inc. · NASDAQ:SHLS
Shoals Technologies — Q1 2024 Earnings Presentation
22 slides from Shoals Technologies's earnings presentation, May 7, 2024
Slide 1: Q1 2024 Investor Presentation
May 2024 TECHNOLOGIES GROUP, INC. Q1 2024 Investor Presentation
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER Forward-Looking Statements This presentation 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 re
Slide 3: Disclaimer: Non-GAAP Financial Information
DISCLAIMER Non-GAAP Financial Information This presentation includes Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings per Share (“EPS” ), Free Cash Flow and Net Debt, which are unaudited financial measures that exclude items and
Slide 4: Agenda
AGENDA 01 First Quarter 2024 Update 02 Financial Overview and Business Update 03 Guidance 04 Appendix © 2024 Shoals Technologies Group 4
Slide 5: Shoals Business Update
SHOALS BUSINESS UPDATE Revenue at the Low End of Revenue declined 14% versus prior year period primarily as a result of project push outs(1) Outlook GM % Within Gross profit % decreased 570 bps year-over-year to 40.2% Target Range of 40% to 45% Backlog and awarded orders up 17% versus prior year and
Slide 6: Key Takeaways
KEY TAKEAWAYS • Solar led power generation additions in 2023 and is projected to do the same in 2024. • Electrical demand is projected to grow 5X driven by data center/AI providing a strong tailwind for solar. • Transitory industry impediments are stunting market growth in the near term. • Shoals ha
Slide 7: Financial Summary
FINANCIAL SUMMARY • Revenue decreased 14% year over year • Gross Profit decreased 24% year over year • Company maintaining gross profit % target of 40%-45% to reflect industry-leading value proposition See Appendix for reconciliation of non-GAAP measures. © 2024 Shoals Technologies Group 7
Slide 8: First Quarter Financial Snapshot
FIRST QUARTER FINANCIAL SNAPSHOT Revenue ($mm) Adjusted diluted EPS Adjusted gross profit % $105.1 $0.15 47.8% -14% $90.8 -770 bps 40.2% -53% $0.07 2023 2024 2023 2024 2023 2024 3-Mos ended March 31, 3-Mos ended March 31, 3-Mos ended March 31, Revenue ($mm) Adjusted diluted EPS Adjusted Gross Profit
Slide 9: Consistent Growth Post IPO
CONSISTENT GROWTH POST IPO Revenue, LTM Adjusted EBITDA, LTM $600 $200 $453.2 $488.9 $474.7 $164.4 $173.4 $155.7 $500 $409.8 $143.0 $326.9 $364.1 $150 $400 $114.6 $280.3 $93.0 $300 $249.4 $100 $213.2 $235.6 $62.9 $65.3 $64.5 $74.1 $200 $50 $100 $- $- 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24
Slide 10: Backlog & Awarded Orders
BACKLOG & AWARDED ORDERS BACKLOG & AWARDED ORDERS $, mm 700.0 633.3 631.3 615.2 600.0 546.1 527.5 500.0 471.2 428.6 366.0 242.4 425.5 400.0 419.0 327.2 299.9 271.9 300.0 259.7 132.6 200.0 303.7 267.3 100.0 199.3 227.6 205.8 194.5 168.9 196.2 - Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2023 2024 Backlog Awarded Orders
Slide 11: Debt & Liquidity
DEBT & LIQUIDITY $, mm Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Cash & Cash Equivalents $2.5 $10.1 $11.2 $8.8 $6.5 $5.9 $9.2 $22.7 $15.2 Term Loan Facility $196.8 $196.3 $195.8 $195.3 $194.8 $194.3 $193.8 $143.8 $0.0 • Net debt declined $79.8 million Revolving Credit F
Slide 12: Free Cash Flow
FREE CASH FLOW $, mm Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Net Cash Provided by (Used in) Operating Activities ($25.9) $19.1 $11.8 $34.4 $9.9 $27.9 $27.7 $26.4 $12.9 Net Cash Used in Investing Activities ($0.9) ($1.3) ($0.7) ($0.8) ($2.0) ($2.4) ($3.5) ($2.9) ($2.5)
Slide 13: Illustrative Shoals Revenue Recognition to COD
ILLUSTRATIVE SHOALS REVENUE RECOGNITION TO COD Shoals recognizes revenue on projects well in advance of their commercial operation date (COD). The chart below illustrates the distribution of time (in months) between the time that Shoals recognizes revenue and the project becomes commercially opera
Slide 14: Shoals Shipments vs COD
SHOALS SHIPMENTS VS COD 2020 2021 2022 2023 CAGR 2020-2023 Shoals Revenue 1 $176 $213 $327 $489 41% YoY Growth Rate 22% 22% 53% 50% 2019 2020 2021 2022 2023 2024 CAGR Forecast 2021-2024 U.S. Utility-Scale PV Installations 8,732 14,033 16,598 12,752 22,547 28,325 20% (MWdc)2 YoY Growth Rate 61% 18% -
Slide 15: Market: Project Delays Impacting Shoals
MARKET: PROJECT DELAYS IMPACTING SHOALS Macro and industry specific issues are causing project delays EIA data, based on form 860 reporting as of February 2024, has shown an increase in the number of gigawatts of projects experiencing delays 100.0 90.0 80.0 70.0 60.0 GW under Development 50.0 40
Slide 16: Warranty Update
WARRANTY UPDATE • Our top priority is taking care of the customer. • Since our 4Q earnings call, we have become aware of only one additional site displaying shrinkback. We continue to work with our customers to identify and remediate known issues as we address challenges and opportunities in the pro
Slide 17: Guidance
GUIDANCE 2Q 2024, ($mm) Guidance Revenue $85 - $95 Adjusted EBITDA $20 - $25 2024, ($mm) Guidance Revenue $440 - $490 Adjusted EBITDA $130 - $150 Adjusted Net Income $85 - $100 Cash Flow from Operations $100 - $115 Capital Expenditures $15 - $20 Interest Expense $15 - $20 A reconciliation of Adjuste
Slide 18: Appendix
APPENDIX —S
Slide 19: Reconciliation of Non-GAAP Measures: Adjusted Gross Profit
RECONCILIATION OF NON-GAAP MEASURES (in thousands) Adjusted Gross Profit 3 Months Ended March 31, 2024 2023 Net revenue $ 90,807 $ 105,086 Cost of revenue 54,347 56,829 Gross profit 36,460 48,257 Gross profit % 40.2% 45.9% Wire insulation shrinkback expenses (a) - 2,006 Adjusted gross profit $ 36,46
Slide 20: Reconciliation of Non-GAAP Measures: Adjusted EBITDA
RECONCILIATION OF NON-GAAP MEASURES (in thousands) Adjusted EBITDA 3 Months Ended March 31, 2024 2023 Net income $ 4,774 $ 16,983 Interest expense, net 4,362 5,996 Income tax expense 2,448 3,121 Depreciation expense 1,106 484 Amortization of intangibles 1,896 2,022 Equity-based compensation 5,023 7,
Slide 21: Reconciliation of Non-GAAP Measures: Adjusted Net Income
RECONCILIATION OF NON-GAAP MEASURES (in thousands) Adjusted Net Income 3 Months Ended March 31, 2024 2023 Net income attributable to Shoals Technologies Group, Inc. $ 4,774 $ 14,296 Net income impact from assumed exchange of Class B common stock to Class A common stock (c) - 2,687 (d) Adjustment to
Slide 22: Reconciliation of Non-GAAP Measures: Adjusted Diluted EPS
RECONCILIATION OF NON-GAAP MEASURES (in thousands, except EPS) Adjusted Diluted Earnings per Share ("EPS") 3 Months Ended March 31, 2024 2023 Diluted weighted average shares of Class A common stock outstanding, excluding Class B common stock 170,514 147,107 Assumed exchange of Class B common stock t
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