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, 2022.
“Shoals navigated the significant challenges and
uncertainty the industry faced during the second quarter to deliver
record revenue and gross profit, while maintaining gross margin
within our targeted range,” said Jason Whitaker, Chief Executive
Officer of Shoals.
“We continue to see robust growth across our
business, with backlog and awarded orders up 63% year-over-year and
8% sequentially. Demand for our combine-as-you-go solution
continues to grow. During the quarter we converted four additional
customers, bringing the total BLA customers to 29. Customer
interest in our recently introduced products is strong,
particularly within battery storage, wire management, and EV
charging. Further, we remain on track to have our BLA 2.0 and
high-capacity plug-and-play wire harnesses certified later this
year. Finally, the two-year tariff exemption for solar panels
announced by the White House was a turning point in customer
sentiment, and we have seen order patterns normalize as a result,”
concluded Mr. Whitaker.
Second Quarter 2022 Financial
ResultsRevenue grew 23%, to $73.5 million, compared to
$59.7 million for the prior-year period, driven by increases of 97%
in Components and 11% in System Solutions. The growth in Components
revenue was driven by increases in shipments of battery storage
products as well as shipments of solar products to a significant
number of new customers. New customers typically purchase
Components first, before transitioning to System Solutions. The
growth in System Solutions revenue reflected strong demand for the
Company’s combine-as-you-go system. System Solutions represented
77% of revenue in the quarter versus 86% in the prior-year period
and 69% in the prior quarter.
Gross profit increased 9% to $28.6 million,
compared to $26.2 million in the prior-year period. Gross profit as
a percentage of revenue was 38.9% compared to 43.8% in the
prior-year period, due to a higher mix of Components sales in the
quarter which carry lower margins than System Solutions as well as
higher raw material and logistics costs.
General and administrative expenses were $13.3
million, compared to $10.0 million during the same period in the
prior year. This change was primarily a result of higher non-cash
stock-based compensation, planned increases in payroll expense due
to higher headcount to support growth and new product initiatives,
and public company costs.
Income from operations was $13.0 million,
compared to $14.1 million during the same period in the prior
year.
Net income was $7.3 million compared to $9.2
million during the same period in the prior year. The change was
primarily due to higher general and administrative expenses,
interest expense and taxes in the current period. Basic and diluted
net income per share was $0.04 compared to basic and diluted net
income per share of $0.05 in the prior-year period.
Adjusted EBITDA was $19.8 million compared to
$20.6 million for the prior-year period.
Adjusted net income was $11.8 million compared
to $14.7 million during the same period in the prior year. Adjusted
diluted earnings per share was $0.07 compared to $0.09 in the
prior-year period.
Backlog and Awarded OrdersThe
Company’s backlog and awarded orders on June 30, 2022 were $327.2
million, representing a 63% increase versus the same time last year
and an 8% sequential increase from March 31, 2022. The increase in
backlog and awarded orders reflects continued robust demand for the
Company’s products.
Full Year 2022 OutlookBased on
current business conditions, business trends and other factors, for
the year ending December 31, 2022, the Company continues to
expect:
- Revenues to be in the range of $300
million to $325 million
- Adjusted EBITDA to be in the range
of $77 million to $86 million
- Adjusted net income to be in the
range of $45 million to $53 million
A reconciliation of the Company’s non-GAAP
measures to the applicable GAAP measures are found within this
release.
Webcast and Conference Call
InformationCompany management will host a webcast and
conference call on August 15, 2022, 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 1-855-327-6837 (domestic) or +1-631-891-4304
(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 10019579. The replay
will be available until 11:59 p.m. Eastern Time on August 29,
2022.
About Shoals Technologies Group,
Inc.Shoals Technologies Group, Inc. is a leading provider
of electrical balance of systems (EBOS) solutions for solar,
storage, and electric vehicle charging infrastructure. Since its
founding in 1996, the Company has introduced innovative
technologies and systems solutions that allow its customers to
substantially increase installation efficiency and safety while
improving system performance and reliability. Shoals Technologies
Group, Inc. is a recognized leader in the renewable energy industry
whose solutions are deployed on over 20 GW of solar systems
globally. For additional information, please visit:
https://www.shoals.com.
Investor Relations Contact Shoals Technologies
Group, Inc. Email: investors@shoals.com Phone:
615-323-9836
Forward-Looking StatementsThis 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 Earnings per Share (“EPS”)We define
Adjusted EBITDA as net income (loss) plus (i) interest expense,
net, (ii) income tax expense, (iii) depreciation expense, (iv)
amortization of intangibles, (v) payable pursuant to the tax
receivable agreement 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) attributable to
Shoals Technologies Group, Inc. plus (i) net income impact from pro
forma conversion of Class B common stock to Class A common stock,
(ii) amortization of intangibles, (iii) payable pursuant to the tax
receivable agreement adjustment, (iv) loss on debt repayment, (v)
amortization of deferred financing costs, (vi) equity-based
compensation, (vii) acquisition-related expenses, (viii) COVID-19
expenses and (ix) 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.Condensed Consolidated Balance Sheets
(Unaudited)(in thousands, except shares and par value)
|
June 30,2022 |
|
December 31,2021 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
10,094 |
|
|
$ |
5,006 |
|
Accounts receivable, net |
|
57,827 |
|
|
|
31,499 |
|
Unbilled receivables |
|
14,580 |
|
|
|
13,533 |
|
Inventory, net |
|
64,961 |
|
|
|
38,368 |
|
Other current assets |
|
8,827 |
|
|
|
5,042 |
|
Total Current Assets |
|
156,289 |
|
|
|
93,448 |
|
Property, plant and equipment,
net |
|
16,830 |
|
|
|
15,574 |
|
Goodwill |
|
69,941 |
|
|
|
69,436 |
|
Other intangible assets,
net |
|
60,727 |
|
|
|
65,236 |
|
Deferred tax assets |
|
175,059 |
|
|
|
176,958 |
|
Other assets |
|
17,771 |
|
|
|
5,762 |
|
Total
Assets |
$ |
496,617 |
|
|
$ |
426,414 |
|
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit) |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
24,258 |
|
|
$ |
19,985 |
|
Accrued expenses and other |
|
25,297 |
|
|
|
9,569 |
|
Current portion of payable pursuant to the tax receivable
agreement |
|
3,583 |
|
|
|
— |
|
Long-term debt—current portion |
|
2,000 |
|
|
|
2,000 |
|
Total Current Liabilities |
|
55,138 |
|
|
|
31,554 |
|
Revolving line of credit |
|
85,140 |
|
|
|
55,140 |
|
Long-term debt, less current
portion |
|
189,515 |
|
|
|
189,913 |
|
Payable pursuant to the tax
receivable agreement, less current portion |
|
153,591 |
|
|
|
156,374 |
|
Other long-term
liabilities |
|
4,793 |
|
|
|
931 |
|
Total Liabilities |
|
488,177 |
|
|
|
433,912 |
|
Stockholders’ Equity
(Deficit) |
|
|
|
Preferred stock, $0.00001 par value - 5,000,000 shares authorized;
none issued and outstanding as of June 30, 2022 and December 31,
2021 |
|
— |
|
|
|
— |
|
Class A common stock, $0.00001 par value - 1,000,000,000 shares
authorized; 112,667,006 and 112,049,981 shares issued and
outstanding as of June 30, 2022 and December 31, 2021,
respectively |
|
1 |
|
|
|
1 |
|
Class B common stock, $0.00001 par value - 195,000,000 shares
authorized; 54,534,591 and 54,794,479 shares issued and outstanding
as of June 30, 2022 and December 31, 2021, respectively |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
101,243 |
|
|
|
95,684 |
|
Accumulated deficit |
|
(86,091 |
) |
|
|
(93,133 |
) |
Total stockholders’ equity
attributable to Shoals Technologies Group, Inc. |
|
15,154 |
|
|
|
2,553 |
|
Non-controlling interests |
|
(6,714 |
) |
|
|
(10,051 |
) |
Total stockholders' equity
(deficit) |
|
8,440 |
|
|
|
(7,498 |
) |
Total Liabilities and
Stockholders’ Equity (Deficit) |
$ |
496,617 |
|
|
$ |
426,414 |
|
Shoals Technologies Group,
Inc.Condensed Consolidated Statements of
Operations (Unaudited)(in thousands, except per share
amounts)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Revenue |
$ |
73,490 |
|
|
$ |
59,722 |
|
|
$ |
141,466 |
|
|
$ |
105,326 |
|
Cost of
revenue |
|
44,897 |
|
|
|
33,543 |
|
|
|
86,581 |
|
|
|
60,373 |
|
Gross
profit |
|
28,593 |
|
|
|
26,179 |
|
|
|
54,885 |
|
|
|
44,953 |
|
Operating
Expenses |
|
|
|
|
|
|
|
General and administrative expenses |
|
13,265 |
|
|
|
10,018 |
|
|
|
27,184 |
|
|
|
16,834 |
|
Depreciation and amortization |
|
2,344 |
|
|
|
2,062 |
|
|
|
4,710 |
|
|
|
4,130 |
|
Total Operating Expenses |
|
15,609 |
|
|
|
12,080 |
|
|
|
31,894 |
|
|
|
20,964 |
|
Income from
Operations |
|
12,984 |
|
|
|
14,099 |
|
|
|
22,991 |
|
|
|
23,989 |
|
Interest expense, net |
|
(4,170 |
) |
|
|
(3,620 |
) |
|
|
(8,006 |
) |
|
|
(7,329 |
) |
Payable pursuant to the tax
receivable agreement adjustment |
|
— |
|
|
|
(1,664 |
) |
|
|
— |
|
|
|
(1,664 |
) |
Loss on debt repayment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,990 |
) |
Income (loss) before
income taxes |
|
8,814 |
|
|
|
8,815 |
|
|
|
14,985 |
|
|
|
(994 |
) |
Income tax benefit
(expense) |
|
(1,511 |
) |
|
|
339 |
|
|
|
(3,033 |
) |
|
|
1,814 |
|
Net
income |
|
7,303 |
|
|
|
9,154 |
|
|
|
11,952 |
|
|
|
820 |
|
Less: net income (loss)
attributable to non-controlling interests |
|
2,901 |
|
|
|
4,596 |
|
|
|
4,910 |
|
|
|
(879 |
) |
Net income
attributable to Shoals Technologies Group, Inc. |
$ |
4,402 |
|
|
$ |
4,558 |
|
|
$ |
7,042 |
|
|
$ |
1,699 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months EndedJune 30,
2022 |
|
Period from January 27, 2021to June 30,
2021 |
|
2022 |
|
2021 |
|
|
Earnings (loss) per
share of Class A common stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.04 |
|
|
$ |
0.05 |
|
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
Diluted |
$ |
0.04 |
|
|
$ |
0.05 |
|
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
Weighted average
shares of Class A common stock outstanding: |
|
|
|
|
|
|
|
Basic |
|
112,489 |
|
|
|
93,544 |
|
|
|
112,350 |
|
|
|
93,542 |
|
Diluted |
|
112,616 |
|
|
|
166,827 |
|
|
|
112,428 |
|
|
|
93,542 |
|
Shoals Technologies Group,
Inc.Condensed Consolidated Statements of Cash
Flows (Unaudited)(in thousands)
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
Cash Flows from
Operating Activities |
|
|
|
Net income |
$ |
11,952 |
|
|
$ |
820 |
|
Adjustments to reconcile net income to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
5,402 |
|
|
|
4,808 |
|
Amortization/write off of deferred financing costs |
|
684 |
|
|
|
5,415 |
|
Equity-based compensation |
|
7,896 |
|
|
|
4,172 |
|
Provision for obsolete or slow-moving inventory |
|
443 |
|
|
|
— |
|
Deferred taxes |
|
2,847 |
|
|
|
(524 |
) |
Gain on sale of assets |
|
— |
|
|
|
61 |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
|
(26,259 |
) |
|
|
(15,973 |
) |
Unbilled receivables |
|
(1,047 |
) |
|
|
(3,003 |
) |
Inventory |
|
(27,404 |
) |
|
|
(6,151 |
) |
Other assets |
|
(2,059 |
) |
|
|
(4,631 |
) |
Accounts payable |
|
4,060 |
|
|
|
(410 |
) |
Accrued expenses and other |
|
16,742 |
|
|
|
(362 |
) |
Net Cash Used in
Operating Activities |
|
(6,743 |
) |
|
|
(14,114 |
) |
Cash Flows Used In
Investing Activities |
|
|
|
Purchases of property, plant and equipment |
|
(2,149 |
) |
|
|
(1,736 |
) |
Net Cash Used in
Investing Activities |
|
(2,149 |
) |
|
|
(1,736 |
) |
Cash Flows from
Financing Activities |
|
|
|
Distributions to non-controlling interest |
|
(4,566 |
) |
|
|
(2,973 |
) |
Employee withholding taxes related to net settled equity
awards |
|
(1,297 |
) |
|
|
(137 |
) |
Deferred financing costs |
|
— |
|
|
|
(94 |
) |
Payments on term loan facility |
|
(1,000 |
) |
|
|
(151,750 |
) |
Proceeds from revolving credit facility |
|
38,000 |
|
|
|
34,000 |
|
Proceeds from issuance of Class A common stock sold in an IPO, net
of underwriting discounts and commissions |
|
— |
|
|
|
278,833 |
|
Purchase of LLC Interests with proceeds from IPO |
|
— |
|
|
|
(124,312 |
) |
Deferred offering costs |
|
— |
|
|
|
(9,619 |
) |
Net Cash Provided By
Financing Activities |
|
23,137 |
|
|
|
18,948 |
|
Net Increase in Cash,
Cash Equivalents and Restricted Cash |
|
14,245 |
|
|
|
3,098 |
|
Cash, Cash Equivalents
and Restricted Cash—Beginning of Period |
|
9,557 |
|
|
|
10,073 |
|
Cash, Cash Equivalents
and Restricted Cash—End of Period |
$ |
23,802 |
|
|
$ |
13,171 |
|
Shoals Technologies Group,
Inc.Adjusted EBITDA, Adjusted Net Income and
Adjusted Diluted Earnings per Share (“EPS”) (Unaudited)(in
thousands)
Reconciliation of Net Income (Loss) to Adjusted
EBITDA (in thousands):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net income |
$ |
7,303 |
|
$ |
9,154 |
|
|
$ |
11,952 |
|
$ |
820 |
|
Interest expense, net |
|
4,170 |
|
|
3,620 |
|
|
|
8,006 |
|
|
7,329 |
|
Income tax benefit
(expense) |
|
1,511 |
|
|
(339 |
) |
|
|
3,033 |
|
|
(1,814 |
) |
Depreciation expense |
|
470 |
|
|
411 |
|
|
|
893 |
|
|
816 |
|
Amortization of
intangibles |
|
2,238 |
|
|
1,996 |
|
|
|
4,509 |
|
|
3,992 |
|
Payable pursuant to the TRA
adjustment (a) |
|
— |
|
|
1,664 |
|
|
|
— |
|
|
1,664 |
|
Loss on debt repayment |
|
— |
|
|
— |
|
|
|
— |
|
|
15,990 |
|
Equity-based compensation |
|
4,063 |
|
|
2,780 |
|
|
|
7,896 |
|
|
4,172 |
|
Acquisition-related
expenses |
|
12 |
|
|
— |
|
|
|
12 |
|
|
— |
|
COVID-19 expenses (b) |
|
— |
|
|
106 |
|
|
|
— |
|
|
161 |
|
Non-recurring and other
expenses (c) |
|
— |
|
|
1,239 |
|
|
|
— |
|
|
1,578 |
|
Adjusted EBITDA |
$ |
19,767 |
|
$ |
20,631 |
|
|
$ |
36,301 |
|
$ |
34,708 |
|
(a) Represents an adjustment to
eliminate the remeasurement of the payable pursuant to the TRA.
(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, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net income attributable to Shoals Technologies Group, Inc. |
$ |
4,402 |
|
|
$ |
4,558 |
|
|
$ |
7,042 |
|
|
$ |
1,699 |
|
Net income impact from pro
forma conversion of Class B common stock to Class A common stock
(a) |
|
2,901 |
|
|
|
4,596 |
|
|
|
4,910 |
|
|
|
(879 |
) |
Adjustment to the provision
for income tax (b) |
|
(686 |
) |
|
|
(942 |
) |
|
|
(1,159 |
) |
|
|
192 |
|
Tax effected net income |
|
6,617 |
|
|
|
8,212 |
|
|
|
10,793 |
|
|
|
1,012 |
|
Amortization of
intangibles |
|
2,238 |
|
|
|
1,996 |
|
|
|
4,509 |
|
|
|
3,992 |
|
Amortization of deferred
financing costs |
|
408 |
|
|
|
305 |
|
|
|
684 |
|
|
|
675 |
|
Payable pursuant to the TRA
adjustment (c) |
|
— |
|
|
|
1,664 |
|
|
|
— |
|
|
|
1,664 |
|
Loss on debt repayment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,990 |
|
Equity-based compensation |
|
4,063 |
|
|
|
2,780 |
|
|
|
7,896 |
|
|
|
4,172 |
|
Acquisition-related
expenses |
|
12 |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
COVID-19 expenses (d) |
|
— |
|
|
|
106 |
|
|
|
— |
|
|
|
161 |
|
Non-recurring and other
expenses (e) |
|
— |
|
|
|
1,239 |
|
|
|
— |
|
|
|
1,578 |
|
Tax impact of adjustments
(f) |
|
(1,588 |
) |
|
|
(1,635 |
) |
|
|
(3,093 |
) |
|
|
(5,806 |
) |
Adjusted Net Income |
$ |
11,750 |
|
|
$ |
14,667 |
|
|
$ |
20,801 |
|
|
$ |
23,438 |
|
(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, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Statutory U.S. Federal income tax rate |
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
Permanent adjustments |
0.1 |
% |
|
2.0 |
% |
|
0.1 |
% |
|
2.0 |
% |
State and local taxes (net of
federal benefit) |
2.5 |
% |
|
(2.5 |
)% |
|
2.5 |
% |
|
(1.1 |
)% |
Effective income tax rate for
Adjusted Net Income |
23.6 |
% |
|
20.5 |
% |
|
23.6 |
% |
|
21.9 |
% |
(c) Represents an adjustment to
eliminate the remeasurement of the payable pursuant to the TRA.
(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, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Diluted weighted average shares of Class A common shares
outstanding, excluding Class B common shares |
|
112,616 |
|
|
93,760 |
|
|
112,428 |
|
|
93,650 |
Assumed pro forma conversion
of Class B common shares to Class A common shares |
|
54,635 |
|
|
73,067 |
|
|
54,585 |
|
|
73,067 |
Adjusted diluted weighted
average shares outstanding |
|
167,251 |
|
|
166,827 |
|
|
167,013 |
|
|
166,717 |
|
|
|
|
|
|
|
|
Adjusted Net Income (a) |
$ |
11,750 |
|
$ |
14,667 |
|
$ |
20,801 |
|
$ |
23,438 |
Adjusted Diluted EPS |
$ |
0.07 |
|
$ |
0.09 |
|
$ |
0.12 |
|
$ |
0.14 |
(a) Represents Adjusted Net Income
for the full period presented.
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