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 second
quarter ended June 30, 2021.
“Shoals delivered another record quarter, with
revenue growth accelerating to 38% year-over-year and gross margin
improving over 500 basis points. System solutions grew 62%
year-over-year and contributed 86% of revenues in the quarter. The
continued strength in our results and robust customer demand
support our growth outlook,” said Jason Whitaker, Chief Executive
Officer of Shoals.
Mr. Whitaker added, “We are happy to report
Shoals is continuing to progress on its growth strategies of
converting more customers to our BLA solution, expanding
internationally, broadening our product offering into complementary
categories of EBOS and introducing new products for EV charging
infrastructure. Since going public in January, we have more than
doubled the number of BLA customers and have an additional 13
customers in transition to our system, including two international
customers. Both our new IV curve benchmarking and wire management
solutions are on track to generate revenues starting in the fourth
quarter and our EV charging products are on track to launch later
this year. Notably, the market opportunity for Shoals in EV
infrastructure has more than doubled since we announced our entry
into the market earlier this year, and we are moving rapidly to
capitalize on the opportunity. I am proud of our team’s
accomplishments and even more excited about the growth ahead of
us.”
Second Quarter 2021 Financial
ResultsRevenues were $59.7 million, compared to $43.4
million for the prior-year period, an increase of 38%, driven by a
62% year-over-year increase in System Solutions revenues, which was
partly offset by a decline in Components revenues.
The growth in System Solutions revenues reflects
strong demand for the Company’s combine-as-you-go system. The
decline in Components revenues was consistent with the expected
change in certain customers’ order timing relative to last year and
the conversion of other customers from Components to System
Solutions. The sale of System Solutions represented 86% of revenues
versus 73% in the prior-year period. Our total number of customers
increased in 2021 as compared to 2020.
Gross profit increased 56% to $26.2 million,
compared to $16.8 million in the prior-year period. Gross profit as
a percentage of revenue increased by over 500 basis points to 43.8%
from 38.8% in the prior year period, driven primarily by increased
revenue and a higher proportion of revenue from combine-as-you-go
System Solutions, purchasing efficiencies from increased volumes,
improved material planning which reduced logistics costs,
enhancements to product design that lowered manufacturing costs,
and other manufacturing efficiencies resulting from higher
production volume.
General and administrative expenses were $10.0
million compared to $9.3 million during the same period in the
prior year. This increase was primarily a result of planned
increased payroll expense due to higher headcount to support our
growth and product initiatives, new public company costs and
non-recurring public offering expenses, partially offset by a
decrease in equity-based compensation.
Income from operations was $14.1 million,
compared to $5.4 million during the same period in the prior year,
an increase of 159%.
Net income was $9.2 million, compared to net
income of $5.2 million during the same period in the prior year.
The increase in net income was primarily due to increased systems
solutions revenue partially offset by an increase in interest
expense. Net income and loss for 2021 are 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 was
$0.05.
Adjusted EBITDA increased 34% to $20.6 million,
compared to $15.4 million for the prior-year period.
Adjusted net income increased 12% to $14.7
million, compared to $13.1 million during the same period in the
prior year. Adjusted diluted earnings per share was $0.09.
First Six Months 2021 Financial
ResultsRevenues were $105.3 million, compared to $84.2
million for the prior-year period, an increase of 25%, driven by a
55% year-over-year increase in System Solutions revenues which was
partly offset by a decline in Components revenues.
The growth in System Solutions revenues reflects
strong demand for the Company’s combine-as-you-go system for the
first six months of 2021. The sale of System Solutions represented
80% of revenues versus 65% in the prior-year period.
Gross profit increased 45% to $45.0 million for
the first six months of 2021, compared to $31.0 million in the
prior-year period. Gross profit as a percentage of revenue
increased by 590 basis points to 42.7% from 36.8% in the prior year
period, driven primarily by increased revenue and a higher
proportion of revenue from combine-as-you-go System Solutions,
purchasing efficiencies from increased volumes, improved material
planning which reduced logistics costs, enhancements to product
design that lowered manufacturing costs, and other manufacturing
efficiencies resulting from higher production volume.
General and administrative expenses were $16.8
million for the first six months of 2021 compared to $11.9 million
during the same period in the prior year. This increase was
primarily a result of new public company costs and non-recurring
expenses related to our public offerings, planned increased payroll
expense due to higher headcount to support our growth and product
initiatives, partially offset by a decrease in equity-based
compensation.
Income from operations was $24.0 million for the
first six months of 2021, compared to $15.0 million during the same
period in the prior year, an increase of 60%.
Net income was $0.8 million for the first six
months of 2021, compared to net income of $14.5 million during the
same period in the prior year. The decrease in net income was
primarily the result of a $16.0 million charge the Company recorded
in the first quarter related to loss on debt repayment. Net income
and loss for 2021 are 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.
Adjusted EBITDA increased 26% to $34.7 million
for the first six months of 2021, compared to $27.5 million for the
prior-year period.
Adjusted net income was $23.4 million for the
first six months of 2021, compared to $22.1 million during the same
period in the prior year. Adjusted diluted earnings per share was
$0.14.
Backlog and Awarded OrdersThe
Company’s backlog and awarded orders on June 30, 2021 were $200.5
million, an increase of 63% year-over-year and 11% versus March 31,
2021. The increase in backlog and awarded orders reflects continued
robust demand for the company’s products from customers in the U.S.
Backlog represents signed purchase orders or contractual minimum
purchase commitments with take-or-pay provisions and awarded orders
are orders we are in the process of documenting a contract but for
which a contract has not yet been signed.
Full Year 2021
Outlook Based
on current business conditions, business trends and other factors,
the Company reaffirms its previously announced outlook for the full
year ending December 31, 2021 which calls for:
- Revenues to be in the range of $230
million to $240 million, up 31% to 37% year-over-year
- Adjusted EBITDA to be in the range
of $75 million to $80 million
- Adjusted net
income to be in the range of $47 to $51 million
For a reconciliation of a non-GAAP figure to the
applicable GAAP figure please see pages 11-13 of this release.
These expectations do not consider, or give effect for, material
acquisitions that may be completed by the Company during 2021 or
other unforeseen events, including changes in global economic
conditions.
Webcast and Conference Call
InformationCompany management will host a webcast and
conference call on August 10, 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 1-877-407-0789 (domestic) or +1-201-689-8562
(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 13721882. The replay
will be available until 11:59 p.m. Eastern Time on August 24,
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
Non-GAAP Financial Information
(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").
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 projected future
results of operations, business strategies, and industry and
regulatory environment. 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 and Adjusted Net Income
We 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) COVID-19 expenses and (viiii)
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 finance costs, (v)
equity-based compensation, (vi) COVID-19 expenses and (vii)
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)
|
June 30, 2021 |
|
December 31, 2020 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
13,171 |
|
|
$ |
10,073 |
|
Accounts receivable, net |
42,977 |
|
|
27,004 |
|
Unbilled receivables |
6,797 |
|
|
3,794 |
|
Inventory, net |
21,272 |
|
|
15,121 |
|
Other current assets |
7,292 |
|
|
155 |
|
Total Current Assets |
91,509 |
|
|
56,147 |
|
Property, plant and equipment, net |
13,622 |
|
|
12,763 |
|
Goodwill |
50,176 |
|
|
50,176 |
|
Other intangible assets, net |
67,996 |
|
|
71,988 |
|
Deferred tax asset |
49,573 |
|
|
— |
|
Other assets |
840 |
|
|
4,236 |
|
Total Assets |
$ |
273,716 |
|
|
$ |
195,310 |
|
|
|
|
|
Liabilities and Stockholders' Deficit / Members’
Deficit |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
14,224 |
|
|
$ |
14,634 |
|
Accrued expenses |
9,499 |
|
|
5,967 |
|
Long-term debt—current portion |
3,500 |
|
|
3,500 |
|
Total Current Liabilities |
27,223 |
|
|
24,101 |
|
Revolving line of credit |
49,000 |
|
|
20,000 |
|
Long-term debt, less current portion |
188,859 |
|
|
335,332 |
|
Payable Pursuant to the Tax
Receivable Agreement |
43,356 |
|
|
— |
|
Total Liabilities |
308,438 |
|
|
379,433 |
|
Commitments and Contingencies (Note 12) |
|
|
|
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 June 30, 2021 |
— |
|
|
— |
|
Class A common stock, $0.00001 par value - 1,000,000,000 shares
authorized; 93,545,564 shares issued and outstanding as of June 30,
2021 |
1 |
|
|
— |
|
Class B common stock, $0.00001 par value - 195,000,000 shares
authorized; 73,066,607 shares issued and outstanding as of June 30,
2021 |
1 |
|
|
— |
|
Additional paid-in capital |
78,883 |
|
|
— |
|
Accumulated deficit |
(93,782 |
) |
|
— |
|
Total stockholders’ deficit attributable to Shoals Technologies
Group, Inc. / members' deficit |
(14,897 |
) |
|
(184,123 |
) |
Non-controlling interests |
(19,825 |
) |
|
— |
|
Total stockholders’ deficit / members’ deficit |
(34,722 |
) |
|
(184,123 |
) |
Total Liabilities and Stockholders’ Deficit / Members’
Deficit |
$ |
273,716 |
|
|
$ |
195,310 |
|
Shoals Technologies Group,
Inc.Consolidated Statements of Operations
(in thousands, except per share amounts)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue |
$ |
59,722 |
|
|
$ |
43,427 |
|
|
$ |
105,326 |
|
|
$ |
84,167 |
|
Cost of
revenue |
33,543 |
|
|
26,598 |
|
|
60,373 |
|
|
53,152 |
|
Gross
profit |
26,179 |
|
|
16,829 |
|
|
44,953 |
|
|
31,015 |
|
Operating
Expenses |
|
|
|
|
|
|
|
General and administrative expenses |
10,018 |
|
|
9,317 |
|
|
16,834 |
|
|
11,875 |
|
Depreciation and amortization |
2,062 |
|
|
2,064 |
|
|
4,130 |
|
|
4,125 |
|
Total Operating Expenses |
12,080 |
|
|
11,381 |
|
|
20,964 |
|
|
16,000 |
|
Income from
Operations |
14,099 |
|
|
5,448 |
|
|
23,989 |
|
|
15,015 |
|
Interest expense, net |
(3,620 |
) |
|
(225 |
) |
|
(7,329 |
) |
|
(497 |
) |
Tax receivable agreement
liability adjustment |
(1,664 |
) |
|
— |
|
|
(1,664 |
) |
|
— |
|
Loss on debt repayment |
— |
|
|
— |
|
|
(15,990 |
) |
|
— |
|
Income (loss) before
income taxes |
8,815 |
|
|
5,223 |
|
|
(994 |
) |
|
14,518 |
|
Income tax benefit |
339 |
|
|
— |
|
|
1,814 |
|
|
— |
|
Net
income |
9,154 |
|
|
5,223 |
|
|
820 |
|
|
14,518 |
|
Less: net income (loss)
attributable to non-controlling interests |
4,596 |
|
|
— |
|
|
(879 |
) |
|
— |
|
Net income
attributable to Shoals Technologies Group, Inc. |
$ |
4,558 |
|
|
$ |
5,223 |
|
|
$ |
1,699 |
|
|
$ |
14,518 |
|
|
Three Months Ended June 30, 2021 |
|
|
|
Period from January 27, 2021 to June 30,
2021 |
Earnings per share of
Class A common stock: |
|
|
|
|
|
Basic |
$ |
0.05 |
|
|
|
|
$ |
(0.01 |
) |
Diluted |
$ |
0.05 |
|
|
|
|
$ |
(0.01 |
) |
Weighted average
shares of Class A common stock outstanding: |
|
|
|
|
|
Basic |
93,544 |
|
|
|
|
93,542 |
|
Diluted |
166,827 |
|
|
|
|
93,542 |
|
Shoals Technologies Group,
Inc.Consolidated Statements of Cash Flows
(in thousands)
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
Cash Flows from
Operating Activities |
|
|
|
Net income |
$ |
820 |
|
|
$ |
14,518 |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
Depreciation and amortization |
4,808 |
|
|
4,656 |
|
Amortization/write off of deferred financing costs |
5,415 |
|
|
21 |
|
Equity-based compensation |
4,172 |
|
|
6,704 |
|
Deferred taxes |
(524 |
) |
|
— |
|
Tax receivable agreement liability adjustment |
1,664 |
|
|
— |
|
Gain on sale of assets |
61 |
|
|
— |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
(15,973 |
) |
|
21 |
|
Unbilled receivables |
(3,003 |
) |
|
(4,970 |
) |
Inventory |
(6,151 |
) |
|
(3,356 |
) |
Other assets |
(4,631 |
) |
|
515 |
|
Accounts payable |
(410 |
) |
|
(1,494 |
) |
Accrued expenses |
(362 |
) |
|
2,313 |
|
Net Cash Provided by
(Used in) Operating Activities |
(14,114 |
) |
|
18,928 |
|
Cash Flows Used In
Investing Activities |
|
|
|
Purchases of property, plant and equipment |
(1,736 |
) |
|
(1,345 |
) |
Net Cash Used in
Investing Activities |
(1,736 |
) |
|
(1,345 |
) |
Cash Flows from
Financing Activities |
|
|
|
Member / non-controlling interest distributions |
(2,973 |
) |
|
(214 |
) |
Employee withholding taxes related to net settled equity
awards |
(137 |
) |
|
— |
|
Deferred financing costs |
(94 |
) |
|
— |
|
Payments on term loan facility |
(151,750 |
) |
|
— |
|
Proceeds from revolving credit facility |
34,000 |
|
|
— |
|
Repayments on revolving credit facility |
(5,000 |
) |
|
|
Payments on senior debt - term loan |
— |
|
|
(1,747 |
) |
Payments on senior debt - revolving line of credit |
— |
|
|
(8,400 |
) |
Proceeds from issuance of Class A common stock sold in an IPO, net
of underwriting discounts and commissions |
154,521 |
|
|
— |
|
Deferred offering costs |
(9,619 |
) |
|
— |
|
Net Cash Provided by
(Used in) Financing Activities |
18,948 |
|
|
(10,361 |
) |
Net Increase in Cash
and Cash Equivalents |
3,098 |
|
|
7,222 |
|
Cash and Cash
Equivalents—Beginning of Period |
10,073 |
|
|
7,082 |
|
Cash and Cash
Equivalents—End of Period |
$ |
13,171 |
|
|
$ |
14,304 |
|
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 Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
$ |
9,154 |
|
|
$ |
5,223 |
|
|
$ |
820 |
|
|
$ |
14,518 |
|
Interest expense |
3,620 |
|
|
225 |
|
|
7,329 |
|
|
497 |
|
Income tax benefit |
(339 |
) |
|
— |
|
|
(1,814 |
) |
|
— |
|
Depreciation expense |
411 |
|
|
338 |
|
|
816 |
|
|
664 |
|
Amortization of
intangibles |
1,996 |
|
|
1,996 |
|
|
3,992 |
|
|
3,992 |
|
Tax receivable agreement
liability adjustment(a) |
1,664 |
|
|
— |
|
|
1,664 |
|
|
— |
|
Loss on debt repayment |
— |
|
|
— |
|
|
15,990 |
|
|
— |
|
Equity-based compensation |
2,780 |
|
|
6,704 |
|
|
4,172 |
|
|
6,704 |
|
COVID-19 expenses(b) |
106 |
|
|
806 |
|
|
161 |
|
|
806 |
|
Non-recurring and other
expenses(c) |
1,239 |
|
|
112 |
|
|
1,578 |
|
|
294 |
|
Adjusted EBITDA |
$ |
20,631 |
|
|
$ |
15,404 |
|
|
$ |
34,708 |
|
|
$ |
27,475 |
|
(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 (Loss) Attributable to Shoals
Technologies Group, Inc. to Adjusted Net Income (in thousands):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income attributable to Shoals Technologies Group, Inc. |
$ |
4,558 |
|
|
$ |
5,223 |
|
|
$ |
1,699 |
|
|
$ |
14,518 |
|
Net income (loss) impact from
pro forma conversion of Class B common stock to Class A common
stock (a) |
4,596 |
|
|
— |
|
|
(879 |
) |
|
— |
|
Adjustment to the provision
for income tax (b) |
(942 |
) |
|
(1,133 |
) |
|
192 |
|
|
(3,150 |
) |
Tax effected net income |
8,212 |
|
|
4,090 |
|
|
1,012 |
|
|
11,368 |
|
Amortization of
intangibles |
1,996 |
|
|
1,996 |
|
|
3,992 |
|
|
3,992 |
|
Amortization of deferred
financing costs |
305 |
|
|
12 |
|
|
675 |
|
|
21 |
|
Tax receivable agreement
liability adjustment(c) |
1,664 |
|
|
— |
|
|
1,664 |
|
|
— |
|
Loss on debt repayment |
— |
|
|
— |
|
|
15,990 |
|
|
— |
|
Equity-based compensation |
2,780 |
|
|
6,704 |
|
|
4,172 |
|
|
6,704 |
|
COVID-19 expenses (d) |
106 |
|
|
806 |
|
|
161 |
|
|
806 |
|
Non-recurring and other
expenses (e) |
1,239 |
|
|
112 |
|
|
1,578 |
|
|
294 |
|
Tax impact of adjustments
(f) |
(1,635 |
) |
|
(635 |
) |
|
(5,806 |
) |
|
(1,110 |
) |
Adjusted Net Income |
$ |
14,667 |
|
|
$ |
13,085 |
|
|
$ |
23,438 |
|
|
$ |
22,075 |
|
(a) Reflects net income (loss) 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 Ended June 30, |
|
Six Months Ended June 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) |
2.0 |
|
% |
|
0.7 |
% |
|
2.0 |
|
% |
|
0.7 |
% |
Permanent items, including
valuation adjustment |
(2.5 |
) |
% |
|
— |
% |
|
(1.1 |
) |
% |
|
— |
% |
Effective income tax rate for
Adjusted Net Income |
20.5 |
|
% |
|
21.7 |
% |
|
21.9 |
|
% |
|
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 Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Diluted weighted average
shares of Class A common shares outstanding, excluding Class B
common shares |
93,760 |
|
|
N/A (b) |
|
93,650 |
|
|
N/A (b) |
Assumed pro forma conversion
of Class B common shares to Class A common shares |
73,067 |
|
|
N/A (b) |
|
73,067 |
|
|
N/A (b) |
Adjusted diluted weighted
average shares outstanding |
166,827 |
|
|
N/A (b) |
|
166,717 |
|
|
N/A (b) |
|
|
|
|
|
|
|
|
Adjusted Net Income (a) |
$ |
14,667 |
|
|
N/A (b) |
|
$ |
23,438 |
|
|
N/A (b) |
Adjusted Diluted EPS |
$ |
0.09 |
|
|
N/A (b) |
|
$ |
0.14 |
|
|
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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