Slide 1: Q2 2023 Investor Presentation
August 2023 TECHNOLOGIES GROUP, INC. Q2 2023 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 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 01 Company Overview 02 Technology and Value Proposition 03 Growth Strategy 04 Financial Overview and Business Update © 2023 Shoals Technologies Group 4
Slide 5: Company Overview
COMPANY OVERVIEW
Slide 6: Who We Are
WHO WE ARE Leading Provider of Electrical Sell patented products that are less Focus on selling complete systems Balance of System (“EBOS”) costly to install and more reliable rather than individual solutions for renewable energy than competing solutions components Products used on more than 50% o
Slide 7: Our Products
OUR PRODUCTS MISSION CRITICAL EBOS COMPONENTS AC HIGH VOLTAGE(1) DC FEEDER CABLE(1) WIRELESS JUNCTION RECOMBINER MONITORING BOXES S INLINE CABLE SPLICE FUSES ASSEMBLIES BOX COMBINERS DISCONNECTS TRANSITION BOX © 2023 Shoals Technologies Group 7 (1) EBOS products not currently offered by Shoals. © 20
Slide 8: EBOS Is an Attractive Segment
EBOS IS AN ATTRACTIVE SEGMENT… Must Have Product… EBOS is required for every solar, EV Charging or Energy Storage Creates… project regardless of size, location or technology Low technology risk …That’s Technology EBOS works with all types of panels, mounting systems, inverters and Agnostic… chargers
Slide 9: EBOS Market Growing Faster Than the Overall Solar Market
…THAT’S Compound Annual Growth Rate in GROWING Addressable Market for EBOS from 2021 to 2025 FASTER + 5% 28% THAN THE OVERALL SOLAR MARKET + 1.5% 23% EBOS market has several + 8% growth accelerants Primarily ground mount, which is growing faster than the overall market + 1% 12% Beneficiary of batter
Slide 10: We Have a Simple Mission
12 I would move 3 to 2 and add comment about best value for 3 WE HAVE A SIMPLE MISSION 01 Create products that can be installed by anyone 02 Move assembly from the field to the factory 03 Leverage the factory environment to produce products with superior quality, reliability and safety © 2023 Shoals
Slide 11: Reducing Installation Cost Is Critical
REDUCING INSTALLATION COST IS CRITICAL FOR CONTINUED COST REDUCTION IN SOLAR Contribution of Equipment vs. Installation Hourly Wages For Field Labor vs. Total Installed to the Cost of a Solar Energy Project(1) Cost of Utility Scale Solar +33% 19% 18% 17% Increase in the 19% 23% contribution of $100.
Slide 12: We Focus on Custom System Solutions
WE FOCUS ON CUSTOM “SYSTEM SOLUTIONS” Revenue Mix For the Year System Solutions bundle… Ended December 31, 2022 Proprietary components Pre-construction design and engineering, including specifying and optimizing the system Proprietary installation methods 22% Technical support 78% System Sol
Slide 13: Proven Financial Performance
PROVEN FINANCIAL PERFORMANCE Revenues ($mm) Gross Profit ($mm) Adjusted EBITDA ($mm) $327 $131 $93 $61 $63 $83 $213 $67 $176 2020 2021 2022 2020 2021 2022 2020 2021 2022 Note: See Appendix for reconciliation of non-GAAP measures. © 2023 Shoals Technologies Group 13
Slide 14: Our Commitment to ESG
OUR COMMITMENT TO ESG We challenge and support each other to design, develop, and deliver solutions that have the potential to change the world. In July 2023, we published our second annual ESG Report that addresses our polices, programs, practices, and impact. Environmental Stewardship Social Commi
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)(1) 50MW Solar Project Using Trackers 50MW Solar Project Using Trackers 13% Other(2) 26% 11% 37% Installation(1) Mounting System EBOS 9.
Slide 17: Three Big Issues with Conventional Homerun EBOS
CONVENTIONAL HOMERUN EBOS SYSTEMS HAVE THREE BIG ISSUES Installation methods that require Redundant wiring that wastes Too much work done in the field electricians and special tools time and material where it’s hard to control quality • Trenching • Every string requires two wire runs • Every connect
Slide 18: Thousands of Wire Runs and Connections
CONVENTIONAL HOMERUN EBOS REQUIRES THOUSANDS OF WIRE RUNS & CONNECTIONS 30 PANELS PER STRING 24 STRINGS PER COMBINER 8 COMBINERS PER INVERTER 1 2.2 MW INVERTER 400 wire runs 2,192 connections for every 2.2 MW inverter! Pos + Neg Wire Run A 100 MW solar project using conventional homerun EBOS will re
Slide 19: Installing Conventional EBOS Requires Licensed Electricians
INSTALLING CONVENTIONAL HOMERUN EBOS REQUIRES LICENSED ELECTRICIANS LAY MEASURE STRIP CRIMP INSPECT INSTALL Lay the wire out Measure out the Strip the Crimp on the Inspect work Install the finished to cut the wire appropriate length to cable jacket appropriate end for any defects product down the to
Slide 20: Shoals' Combine-as-You-Go System
SHOALS’ COMBINE-AS-YOU-GO SYSTEM SOLVES THE ISSUES WITH CONVENTIONAL HOMERUN EBOS Big Lead Assembly (“BLA”) Interconnect Harness Plug-n-Play Connectors Simple push connectors speed Proprietary above ground feeder Pre-fabricated wire harnesses with installation, reduce errors and make cable eliminate
Slide 21: The Six Advantages of Combine-as-You-Go
THE SIX ADVANTAGES OF SHOALS’ COMBINE-AS-YOU-GO SYSTEM 01 02 03 04 05 06 Can be Enables Reduces Reduces installed above-ground wire runs Eliminates Increases safety maintenance by anyone installation dramatically combiner boxes and reliability requirements Plug-n-play Hung from Strings combined Dire
Slide 22: What the Industry Says About Us
WHAT THE INDUSTRY “ Shoals has the better mousetrap… You don’t need licensed electricians which is huge – Project Manager, Solar Developer ” SAYS ABOUT US “ On projects of 100MW, it’s a seven-figure swing [versus homerun]. I really can’t think of a reason we wouldn’t use BLA – Director of Constructi
Slide 23: Create a Competitive Moat
PATENTS, CONSULTATIVE SALES PROCESS AND PROPRIETARY MANUFACTURING CREATE A COMPETITIVE MOAT Patents limit competitors’ ability to Most of what we sell are custom Proprietary manufacturing process develop products that can replicate solutions that require a highly that enables high customization the
Slide 24: Growth Strategy
GROWTH STRATEGY
Slide 25: Our Growth Strategy
OUR GROWTH STRATEGY 01 02 03 04 05 Introduce Time and Cost Grow Wallet Share with Grow Wallet Size with Expand Growth in our Core Business Saving Solutions for EV Complementary Solar Products Battery Storage Products Internationally Charging Infrastructure Growth in our Core Business EBOS Customer E
Slide 26: BLA Continues to Gain Share
BLA CONTINUES TO GAIN SHARE EPCs and Developers 2Q 2022 4Q 2022 Today Highlights Converted Converted Converted 50% YoY increase in converted BLA customers, 29 36 43 including 4 international customers. 14 additional customers converted to BLA In Transition In Transition In Transition since Q2 20
Slide 27: New Product Status
NEW PRODUCT STATUS Product Commercial Status Revenue Development Timing Wire Management • Safely secures cabling • Quoting globally • Launched • 4Q 2022 • Replaces “zip ties” that have a high rate of failure • Over 1.1GW served to date • High margin product category “BLA+” • Incorporates EBOS conten
Slide 28: EV Charging Is an Attractive Market for Shoals
EV CHARGING IS AN ATTRACTIVE MARKET FOR SHOALS Rapidly Growing Demand High Labor Content Inefficient Means & Methods Spending on Public & Commercial Public & Commercial Duplicative homeruns EV Charging Infrastructure EV Charging Infrastructure ($ in millions)(1) % of spend by cost category(1) Ex
Slide 29: Conventional EV Charging Systems
CONVENTIONAL EV CHARGING SYSTEMS Dispensers 3-4 Individual Wire Runs from Each Disconnect Distribution Panel Dispenser to the Switch Transformer Boards (Breakers) distribution panel Wire runs fished through conduit buried in trenches Multiple equipment vendors Components arrive on site at differ
Slide 30: Shoals eMobility Charging System
SHOALS EMOBILITY CHARGING SYSTEM Shoals eMobility charging system focuses on four product families 01 Fuel Power Center 02 EV-BLA 03 Raceways 04 Quick Connect Bases Prefabricated plug-n-play EV power Patented Solar BLA cable-bus solution Above-ground cable raceway Prefabricated skidded dispe
Slide 31: EV Business Potential
EV BUSINESS POTENTIAL 893,118 YE2021 YE2025 Number of Addressable Chargers in the U.S. (Points)(1) 192,554 893,118 Points Added in the U.S. During 2022 Through 2025(1) 700,564 489,697 Average Shoals Addressable Spend per Point(2) $5,000 233,273 192,554 Implied 2022-2025 U.S. Market Opportunity $3.5B
Slide 32: Financial Overview and Business Update
FINANCIAL OVERVIEW AND BUSINESS UPDATE
Slide 33: Simple Model That Delivers Strong Financial Results
SIMPLE MODEL THAT DELIVERS STRONG FINANCIAL RESULTS Core Objectives Tactics Results Grow faster than • Take market share with disruptive products 36% CAGR in revenues from 2020-2022 the market • Increase number of projects within base customers ~225 bps increase in Gross Margin • Locate manufacturin
Slide 34: High Revenue Visibility Driven by Long Project Lead Times
HIGH REVENUE VISIBILITY DRIVEN BY LONG PROJECT LEAD TIMES… Shoals Project Identified EPC Award Purchase Order Shoals receives preliminary Shoals receives Shoals receives binding design drawings verbal award purchase order (Pipeline) (Awarded Order) (Backlog) Pre-EBOS Project Development Pre-Construc
Slide 35: Order Book Continues to Grow
Backlog and Awarded Orders ORDER BOOK as of June 30 ($mm)(1) CONTINUES TO GROW $546 Second quarter quotes up 71% year- over-year $327 Backlog and awarded orders up 67% from second quarter 2022 2022 2023 (1) Backlog defined as signed purchase orders and take or pay contracts with volume commitments.
Slide 36: Three Simple Reasons to Invest in Shoals
THREE SIMPLE REASONS TO INVEST IN SHOALS Gain Exposure to the Largest Part …With a Company that Can Grow …And Deliver Strong Returns of the Solar Market… Faster Than the Market… for Shareholders Ground mount solar is the fastest “Category killer product” that’s gaining ~40% top line growth(3) growin
Slide 37: Appendix
APPENDIX
Slide 38: Reconciliation of Non-GAAP Measures: Adjusted EBITDA
RECONCILIATION OF NON-GAAP MEASURES Adjusted EBITDA 3 Months Ended June 30, 6 Months Ended June 30, $, millions 2023 2022 2023 2022 Net Income $ 18.9 $ 7.3 $ 35.9 $ 12.0 Interest expense, net 6.5 4.2 12.5 8.0 Income tax expense 6.2 1.5 9.3 3.0 Depreciation expense 0.6 0.5 1.0 0.9 Amortization of int
Slide 39: Reconciliation of Non-GAAP Measures: Adjusted Net Income
RECONCILIATION OF NON-GAAP MEASURES Adjusted Net Income 3 Months Ended June 30, 6 Months Ended June 30, $, millions 2023 2022 2023 2022 Net income attributable to Shoals Technologies Group, Inc. $ 18.9 $ 4.4 $ 33.2 $ 7.0 Net income impact from assumed exchange of (a) Class B common stock to Class A