Shoals Technologies Group, Inc. · NASDAQ:SHLS
Shoals Technologies — Q4 2022 Earnings Presentation
39 slides from Shoals Technologies's earnings presentation, Feb 28, 2023
Slide 1: Q4 2022 Investor Presentation
February 2023 Q4 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 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 solar energy than competing solutions components Products used on more than 50% of al
Slide 7: Our Products
OUR PRODUCTS MISSION CRITICAL EBOS COMPONENTS AC HIGH VOLTAGE(1) DC FEEDER CABLE(1) WIRELESS JUNCTION RECOMBINERS MONITORING BOXES INLINE CABLE SPLICE FUSES ASSEMBLIES BOX COMBINERS DISCONNECTS TRANSITION BOX © 2023 Shoals Technologies Group 7 (1) EBOS products not currently offered by Shoals. © 202
Slide 8: EBOS Is an Attractive Segment
EBOS IS AN ATTRACTIVE SEGMENT… Must Have Product… EBOS is required for every solar project regardless of size, Creates… location or technology Low technology risk …That’s Technology EBOS works with all types of panels, mounting systems and inverters Agnostic… Strong preference for …With a High Failu
Slide 9: That's Growing Faster Than the Overall Solar Market
…THAT’S Compound Annual Growth Rate in GROWING FASTER Addressable Market for EBOS from 2021 to 2025 THAN THE OVERALL SOLAR MARKET + 5% 28% + 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 +27% 13% 12% 15%+ Increase in the contribution of 100 26% 30%
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 Technical support 22% 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 At Shoals™, we challenge and support each other to design, develop, and deliver solutions that have the potential to change the world. In 2021, we published our inaugural ESG report and look forward to sharing future progress and disclosure enhancements. Environmental Stewardsh
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 11% Other(2) 29% 12% 36% Installation(1) Mounting System EBOS 9.
Slide 17: Three Big Issues
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 & 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: 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
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 Shoals has the better mousetrap… You don’t need licensed electricians which is huge INDUSTRY – Project Manager, Solar Developer SAYS 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 ABOUT US – Director of Construction, EP
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 Win the Customer and Grow Wallet Share with Grow Wallet Size with Expand Saving Solutions for EV Take Share with BLA Complementary Solar Products Battery Storage Products Internationally Charging Infrastructure Estimated BLA Share EBOS Custo
Slide 26: BLA Continues to Gain Share
BLA CONTINUES TO GAIN SHARE EPCs and Developers At IPO (January 2021) Today Highlights Converted Converted 4 36 9X number of EPC and developer converted since IPO. In Transition In Transition 3 additional customers converted to BLA in Q4 2022 10 14 ~55% increase in prospects, in transition, an
Slide 27: New Product Status
NEW PRODUCT STATUS Product Commercial Status Revenue Development Timing Wire Management • Safely secures cabling • First release • Quoting globally • 4Q 2022 • Replaces “zip ties” that have a high rate of failure complete • Surpassed 800MW of deliveries • High margin product category “BLA 2.0” • Inc
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 EV Charging System Solutions
SHOALS EV CHARGING SYSTEM SOLUTIONS Shoals eMobility charging product focuses on four product families 01 Fuel Power Center 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
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 $3.5B
Slide 32: Financial Overview and Business Update
FINANCIAL OVERVIEW AND BUSINESS UPDATE
Slide 33: Simple Model That Delivers Strong Financial Results
SIMPLE MODEL THAT DELIVERS STRONG FINANCIAL RESULTS Core Objectives Tactics Results Grow faster than • Take market share with disruptive products 36% CAGR in revenues from 2020-2022 the market ~225 bps increase in Gross Margin • Locate manufacturing in low-cost regions from 2020-2022 • Use automatio
Slide 34: High Revenue Visibility Driven by Long Project Lead Times
HIGH REVENUE VISIBILITY DRIVEN BY LONG PROJECT LEAD TIMES… Shoals Project Identified EPC Award Purchase Order Shoals receives preliminary Shoals receives Shoals receives binding design drawings verbal award purchase order Pre-EBOS Project Development Pre-Construction EBOS Delivery Construction 6 mon
Slide 35: Order Book Continues to Grow
Backlog and Awarded Orders ORDER BOOK as of Dec 31st ($mm)(1) CONTINUES $429 TO GROW $299 Fourth quarter quotes up 49% year- over-year Backlog and awarded orders up 43% from fourth quarter 2021 2021 2022 (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 growing “Category killer product” that’s gaining ~36% top line growth(4
Slide 37: Appendix
APPENDIX
Slide 38: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES $, thousands 3 Months Ended December 31, 12 Months Ended December 31, 2022 2021 2022 2021 Net Income (loss) $ 118,302 $ (2,152) $ 143,013 $ 3,944 Interest expense, net 5,778 3,638 18,538 14,549 Income tax expense 3,502 3,209 8,987 86 Depreciation expense 487 436 1
Slide 39: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES $, thousands 3 Months Ended December 31, 12 Months Ended December 31, 2022 2021 2022 2021 Net income (loss) attributable to Shoals Technologies Group, Inc. $ 112,611 $ (1,837) $ 127,611 $ 2,348 Net income (loss) impact from assumed exchange of Class B common stock
Shoals Technologies Group — Q4 2022 Earnings Presentation on 6ix