Shoals Technologies Group, Inc. · NASDAQ:SHLS
Shoals Technologies — Q3 2022 Earnings Presentation
39 slides from Shoals Technologies's earnings presentation, Nov 14, 2022
Slide 1: Q3 2022 Investor Presentation
November 2022 sit shoals TECHNOLOGIES © GROUP, INC. Q3 2022 Investor Presentation
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER Forward-Looking Statements and Other Information 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 possibl
Slide 3: Disclaimer: Non-GAAP Financial Information
DISCLAIMER Non-GAAP Financial Information This presentation includes Adjusted EBITDA and Adjusted Net Income (which are shown in the reconciliations set forth in the Appendix hereto), which are unaudited financial measures that exclude items and therefore are not in accordance with U.S. generally ac
Slide 4: Agenda
AGENDA ° + QO] Company Overview e 7 02 Technology and Value Proposition “e: shoal sie snoais . + O03 Growth Strategy CS t 04 Financial Overview and Business Update BYHe SHES shoals © 2022 Shoals Technologies Group
Slide 5: Company Overview
COMPANY OVERVIEW
Slide 6: Leading Provider of Electrical Balance of System Solutions for Solar
Leading Provider of Electrical Sell patented products that are less Balance of System (“EBOS”) costly to install and more reliable solutions for solar energy than competing solutions = Products used on approximately 50% of = Install faster > fewer labor hours than all U.S. solar capacity installed i
Slide 7: Our Products
OUR PRODUCTS MISSION CRITICAL EBOS COMPONENTS Gi Ac HIGH VoLTAGE [1 Dc FEEDER CABLE" WIRELESS = JUNCTION MONITORING BOXES Z ESA, : XA _ PAPKERYLRY ASSES CABLE SPLICE ASSEMBLIES BOX ql rit TH ‘ i 5 : : 6 2 ~ “oes . -,8 Sos ‘ : COMBINERS DISCONNECTS TRANSITION 7% <4 = - 5 ‘- " % s ‘ Sec oS eee Se .. k
Slide 8: EBOS Is an Attractive Segment
EBOS IS AN ATTRACTIVE SEGMENT, Must Have Product... That's Technology Agnosti «With a High Consequence of Failure... ..Where Price Isn't the Focus... and Requires a High Level of Customization shoals EBOS is required for every solar project regardless of size, location or technology EBOS works with
Slide 9: Market growth by segment
»Te A > A e RA OLAR AR +5% 28% +15% 23% 2 eve +8% 0 a elera Primarily ground mo growing faste a e overa arke +1% 12% Beneficiary of battery energy storage e and retro Rip and replace of e g solar flee BOS for emerging arging marke US.Solar Ground Mount Battery Energy Rip & Replace of Solar EBOS EV C
Slide 10: I would move 3 to 2 and add comment about best value for 3
12 I would move 3 to 2 and add comment about best value for 3
Slide 11: 2022 2027 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
100 0 2022 2027 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 12: System Solutions and Solar Components
▪ ▪ ▪ ▪ ▪ ▪ ⇒ System Solutions Solar Components ▪ ▪
Slide 13: 2019 2020 2021 2019 2020 2021 2019 2020 2021
2019 2020 2021 2019 2020 2021 2019 2020 2021
Slide 14: Our Commitment to ESG
CO,;: 109.6 million MT NOx: 56,166 MT SO,: 59,243 MT Particulate: 6,155 MT shoals OUR COMMITMENT TO ESG Proactive safety environment reflected in FY 2020 TRIR of 0.88 Certified to rigorous quality management standards 14,7 trillion gallons Recycling program includes substantially all waste from manu
Slide 15: Technology and Value Proposition
TECHNOLOGY AND VALUE PROPOSITION
Slide 16: EBOS Is a Unique Category
EBOS IS A UNIQUE CATEGORY Cheap to buy. but expensive to install Contribution to Construction Cost (¢ per watt) EBOS Contribution to Installation Cost (¢ per watt) 50MW Solar Project Using Trackers 50MW Solar Project Using Trackers 11% Other!2) 29% 12% 36% Installation”) Mounting System EBOS Install
Slide 17: Conventional Homerun EBOS Systems Have Three Big Issues
CONVENTIONAL HOMERUN EBOS SYSTEMS HAVE THREE BIG ISSUES Installation methods that and special tools Trenching Underground conduit Six step process for every connection Complex wiring architecture shoals Redundant wiring that Every string requires two wire runs Same distances covered multiple times M
Slide 18: Conventional Homerun EBOS Requires Thousands of Wire Runs and Connections
CONVENTIONAL HOMERUN EBOS REQUIRES THOUSANDS OF WIRE RUNS & CONNECTIONS TILL n LLL \ St BaGaa \ ' ' ' ' ' x o Connections \ for every 2.2 MW inverter! TLL \ Vv Pos + Neg Wire Run — shoals 2022 Shoals Technologies Group 18
Slide 19: Licensed Electricians
LICENSED ELECTRICIANS K f My PSS Lay the wire out to cut the wire to length Measure out the appropriate length to expose the copper wire Strip the cable jacket Crimp on the appropriate end (either positive or negative) Inspect work for any defects Install the finished product down the row and into t
Slide 20: Combine-As-You-Go Solves the Issues
COMBINE-AS-YOU-GO SOLVES THE ISSUES Big Lead Assembly (“BLA”) Proprietary above ground feeder cable eliminates underground conduits and combiner boxes and installs using general labor C) Interconnect Harness Plug-n-Play Connectors a e ; Simple push connectors speed Pre-fabricated wire harnesses with
Slide 21: The Six Advantages of Shoals' Combine-As-You-Go System
Can be installed by anyone Plug-n-play push connectors Installable by general labor No electricians required LOWER LABOR RATES AND FEWER LABOR HOURS shoals THE SIX ADVANTAGES OF SHOALS’ COMBINE-AS-YOU-GO SYSTEM Enables above-ground installation Hung from mounting structure No trenching or buried con
Slide 22: Customer testimonials
Shoals has the better mousetrap... You don’t need licensed electricians which is huge - Project Manager, Solar Developer On projects of 100MW, it’s a seven-figure swing [versus homerun]. | really can’t think of a reason we wouldn't use BLA - Director of Construction, EPC/Developer The BLA is driving
Slide 23: Create a Competitive Moat
CREATE A COMPETITIVE MOAT Patents limit competitors’ ability to develop products than can replicate the benefits that ours provide » 57 Issued and pending patents * Cover prerequisites for labor savings shoals 1 nin Most of what we sell are custom Proprietary manufacturing process solutions that req
Slide 24: Growth Strategy
GROWTH STRATEGY ———
Slide 25: Target current products and products not targeted
Current Products Target Products 2017 2020 2021 Target Not Targeted Solar Solar + Storage U.S. International (ex. 2020 2023 China)
Slide 26: BLA customers converted since IPO
At IPO (January 2021) Today Converted Converted ▪ 8X number of EPC and developer converted since IPO. 4 23 33 ▪ 4 additional customers converted to BLA in Q3 6 2022 In Transition In Transition ▪ ~40% increase in prospects, in transition, and 10 14 4 converted since Q4 2021 demonstrates robust demand
Slide 27: New Product Introductions Are on Schedule
NEW PRODUCT INTRODUCTIONS ARE ON SCHEDULE 2021 2022 Q2 Q3 Ql Q2 ex) ord 4 MISES a Replaces “zip ties” that have a high rate of failure High margin product category cen ©) * Wire-Structure Interface * a a High Current Model Plug-n-play string-level monitoring (current, temp, IV curve trace, incline)
Slide 28: EV Charging Is an Attractive Market for Shoals
EV CHARGING IS AN ATTRACTIVE MARKET FOR SHOALS Spending on Public & Commercial EV Charging Infrastructure ($ in millions) $2,582 $2,286 $789 2021 2022 2023 Spend on EV charging stations is forecast to more than triple from 2021 to 2023 shoals Public & Commercial EV Charging Infrastructure % of spend
Slide 29: Conventional EV Charging Systems
CONVENTIONAL EV CHARGING SYSTEMS Dispensers 3-4 Individual Wire Runs from Each Dispenser to the Disconnect Distribution Panel rarnrnnnes distribution panel Switch Transformer Boards (Breakers) Wire runs fished through conduit buried in trenches * Multiple equipment vendors = Components arrive on sit
Slide 30: Shoals EV Charging System Solutions
SHOALS EV CHARGING SYSTEM SOLUTIONS 02 Raceways 03 EV-BLA * Patented trunk bus solution similar to solar BLA * Eliminates individual homeruns from each dispenser. Reduces wire runs by up to 75% Capable of above-ground installation if Utilizes plug-n-play connectors for rapid deployment * Estimated t
Slide 31: EV Business Market Entry Timeline
EV BUSINESS MARKET ENTRY TIMELINE Complete Market Entry Plan Phase | Products: Prototypes Complete and Testing in Factory Phase | Products: Field Deployed Prototypes Phase || Products: Products Designed and Prototyped Phase |! Products: Field Deployed Prototypes Phase | Products: Production Ramp Up
Slide 32: BNEF raised charge point addition estimates
Following announcements by the Biden Administration and 2021 2025 automakers of new incentives for EVs and EV Infrastructure, BNEF has nearly tripled their estimate for 2021 to 2025 charge point additions.(3) These figures do not include additional upside from the Inflation Reduction Act.
Slide 33: Financial Overview and Business Update
FINANCIAL OVERVIEW AND Nin BUSINESS UPDATE =
Slide 34: Strong Financial Results
Core Objectives Grow faster than the market Deliver 30%+ EBITDA margins Minimize capital intensity shoals STRONG FINANCIAL RESULTS Tactics * Take market share with disruptive products * Locate manufacturing in low-cost regions » Use automation to reduce labor content * Leverage growing volumes to re
Slide 35: High Revenue Visibility Driven by Long Project Lead Times
HIGH REVENUE VISIBILITY DRIVEN BY LONG PROJECT LEAD TIMES... Shoals Purchase Order Shoals receives binding purchase order EPC Award Shoals receives verbal award Project Identified Shoals receives preliminary design drawings Pre-EBOS Project Development Pre-Construction Construction EBOS Delivery 6 m
Slide 36: Backlog and Awarded Orders
Backlog and Awarded Orders as of Sep 30t* ($mm)”) ORDER BOOK CONTINUES TO GROW $471 Third quarter quotes up 75% year- over-year $271 Backlog and awarded orders up 74% from third quarter 2022 2021 2022 © 2022 Shoals Technol 36
Slide 37: Three Simple Reasons to Invest in Shoals
THREE SIMPLE REASONS TO INVEST IN SHOALS Gain Exposure to the Largest Part of the Solar Market... VY Ground mount solar is the fastest growing source of new generation in the U.S.) Utility-scale market is over 6X the size of residential market?) EBOS is required for every project EBOS is less expose
Slide 38: Appendix
APPENDIX
Slide 39: Adjusted EBITDA and Adjusted Net Income
Adjusted EBITDA 3 Months Ended September 30, 9 Months Ended September 30, $, millions 2022 2021 2022 2021 Operating income $ 20.0 $ 9.6 $ 43.0 $ 33.6 Depreciation expense 0.5 0.4 1.4 1.3 Amortization of intangibles 2.1 2.1 6.6 6.1 EBITDA 22.6 12.1 51.0 40.9 Equity-based compensation 4.0 2.7 11.9 6.9
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