Shoals Technologies Group, Inc. (“Shoals” or the “Company”)
(Nasdaq: SHLS), a leading provider of electrical balance of system
(“EBOS”) solutions for solar, battery storage and electric vehicle
charging infrastructure, today announced results for its third
quarter ended September 30, 2021.
“We are continuing to grow faster than the
market as Shoals’ System Solutions take share from conventional
solar EBOS. Third quarter revenues increased 14% year over year and
we ended the quarter with the highest level of backlog and awarded
orders in the company’s history. Since the beginning of the year,
the number of solar EPCs and developers that use BLA has more than
quadrupled and there are an additional 12 customers that are
currently transitioning to our system,” said Jason Whitaker, Chief
Executive Officer of Shoals.
Mr. Whitaker added, “We are not just taking a
bigger slice of the pie we are in, we are growing the size of the
pie available to us by broadening our product portfolio. We have
been doing that organically through new product introductions like
our wire management solutions and IV curve benchmarking products,
and now inorganically through the acquisition of ConnectPV, which
we completed during the third quarter. ConnectPV brings us new
products targeted specifically to energy storage where we see
tremendous growth potential. ConnectPV also gives us access to a
number of customers that we did not historically serve which should
further accelerate our market share gains. We are also expanding
beyond solar by taking our technology and expertise to the rapidly
growing EV charging market. We manufactured the first commercial
versions of our full EV System Solution set including all four
product families during the third quarter, and took first orders
from customers in November. We remain very focused on the EV
charging opportunity and are excited about the prospect of creating
a significant business in EV to complement our core solar business.
Between continued share gains with BLA, new products for solar and
the business we are building in EV, I am incredibly excited about
the future for Shoals.”
“Like many other companies, the key challenge to
our growth is the current supply chain environment. Our business
model has effectively insulated us from most of the margin pressure
that many of our peers are experiencing as a result of rising
commodity prices and the form factor of our products has limited
the impact of shipping and logistics shortages on our business—but,
unfortunately our customers still have to contend with these issues
as they progress their projects. The result is very fluid delivery
schedules, with customers making frequent changes both to product
specifications and when they want product on site. Recently some of
our customers’ projects have been delayed to accommodate design
updates as a result of panel changes or because other materials or
components needed are not available. In both cases, the impact to
us is to delay when we can produce and ship product which will have
the effect of shifting revenues that we expected to recognize in
the fourth quarter of this year into the beginning of next year.
Importantly, we have not had a single order cancel. We view these
conditions as temporary and expect delivery schedules to normalize
as the supply chain and logistics issues our customers are
contending with abate,” concluded Mr. Whitaker.
Third Quarter 2021 Financial
ResultsRevenue was $59.8 million, compared to $52.6
million for the prior-year period, an increase of 14%, driven by
increases in sales of both Components and System solutions.
Revenues increased less than expected as certain customers changed
product specifications or delayed shipment.
System Solutions represented 65% of revenues in
the quarter versus 70% in the prior-year period primarily as a
result of higher Components sales during the third quarter of this
year compared to the third quarter of last year. The increase in
Components sales as a percentage of total sales during the quarter
was expected.
Gross profit increased 5% to $21.8 million,
compared to $20.7 million in the prior-year period. Gross profit as
a percentage of revenue decreased to 36.4% from 39.3% in the prior
year period, due to the expected higher mix of Components sales in
the quarter which carry lower margins than System Solutions as well
as the impact of ConnectPV which we acquired during the quarter.
Gross margins on Components and System Solutions products were in
line with prior periods. ConnectPV’s historical gross margins are
lower than Shoals’ historical gross margins primarily due to the
higher prices they pay for components used in their products as a
result of their smaller size relative to Shoals. Excluding the
impact of ConnectPV, gross margins would have been higher in the
quarter. We expect to bring ConnectPV’s margins in line with
Shoals’ average gross margin as we migrate their business to our
suppliers.
General and administrative expenses were $10.0
million compared to $3.5 million during the same period in the
prior year. This change was primarily a result of higher non-cash
stock-based compensation, acquisition related expenses for
ConnectPV, planned increases in payroll expense due to higher
headcount to support growth and new product initiatives, new public
company costs and one-time public offering expenses.
Income from operations was $9.6 million,
compared to $15.1 million during the same period in the prior
year.
Net income was $5.3 million, compared to net
income of $15.0 million during the same period in the prior year.
This change was primarily due to higher general and administrative
expenses and higher interest expense partially offset by a tax
benefit. Net income for 2021 is not directly comparable to 2020
because prior to its IPO, the Company was organized as a tax
flow-through partnership rather than a corporation and did not
record income taxes. Basic and diluted earnings per share were
$0.02.
Adjusted EBITDA was $16.9 million, compared to
$19.9 million for the prior-year period.
Adjusted net income was $11.6 million, compared
to $15.4 million during the same period in the prior year. Adjusted
diluted earnings per share was $0.07.
During the quarter we acquired ConnectPV for a
combination of cash and stock. The transaction was not significant
to Shoals and the Company expects it to be accretive to 2022
earnings per share. Guggenheim Securities LLC acted as Shoals’
exclusive financial advisor in connection with the transaction.
Backlog and Awarded OrdersThe
Company’s backlog and awarded orders on September 30, 2021 were
$270.7 million, representing an all-time record for the company and
an increase of 101% and 35% versus the same time last year and June
30, 2021, respectively. The increase in backlog and awarded orders
reflects continued robust demand for the company’s products from
customers in the U.S. The acquisition of ConnectPV did not
contribute materially to the year-over-year increase in
backlog.
Fourth and First Quarter
OutlookThe Company is providing an outlook for the next
two quarters given the impacts of recent changes some of its
customers have made to their orders as well as continued disruption
in supply chain, freight and logistics availability across the
solar industry. It is not the Company’s intention to provide
quarterly guidance on an ongoing basis. Based on current market
conditions, business trends and other factors, the Company
expects:
For the quarter ended December 31, 2021:
- Revenues to be in the range of $40
million to $50 million
- Adjusted EBITDA to be in the range
of $11 million to $15 million
- Adjusted net
income to be in the range of $3 to $7 million
For the quarter ended March 31, 2022:
- Revenues to be in the range of $71
million to $76 million
- Adjusted EBITDA to be in the range
of $22 million to $24 million
- Adjusted net
income to be in the range of $14 to $17 million
A reconciliation of the Company’s non-GAAP
measures to the applicable GAAP measures are found within this
release. These expectations do not consider, or give effect to,
material acquisitions that may be completed by the Company during
2021 or 2022, other than ConnectPV, or other unforeseen events,
including changes in global economic conditions or further
disruption in supply chain, freight or logistics availability.
Webcast and Conference Call
InformationCompany management will host a webcast and
conference call on November 9, 2021, at 5:00 p.m. Eastern Time, to
discuss the Company's financial results.
Interested investors and other parties can
listen to a webcast of the live conference call by logging onto the
Investor Relations section of the Company's website at
https://investors.shoals.com.
The conference call can be accessed live over
the phone by dialing 1-844-826-3033 (domestic) or +1-412-317-5185
(international). A telephonic replay will be available
approximately two hours after the call by dialing 1-844-512-2921 or
for international callers, + 1-412-317-6671. The conference ID for
the live call and pin number for the replay is 10161234. The replay
will be available until 11:59 p.m. Eastern Time on November 23,
2021.
About Shoals Technologies Group,
Inc.Shoals Technologies Group, Inc. is a leading provider
of electrical balance of system (“EBOS”) solutions for solar,
battery storage and electric vehicle charging infrastructure. The
Company’s mission is to provide innovative products that reduce the
cost of installation while improving system performance,
reliability and safety. At least one Shoals’ product was used on
more than half of the solar energy projects installed in the U.S.
in 2020. To learn more about Shoals Technologies, please visit the
company's website at https://www.shoals.com.
Investor Relations Contact Shoals Technologies
Group, Inc.
Email: investors@shoals.com
Phone: 615-323-9836
Forward-Looking Statements
This report 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 results of operations, business strategies, technology
developments, financing and investment plans, dividend policy,
competitive position, industry and regulatory environment,
potential growth opportunities and the effects of competition.
Forward-looking statements include statements that are not
historical facts and can be identified by terms such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” "seek," “should,”
“will,” “would” or similar expressions and the negatives of those
terms.
Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Given these
uncertainties, you should not place undue reliance on
forward-looking statements. Also, forward-looking statements
represent our management’s beliefs and assumptions only as of the
date of this report. You should read this report with the
understanding that our actual future results may be materially
different from what we expect.
Except as required by law, we assume no
obligation to update these forward-looking statements, or to update
the reasons actual results could differ materially from those
anticipated in these forward-looking statements, even if new
information becomes available in the future.
Non-GAAP Financial Measures(1)
A reconciliation of projected adjusted EBITDA, adjusted net income,
and adjusted diluted earnings per share, which are forward-looking
measures that are not prepared in accordance with GAAP, to the most
directly comparable GAAP financial measures, is not provided
because we are unable to provide such reconciliation without
unreasonable effort. The inability to provide a quantitative
reconciliation is due to the uncertainty and inherent difficulty in
predicting the occurrence, the financial impact and the periods in
which the components of the applicable GAAP measures and non-GAAP
adjustments may be recognized. The GAAP measures may include the
impact of such items as non-cash share-based compensation,
amortization of intangible assets and the tax effect of such items,
in addition to other items we have historically excluded from
adjusted EBITDA and adjusted net income per share. We expect to
continue to exclude these items in future disclosures of these
non-GAAP measures and may also exclude other similar items that may
arise in the future (collectively, "non-GAAP adjustments").
Adjusted EBITDA, Adjusted Net Income and
Adjusted Diluted EPSWe define Adjusted EBITDA as net
income (loss) plus (i) interest expense, (ii) income taxes, (iii)
depreciation expense, (iv) amortization of intangibles, (v) tax
receivable agreement liability adjustment, (vi) loss on debt
repayment, (vii) equity-based compensation, (viii)
acquisition-related expenses (ix) COVID-19 expenses and (x)
non-recurring and other expenses. We define Adjusted Net Income as
net income (loss) plus (i) amortization of intangibles, (ii) tax
receivable agreement liability adjustment, (iii) loss on debt
repayment, (iv) amortization of deferred financing costs, (v)
equity-based compensation, (vi) acquisition-related expenses (vii)
COVID-19 expenses and (viii) non-recurring and other expenses, all
net of applicable income taxes. We define Adjusted Diluted EPS as
Adjusted Net Income divided by the diluted weighted average shares
of Class A common shares outstanding for the applicable period,
which assumes the pro forma exchange of all outstanding Class B
common shares for Class A common shares.
Adjusted EBITDA, Adjusted Net Income and
Adjusted Diluted EPS are intended as supplemental measures of
performance that are neither required by, nor presented in
accordance with, GAAP. We present Adjusted EBITDA, Adjusted Net
Income and Adjusted Diluted EPS because we believe they assist
investors and analysts in comparing our performance across
reporting periods on a consistent basis by excluding items that we
do not believe are indicative of our core operating performance. In
addition, we use Adjusted EBITDA, Adjusted Net Income and Adjusted
Diluted EPS: (i) as factors in evaluating management’s performance
when determining incentive compensation; (ii) to evaluate the
effectiveness of our business strategies; and (iii) because our
credit agreement uses measures similar to Adjusted EBITDA, Adjusted
Net Income and Adjusted Diluted EPS to measure our compliance with
certain covenants.
Among other limitations, Adjusted EBITDA,
Adjusted Net Income and Adjusted Diluted EPS do not reflect our
cash expenditures, or future requirements for capital expenditures
or contractual commitments; do not reflect the impact of certain
cash charges resulting from matters we consider not to be
indicative of our ongoing operations; in the case of Adjusted
EBITDA, does not reflect income tax expense or benefit for periods
prior to the reorganization; and may be calculated by other
companies in our industry differently than we do or not at all,
which may limit their usefulness as comparative measures.
Because of these limitations, Adjusted EBITDA,
Adjusted Net Income and Adjusted Diluted EPS should not be
considered in isolation or as substitutes for performance measures
calculated in accordance with GAAP. You should review the
reconciliation of net income to Adjusted EBITDA, Adjusted Net
Income and Adjusted Diluted EPS below and not rely on any single
financial measure to evaluate our business.
Shoals Technologies Group,
Inc.Consolidated Balance Sheets (in
thousands, except shares)
|
September 30,2021 |
|
December 31,2020 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
14,189 |
|
|
|
$ |
10,073 |
|
|
Accounts receivable, net |
44,588 |
|
|
|
27,004 |
|
|
Unbilled receivables |
10,554 |
|
|
|
3,794 |
|
|
Inventory, net |
27,832 |
|
|
|
15,121 |
|
|
Other current assets |
11,706 |
|
|
|
155 |
|
|
Total Current Assets |
108,869 |
|
|
|
56,147 |
|
|
Property, plant and equipment, net |
14,358 |
|
|
|
12,763 |
|
|
Goodwill |
69,321 |
|
|
|
50,176 |
|
|
Other intangible assets, net |
67,508 |
|
|
|
71,988 |
|
|
Deferred tax asset |
121,545 |
|
|
|
— |
|
|
Other assets |
1,204 |
|
|
|
4,236 |
|
|
Total Assets |
$ |
382,805 |
|
|
|
$ |
195,310 |
|
|
|
|
|
|
Liabilities and Stockholders' Deficit / Members’
Deficit |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
18,664 |
|
|
|
$ |
14,634 |
|
|
Accrued expenses |
15,112 |
|
|
|
5,967 |
|
|
Long-term debt—current portion |
2,000 |
|
|
|
3,500 |
|
|
Total Current Liabilities |
35,776 |
|
|
|
24,101 |
|
|
Revolving line of credit |
60,140 |
|
|
|
20,000 |
|
|
Long-term debt, less current portion |
190,136 |
|
|
|
335,332 |
|
|
Payable Pursuant to the Tax
Receivable Agreement |
107,880 |
|
|
|
— |
|
|
Total Liabilities |
393,932 |
|
|
|
379,433 |
|
|
Commitments and Contingencies (Note 13) |
|
|
|
Stockholders’ Deficit / Members’ Deficit |
|
|
|
Members’ deficit |
— |
|
|
|
(184,123 |
) |
|
Preferred stock, $0.00001 par value - 5,000,000 shares authorized;
none issued and outstanding as of September 30, 2021 |
— |
|
|
|
— |
|
|
Class A common stock, $0.00001 par value - 1,000,000,000 shares
authorized; 104,179,939 shares issued and outstanding as of
September 30, 2021 |
1 |
|
|
|
— |
|
|
Class B common stock, $0.00001 par value - 195,000,000 shares
authorized; 62,664,521 shares issued and outstanding as of
September 30, 2021 |
1 |
|
|
|
— |
|
|
Additional paid-in capital |
92,149 |
|
|
|
— |
|
|
Accumulated deficit |
(91,296 |
) |
|
|
— |
|
|
Total stockholders’ equity attributable to Shoals Technologies
Group, Inc. / members' deficit |
855 |
|
|
|
(184,123 |
) |
|
Non-controlling interests |
(11,982 |
) |
|
|
— |
|
|
Total stockholders’ deficit / members’ deficit |
(11,127 |
) |
|
|
(184,123 |
) |
|
Total Liabilities and Stockholders’ Deficit / Members’
Deficit |
$ |
382,805 |
|
|
|
$ |
195,310 |
|
|
|
|
|
|
|
|
|
|
|
|
Shoals Technologies Group,
Inc.Consolidated Statements of Operations
(in thousands, except per share amounts)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue |
$ |
59,840 |
|
|
|
$ |
52,598 |
|
|
|
$ |
165,166 |
|
|
|
$ |
136,765 |
|
|
Cost of
revenue |
38,071 |
|
|
|
31,909 |
|
|
|
98,444 |
|
|
|
85,061 |
|
|
Gross
profit |
21,769 |
|
|
|
20,689 |
|
|
|
66,722 |
|
|
|
51,704 |
|
|
Operating
Expenses |
|
|
|
|
|
|
|
General and administrative expenses |
10,031 |
|
|
|
3,515 |
|
|
|
26,865 |
|
|
|
15,390 |
|
|
Depreciation and amortization |
2,175 |
|
|
|
2,069 |
|
|
|
6,305 |
|
|
|
6,194 |
|
|
Total Operating Expenses |
12,206 |
|
|
|
5,584 |
|
|
|
33,170 |
|
|
|
21,584 |
|
|
Income from
Operations |
9,563 |
|
|
|
15,105 |
|
|
|
33,552 |
|
|
|
30,120 |
|
|
Interest expense, net |
(3,582 |
) |
|
|
(104 |
) |
|
|
(10,911 |
) |
|
|
(601 |
) |
|
Tax receivable agreement
liability adjustment |
(2,014 |
) |
|
|
— |
|
|
|
(3,678 |
) |
|
|
— |
|
|
Loss on debt repayment |
— |
|
|
|
— |
|
|
|
(15,990 |
) |
|
|
— |
|
|
Income before income
taxes |
3,967 |
|
|
|
15,001 |
|
|
|
2,973 |
|
|
|
29,519 |
|
|
Income tax benefit |
1,309 |
|
|
|
— |
|
|
|
3,123 |
|
|
|
— |
|
|
Net
income |
5,276 |
|
|
|
15,001 |
|
|
|
6,096 |
|
|
|
29,519 |
|
|
Less: net income attributable
to non-controlling interests |
2,790 |
|
|
|
— |
|
|
|
1,911 |
|
|
|
— |
|
|
Net income
attributable to Shoals Technologies Group, Inc. |
$ |
2,486 |
|
|
|
$ |
15,001 |
|
|
|
$ |
4,185 |
|
|
|
$ |
29,519 |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30,
2021 |
|
|
|
Period from January 27, 2021 to September 30,
2021 |
|
|
Earnings per share of
Class A common stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.02 |
|
|
|
|
|
$ |
0.02 |
|
|
|
|
Diluted |
$ |
0.02 |
|
|
|
|
|
$ |
0.02 |
|
|
|
|
Weighted average
shares of Class A common stock outstanding: |
|
|
|
|
|
|
|
Basic |
101,890 |
|
|
|
|
|
96,354 |
|
|
|
|
Diluted |
102,251 |
|
|
|
|
|
96,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shoals Technologies Group,
Inc.Consolidated Statements of Cash Flows
(in thousands)
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
Cash Flows from
Operating Activities |
|
|
|
Net income |
$ |
6,096 |
|
|
|
$ |
29,519 |
|
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
Depreciation and amortization |
7,345 |
|
|
|
7,017 |
|
|
Amortization/write off of deferred financing costs |
5,692 |
|
|
|
31 |
|
|
Equity-based compensation |
6,404 |
|
|
|
7,219 |
|
|
Provision for slow-moving inventory |
435 |
|
|
|
488 |
|
|
Deferred taxes |
640 |
|
|
|
— |
|
|
Tax receivable agreement liability adjustment |
3,678 |
|
|
|
— |
|
|
Gain on sale of assets |
61 |
|
|
|
— |
|
|
Changes in assets and liabilities, net of business
acquisition: |
|
|
|
Accounts receivable |
(12,271 |
) |
|
|
(1,087 |
) |
|
Unbilled receivables |
(6,760 |
) |
|
|
(6,076 |
) |
|
Inventory |
(8,505 |
) |
|
|
(2,953 |
) |
|
Other assets |
(6,904 |
) |
|
|
670 |
|
|
Accounts payable |
(5,198 |
) |
|
|
285 |
|
|
Accrued expenses |
2,608 |
|
|
|
3,002 |
|
|
Net Cash Provided by
(Used in) Operating Activities |
(6,679 |
) |
|
|
38,115 |
|
|
Cash Flows Used In
Investing Activities |
|
|
|
Purchases of property, plant and equipment |
(2,483 |
) |
|
|
(2,786 |
) |
|
Acquisition of a business, net of cash acquired |
(12,909 |
) |
|
|
— |
|
|
Net Cash Used in
Investing Activities |
(15,392 |
) |
|
|
(2,786 |
) |
|
Cash Flows from
Financing Activities |
|
|
|
Member / non-controlling interest distributions |
(4,837 |
) |
|
|
(11,356 |
) |
|
Employee withholding taxes related to net settled equity
awards |
(137 |
) |
|
|
— |
|
|
Deferred financing costs |
(94 |
) |
|
|
— |
|
|
Payments on term loan facility |
(152,250 |
) |
|
|
— |
|
|
Proceeds from revolving credit facility |
40,140 |
|
|
|
— |
|
|
Payments on senior debt - term loan |
— |
|
|
|
(21,810 |
) |
|
Proceeds from issuance of Class A common stock sold in an IPO, net
of underwriting discounts and commissions |
154,521 |
|
|
|
— |
|
|
Proceeds from issuance of Class A common stock in follow-on
offering, net of underwriting discounts and commissions |
281,064 |
|
|
|
— |
|
|
Purchase of LLC Interests with proceeds from follow-on
offering |
(281,064 |
) |
|
|
— |
|
|
Payment of debt acquired in acquisition |
(1,537 |
) |
|
|
— |
|
|
Deferred offering costs |
(9,619 |
) |
|
|
— |
|
|
Net Cash Provided by
(Used in) Financing Activities |
26,187 |
|
|
|
(33,166 |
) |
|
Net Increase in Cash
and Cash Equivalents |
4,116 |
|
|
|
2,163 |
|
|
Cash and Cash
Equivalents—Beginning of Period |
10,073 |
|
|
|
7,082 |
|
|
Cash and Cash
Equivalents—End of Period |
$ |
14,189 |
|
|
|
$ |
9,245 |
|
|
|
|
|
|
|
|
|
|
|
|
Shoals Technologies Group,
Inc.Adjusted EBITDA and Adjusted Net Income
Reconciliation (Unaudited)(in thousands)
Reconciliation of Net Income to Adjusted EBITDA (in
thousands):
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
$ |
5,276 |
|
|
|
$ |
15,001 |
|
|
$ |
6,096 |
|
|
|
$ |
29,519 |
|
Interest expense |
3,582 |
|
|
|
104 |
|
|
10,911 |
|
|
|
601 |
|
Income tax benefit |
(1,309 |
) |
|
|
— |
|
|
(3,123 |
) |
|
|
— |
|
Depreciation expense |
449 |
|
|
|
391 |
|
|
1,265 |
|
|
|
1,029 |
|
Amortization of
intangibles |
2,088 |
|
|
|
1,996 |
|
|
6,080 |
|
|
|
5,988 |
|
Tax receivable agreement
liability adjustment(a) |
2,014 |
|
|
|
— |
|
|
3,678 |
|
|
|
— |
|
Loss on debt repayment |
— |
|
|
|
— |
|
|
15,990 |
|
|
|
— |
|
Equity-based compensation |
2,732 |
|
|
|
1,032 |
|
|
6,904 |
|
|
|
7,219 |
|
Acquisition-related
expenses |
1,697 |
|
|
|
— |
|
|
1,697 |
|
|
|
— |
|
COVID-19 expenses(b) |
108 |
|
|
|
1,200 |
|
|
269 |
|
|
|
2,006 |
|
Non-recurring and other
expenses(c) |
243 |
|
|
|
150 |
|
|
1,821 |
|
|
|
444 |
|
Adjusted EBITDA |
$ |
16,880 |
|
|
|
$ |
19,874 |
|
|
$ |
51,588 |
|
|
|
$ |
46,806 |
|
(a) |
Represents an adjustment to eliminate the remeasurement of the Tax
Receivable Agreement. |
(b) |
Represents costs incurred as a direct impact from the COVID-19
pandemic, disinfecting and reconfiguration of facilities, medical
professionals to conduct daily screenings of employees, premium pay
during the pandemic to hourly workers in 2020 and direct legal
costs associated with the pandemic. |
(c) |
Represents certain costs associated with non-recurring professional
services, Oaktree’s expenses and other costs. |
|
|
Reconciliation of Net Income Attributable to
Shoals Technologies Group, Inc. to Adjusted Net Income (in
thousands):
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income attributable to Shoals Technologies Group, Inc. |
$ |
2,486 |
|
|
|
$ |
15,001 |
|
|
|
$ |
4,185 |
|
|
|
$ |
29,519 |
|
|
Net income impact from pro
forma conversion of Class B common stock to Class A common stock
(a) |
2,790 |
|
|
|
— |
|
|
|
1,911 |
|
|
|
— |
|
|
Adjustment to the provision
for income tax (b) |
(668 |
) |
|
|
(3,255 |
) |
|
|
(476 |
) |
|
|
(6,406 |
) |
|
Tax effected net income |
4,608 |
|
|
|
11,746 |
|
|
|
5,620 |
|
|
|
23,113 |
|
|
Amortization of
intangibles |
2,088 |
|
|
|
1,996 |
|
|
|
6,080 |
|
|
|
5,988 |
|
|
Amortization of deferred
financing costs |
278 |
|
|
|
10 |
|
|
|
953 |
|
|
|
31 |
|
|
Tax receivable agreement
liability adjustment(c) |
2,014 |
|
|
|
— |
|
|
|
3,678 |
|
|
|
— |
|
|
Loss on debt repayment |
— |
|
|
|
— |
|
|
|
15,990 |
|
|
|
— |
|
|
Equity-based compensation |
2,732 |
|
|
|
1,032 |
|
|
|
6,904 |
|
|
|
7,219 |
|
|
Acquisition-related
expenses |
1,697 |
|
|
|
— |
|
|
|
1,697 |
|
|
|
— |
|
|
COVID-19 expenses (d) |
108 |
|
|
|
1,200 |
|
|
|
269 |
|
|
|
2,006 |
|
|
Non-recurring and other
expenses (e) |
243 |
|
|
|
150 |
|
|
|
1,821 |
|
|
|
444 |
|
|
Tax impact of adjustments
(f) |
(2,166 |
) |
|
|
(728 |
) |
|
|
(7,972 |
) |
|
|
(1,838 |
) |
|
Adjusted Net Income |
$ |
11,602 |
|
|
|
$ |
15,406 |
|
|
|
$ |
35,040 |
|
|
|
$ |
36,963 |
|
|
(a) |
Reflects net income to Class A common shares from pro forma
exchange of corresponding shares of our Class B common shares held
by our founder and management. |
(b) |
Shoals Technologies Group, Inc. is subject to U.S. Federal income
taxes, in addition to state and local taxes with respect to its
allocable share of any net taxable income of Shoals Parent LLC. The
adjustment to the provision for income tax reflects the effective
tax rates below, assuming Shoals Technologies Group, Inc. owns 100%
of the units in Shoals Parent LLC. |
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Statutory U.S. Federal income tax rate |
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
State and local taxes (net of
federal benefit) |
2.9 |
% |
|
0.7 |
% |
|
2.9 |
% |
|
0.7 |
% |
Permanent items, including
valuation adjustment |
0.1 |
% |
|
— |
% |
|
1.0 |
% |
|
— |
% |
Effective income tax rate for
Adjusted Net Income |
24.0 |
% |
|
21.7 |
% |
|
24.9 |
% |
|
21.7 |
% |
(c) |
Represents an adjustment to eliminate the remeasurement of the Tax
Receivable Agreement. |
(d) |
Represents costs incurred as a direct impact from the COVID-19
pandemic, disinfecting and reconfiguration of facilities, medical
professionals to conduct daily screenings of employees, premium pay
during the pandemic to hourly workers in 2020 and direct legal
costs associated with the pandemic. |
(e) |
Represents certain costs associated with non-recurring professional
services, Oaktree’s expenses and other costs. |
(f) |
Represents the estimated tax impact of all Adjusted Net Income
add-backs, excluding those which represent permanent differences
between book versus tax. |
|
|
Reconciliation of Diluted Weighted Average
Shares Outstanding to Adjusted Diluted Weighted Average Shares
Outstanding (in thousands, except per share):
|
Three Months EndedSeptember 30, |
Nine Months EndedSeptember
30, |
|
2021 |
|
|
2020 |
2021 |
|
2020 |
Diluted weighted average shares of Class A common shares
outstanding, excluding Class B common shares |
|
102,251 |
|
|
N/A (b) |
|
96,527 |
|
|
N/A (b) |
Assumed pro forma
conversion of Class B common shares to Class A common shares |
64,813 |
|
|
N/A (b) |
|
70,285 |
|
|
N/A (b) |
Adjusted diluted
weighted average shares outstanding |
167,064 |
|
|
N/A (b) |
|
166,812 |
|
|
N/A (b) |
|
|
|
|
|
|
|
|
Adjusted Net Income (a) |
$ |
11,602 |
|
|
N/A (b) |
|
$ |
35,040 |
|
|
N/A (b) |
Adjusted Diluted
EPS |
$ |
0.07 |
|
|
N/A (b) |
|
$ |
0.21 |
|
|
N/A (b) |
(a) |
Represents Adjusted Net Income for the full period presented. |
(b) |
This Non-GAAP measure is not applicable for this period, as the
reorganization transactions had not yet occurred. |
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