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, 2022.
“Shoals had an exceptionally strong third
quarter, delivering record revenue, gross profit and adjusted
EBITDA. We grew revenues 52% year-over-year, with System Solutions
revenue increasing 80% compared to the year-ago period which drove
significantly higher gross margin,” said Jason Whitaker, Chief
Executive Officer of Shoals.
“Demand for our products has continued to grow
faster than the overall market, which is underscored by the 74%
year-over-year increase in our backlog and awarded orders this
quarter. Customer demand for our combine-as-you-go solution is
particularly robust, with four new customers converting to our
system during the quarter, bringing the total number of BLA
customers to 33. We are also building backlog of our EV System
Solutions after making our first shipments of these products during
the quarter. We anticipate another step change in our growth next
year as our EV charging products gain acceptance in the market and
our BLA 2.0 and high-capacity plug-and-play wire harnesses receive
UL certification, which we remain on track to obtain by year’s
end,” added Mr. Whitaker
“At the same time as we are taking share and
introducing new products, conditions in our core solar market are
improving. The two-year tariff exemption for Chinese solar panels,
the recently passed Inflation Reduction Act and higher energy
prices have given our customers and end-users the confidence to
reinitiate previously delayed projects, make multi-year commitments
to invest in solar generation and prioritize product availability
and performance over price. As a result of the improving solar
market conditions and our recent performance, we are raising the
low end of our 2022 outlook. I am proud of what our team has
achieved and could not be more excited about the future,” concluded
Mr. Whitaker.
Third Quarter 2022 Financial
ResultsRevenue grew 52%, to $90.8 million, compared to
$59.8 million for the prior-year period, driven by higher sales
volumes as a result of increased demand for solar EBOS generally
and the Company’s combine-as-you-go system solutions specifically
and initial sales of our EV solutions products. System Solutions
and Components revenue increased 80% and 1%, respectively, compared
to the prior-year period. The growth in System Solutions revenues
reflects strong demand for the Company’s combine-as-you-go system.
System Solutions represented 77% of revenue versus 65% in the
prior-year period.
Gross profit increased 66% to $36.0 million,
compared to $21.8 million in the prior-year period. Gross profit as
a percentage of revenue grew 330 bps to 39.7% compared to 36.4% in
the prior-year period, driven primarily by a higher proportion of
revenue from the Company’s combine-as-you-go System Solutions which
carry higher margins than the company’s other products and
increased leverage on fixed costs as a result of higher sales
volumes.
General and administrative expenses were $13.9
million, compared to $10.0 million during the same period in the
prior year. This increase was primarily the result of higher
non-cash stock-based compensation, planned increases in payroll
expense due to higher headcount supporting growth and new product
initiatives, as well as higher public company costs.
Income from operations was $20.0 million,
compared to $9.6 million during the same period in the prior
year.
Net income was $12.8 million compared to $5.3
million during the same period in the prior year. Basic and diluted
net income per share was $0.07 compared to basic and diluted net
income per share of $0.02 in the prior-year period.
Adjusted EBITDA increased 57% to $26.6 million
compared to $16.9 million for the prior-year period.
Adjusted net income grew 43% to $16.6 million
compared to $11.6 million during the same period in the prior year.
Adjusted diluted earnings per share was $0.10 compared to $0.07 in
the prior-year period.
Backlog and Awarded OrdersThe
Company’s backlog and awarded orders as of September 30, 2022 were
$471.2 million, representing a 74% increase versus the same time
last year and a 44% sequential increase from June 30, 2022. The
increase in backlog and awarded orders reflects continued robust
demand for the Company’s solar products as well as the introduction
of new EV charging products.
Full Year 2022 OutlookBased on
current business conditions, business trends and other factors, for
the year ending December 31, 2022, the Company is raising the low
end of its outlook and now expects:
- Revenue to be in the range of $310
million to $325 million up from $300 million to $325 million
- Adjusted EBITDA to be in the range
of $80 million to $86 million up from $77 million to $86
million
- Adjusted net
income to be in the range of $48 million to $53 million up from $45
million to $53 million
A reconciliation of the Company’s non-GAAP
measures to the applicable U.S. generally accepted accounting
principles (“GAAP”) measures are found within this release.
Webcast and Conference Call
InformationCompany management will host a webcast and
conference call on November 14, 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 10019583. The
telephonic replay will be available until 11:59 p.m. Eastern Time
on November 28, 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. Some of the
key factors that could cause actual results to differ from our
expectations include, among others, lower growth than anticipated
in demand for solar energy projects and EV charging infrastructure;
existing governmental policies and regulations, and any subsequent
changes, which may present technical, regulatory and economic
barriers; macroeconomic events, including heightened inflation,
rise in interest rates and a potential recession; changes in the
United States trade environment, including the imposition of import
tariffs and antidumping and countervailing duties; our failure to,
or incurrence of significant costs in order to, obtain, maintain,
protect, defend or enforce our intellectual property and other
proprietary rights; failure to integrate acquired businesses, and
delays, disruptions or quality control problems in our
manufacturing operations in part due to vendor concentration. Other
risks and uncertainties are described in the section entitled "Item
1A. Risk Factors" of our periodic reports filed with the Securities
and Exchange Commission, including our Annual Report on Form 10-K
for the year ended December 31, 2021. 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 MeasuresA reconciliation of
Adjusted EBITDA and Adjusted net income guidance, 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. 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.
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 (“TRA”) 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) 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 TRA liability
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, future requirements for capital expenditures,
contractual commitments or the impact of certain cash charges
resulting from matters we consider not to be indicative of our
ongoing operations. Adjusted EBITDA does not reflect income tax
expense or benefit for periods prior to the reorganization
conducted at the time of the initial public offering. Adjusted
EBITDA, Adjusted Net Income and Adjusted Diluted EPS 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, and net income attributable to Shoals
Technologies Group, Inc. to 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)
|
September 30,2022 |
|
December 31,2021 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
11,202 |
|
|
$ |
5,006 |
|
Accounts receivable, net |
|
71,652 |
|
|
|
31,499 |
|
Unbilled receivables |
|
11,561 |
|
|
|
13,533 |
|
Inventory, net |
|
81,158 |
|
|
|
38,368 |
|
Other current assets |
|
7,608 |
|
|
|
5,042 |
|
Total Current Assets |
|
183,181 |
|
|
|
93,448 |
|
Property, plant and equipment,
net |
|
16,596 |
|
|
|
15,574 |
|
Goodwill |
|
69,941 |
|
|
|
69,436 |
|
Other intangible assets,
net |
|
58,606 |
|
|
|
65,236 |
|
Deferred tax assets |
|
177,112 |
|
|
|
176,958 |
|
Other assets |
|
24,456 |
|
|
|
5,762 |
|
Total
Assets |
$ |
529,892 |
|
|
$ |
426,414 |
|
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit) |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
21,383 |
|
|
$ |
19,985 |
|
Accrued expenses and other |
|
43,407 |
|
|
|
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 |
|
70,373 |
|
|
|
31,554 |
|
Revolving line of credit |
|
85,640 |
|
|
|
55,140 |
|
Long-term debt, less current
portion |
|
189,289 |
|
|
|
189,913 |
|
Payable pursuant to the tax
receivable agreement, less current portion |
|
157,420 |
|
|
|
156,374 |
|
Other long-term
liabilities |
|
4,500 |
|
|
|
931 |
|
Total Liabilities |
|
507,222 |
|
|
|
433,912 |
|
Commitments and
Contingencies |
|
|
|
Stockholders’ Equity
(Deficit) |
|
|
|
Preferred stock, $0.00001 par value - 5,000,000 shares authorized;
none issued and outstanding as of September 30, 2022 and December
31, 2021 |
|
— |
|
|
|
— |
|
Class A common stock, $0.00001 par value - 1,000,000,000 shares
authorized; 113,508,362 and 112,049,981 shares issued and
outstanding as of September 30, 2022 and December 31, 2021,
respectively |
|
1 |
|
|
|
1 |
|
Class B common stock, $0.00001 par value - 195,000,000 shares
authorized; 53,816,214 and 54,794,479 shares issued and outstanding
as of September 30, 2022 and December 31, 2021, respectively |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
104,539 |
|
|
|
95,684 |
|
Accumulated deficit |
|
(78,133 |
) |
|
|
(93,133 |
) |
Total stockholders’ equity
attributable to Shoals Technologies Group, Inc. |
|
26,408 |
|
|
|
2,553 |
|
Non-controlling interests |
|
(3,738 |
) |
|
|
(10,051 |
) |
Total stockholders' equity
(deficit) |
|
22,670 |
|
|
|
(7,498 |
) |
Total Liabilities and
Stockholders’ Equity (Deficit) |
$ |
529,892 |
|
|
$ |
426,414 |
|
Shoals Technologies Group,
Inc.Condensed Consolidated Statements of
Operations (Unaudited)(in thousands, except per share
amounts)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
$ |
90,823 |
|
|
$ |
59,840 |
|
|
$ |
232,289 |
|
|
$ |
165,166 |
|
Cost of
revenue |
|
54,776 |
|
|
|
38,071 |
|
|
|
141,357 |
|
|
|
98,444 |
|
Gross
profit |
|
36,047 |
|
|
|
21,769 |
|
|
|
90,932 |
|
|
|
66,722 |
|
Operating
Expenses |
|
|
|
|
|
|
|
General and administrative expenses |
|
13,853 |
|
|
|
10,031 |
|
|
|
41,037 |
|
|
|
26,865 |
|
Depreciation and amortization |
|
2,229 |
|
|
|
2,175 |
|
|
|
6,939 |
|
|
|
6,305 |
|
Total Operating Expenses |
|
16,082 |
|
|
|
12,206 |
|
|
|
47,976 |
|
|
|
33,170 |
|
Income from
Operations |
|
19,965 |
|
|
|
9,563 |
|
|
|
42,956 |
|
|
|
33,552 |
|
Interest expense, net |
|
(4,754 |
) |
|
|
(3,582 |
) |
|
|
(12,760 |
) |
|
|
(10,911 |
) |
Payable pursuant to the tax
receivable agreement adjustment |
|
— |
|
|
|
(2,014 |
) |
|
|
— |
|
|
|
(3,678 |
) |
Loss on debt repayment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,990 |
) |
Income before income
taxes |
|
15,211 |
|
|
|
3,967 |
|
|
|
30,196 |
|
|
|
2,973 |
|
Income tax benefit
(expense) |
|
(2,452 |
) |
|
|
1,309 |
|
|
|
(5,485 |
) |
|
|
3,123 |
|
Net
income |
|
12,759 |
|
|
|
5,276 |
|
|
|
24,711 |
|
|
|
6,096 |
|
Less: net income attributable to
non-controlling interests |
|
4,801 |
|
|
|
2,790 |
|
|
|
9,711 |
|
|
|
1,911 |
|
Net income
attributable to Shoals Technologies Group, Inc. |
$ |
7,958 |
|
|
$ |
2,486 |
|
|
$ |
15,000 |
|
|
$ |
4,185 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months EndedSeptember 30,
2022 |
|
Period from January 27, 2021to September
30, 2021 |
|
|
2022 |
|
|
|
2021 |
|
|
|
Earnings per share of
Class A common stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.07 |
|
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
0.02 |
|
Diluted |
$ |
0.07 |
|
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
0.02 |
|
Weighted average
shares of Class A common stock outstanding: |
|
|
|
|
|
|
|
Basic |
|
112,975 |
|
|
|
101,890 |
|
|
|
112,561 |
|
|
|
96,354 |
|
Diluted |
|
113,584 |
|
|
|
102,251 |
|
|
|
112,816 |
|
|
|
96,527 |
|
Shoals Technologies Group,
Inc.Condensed Consolidated Statements of Cash
Flows (Unaudited)(in thousands)
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
Cash Flows from
Operating Activities |
|
|
|
Net income |
$ |
24,711 |
|
|
$ |
6,096 |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
Depreciation and amortization |
|
8,001 |
|
|
|
7,345 |
|
Amortization/write off of deferred financing costs |
|
1,023 |
|
|
|
5,692 |
|
Equity-based compensation |
|
11,887 |
|
|
|
6,404 |
|
Provision for obsolete or slow-moving inventory |
|
443 |
|
|
|
435 |
|
Deferred taxes |
|
5,299 |
|
|
|
640 |
|
Payable pursuant to the tax receivable agreement adjustment |
|
— |
|
|
|
3,678 |
|
Gain on sale of assets |
|
— |
|
|
|
61 |
|
Changes in assets and liabilities, net of business
acquisition: |
|
|
|
Accounts receivable |
|
(40,084 |
) |
|
|
(12,271 |
) |
Unbilled receivables |
|
1,972 |
|
|
|
(6,760 |
) |
Inventory |
|
(43,601 |
) |
|
|
(8,505 |
) |
Other assets |
|
(381 |
) |
|
|
(6,904 |
) |
Accounts payable |
|
1,186 |
|
|
|
(5,198 |
) |
Accrued expenses and other |
|
34,558 |
|
|
|
2,608 |
|
Net Cash Provided by
(Used in) Operating Activities |
|
5,014 |
|
|
|
(6,679 |
) |
Cash Flows Used In
Investing Activities |
|
|
|
Purchases of property, plant and equipment |
|
(2,393 |
) |
|
|
(2,483 |
) |
Acquisition of a business, net of cash acquired |
|
— |
|
|
|
(12,909 |
) |
Other |
|
(503 |
) |
|
|
— |
|
Net Cash Used in
Investing Activities |
|
(2,896 |
) |
|
|
(15,392 |
) |
Cash Flows from
Financing Activities |
|
|
|
Distributions to non-controlling interest |
|
(7,762 |
) |
|
|
(4,837 |
) |
Employee withholding taxes related to net settled equity
awards |
|
(1,297 |
) |
|
|
(137 |
) |
Deferred financing costs |
|
— |
|
|
|
(94 |
) |
Payments on term loan facility |
|
(1,500 |
) |
|
|
(152,250 |
) |
Proceeds from revolving credit facility |
|
46,000 |
|
|
|
40,140 |
|
Repayments of revolving credit facility |
|
(15,500 |
) |
|
|
— |
|
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 assumed in acquisition |
|
— |
|
|
|
(1,537 |
) |
Deferred offering costs |
|
— |
|
|
|
(9,619 |
) |
Net Cash Provided By
Financing Activities |
|
19,941 |
|
|
|
26,187 |
|
Net Increase in Cash,
Cash Equivalents and Restricted Cash |
|
22,059 |
|
|
|
4,116 |
|
Cash, Cash Equivalents
and Restricted Cash—Beginning of Period |
|
9,557 |
|
|
|
10,073 |
|
Cash, Cash Equivalents
and Restricted Cash—End of Period |
$ |
31,616 |
|
|
$ |
14,189 |
|
Shoals Technologies Group,
Inc.Adjusted EBITDA, Adjusted Net Income and
Adjusted Diluted Earnings per Share (“EPS”)
(Unaudited)
Reconciliation of Net Income to Adjusted EBITDA
(in thousands):
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
Net income |
$ |
12,759 |
|
$ |
5,276 |
|
|
$ |
24,711 |
|
$ |
6,096 |
|
Interest expense, net |
|
4,754 |
|
|
3,582 |
|
|
|
12,760 |
|
|
10,911 |
|
Income tax benefit
(expense) |
|
2,452 |
|
|
(1,309 |
) |
|
|
5,485 |
|
|
(3,123 |
) |
Depreciation expense |
|
478 |
|
|
449 |
|
|
|
1,371 |
|
|
1,265 |
|
Amortization of
intangibles |
|
2,121 |
|
|
2,088 |
|
|
|
6,630 |
|
|
6,080 |
|
Payable pursuant to the TRA
adjustment(a) |
|
— |
|
|
2,014 |
|
|
|
— |
|
|
3,678 |
|
Loss on debt repayment |
|
— |
|
|
— |
|
|
|
— |
|
|
15,990 |
|
Equity-based compensation |
|
3,991 |
|
|
2,732 |
|
|
|
11,887 |
|
|
6,904 |
|
Acquisition-related
expenses |
|
20 |
|
|
1,697 |
|
|
|
32 |
|
|
1,697 |
|
COVID-19 expenses(b) |
|
— |
|
|
108 |
|
|
|
— |
|
|
269 |
|
Non-recurring and other
expenses(c) |
|
— |
|
|
243 |
|
|
|
— |
|
|
1,821 |
|
Adjusted EBITDA |
$ |
26,575 |
|
$ |
16,880 |
|
|
$ |
62,876 |
|
$ |
51,588 |
|
(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 and direct legal costs associated
with the pandemic.
(c) Represents certain costs
associated with non-recurring professional services, our prior
private equity owners’ 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, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income attributable to
Shoals Technologies Group, Inc. |
$ |
7,958 |
|
|
$ |
2,486 |
|
|
$ |
15,000 |
|
|
$ |
4,185 |
|
Net income impact from pro
forma conversion of Class B common stock to Class A common
stock(a) |
|
4,801 |
|
|
|
2,790 |
|
|
|
9,711 |
|
|
|
1,911 |
|
Adjustment to the provision
for income tax(b) |
|
(1,134 |
) |
|
|
(668 |
) |
|
|
(2,293 |
) |
|
|
(476 |
) |
Tax effected net income |
|
11,625 |
|
|
|
4,608 |
|
|
|
22,418 |
|
|
|
5,620 |
|
Amortization of
intangibles |
|
2,121 |
|
|
|
2,088 |
|
|
|
6,630 |
|
|
|
6,080 |
|
Amortization of deferred
financing costs |
|
339 |
|
|
|
278 |
|
|
|
1,023 |
|
|
|
953 |
|
Payable pursuant to the TRA
adjustment(c) |
|
— |
|
|
|
2,014 |
|
|
|
— |
|
|
|
3,678 |
|
Loss on debt repayment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,990 |
|
Equity-based compensation |
|
3,991 |
|
|
|
2,732 |
|
|
|
11,887 |
|
|
|
6,904 |
|
Acquisition-related
expenses |
|
20 |
|
|
|
1,697 |
|
|
|
32 |
|
|
|
1,697 |
|
COVID-19 expenses(d) |
|
— |
|
|
|
108 |
|
|
|
— |
|
|
|
269 |
|
Non-recurring and other
expenses(e) |
|
— |
|
|
|
243 |
|
|
|
— |
|
|
|
1,821 |
|
Tax impact of
adjustments(f) |
|
(1,529 |
) |
|
|
(2,166 |
) |
|
|
(4,621 |
) |
|
|
(7,972 |
) |
Adjusted Net Income |
$ |
16,567 |
|
|
$ |
11,602 |
|
|
$ |
37,369 |
|
|
$ |
35,040 |
|
(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, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Statutory U.S. Federal income
tax rate |
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
Permanent adjustments |
0.1 |
% |
|
0.1 |
% |
|
0.1 |
% |
|
1.0 |
% |
State and local taxes (net of
federal benefit) |
2.5 |
% |
|
2.9 |
% |
|
2.5 |
% |
|
2.9 |
% |
Effective income tax rate for
Adjusted Net Income |
23.6 |
% |
|
24.0 |
% |
|
23.6 |
% |
|
24.9 |
% |
(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, and direct legal costs associated
with the pandemic.
(e) Represents certain costs
associated with non-recurring professional services, our prior
private equity owners 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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Diluted weighted average
shares of Class A common shares outstanding, excluding Class B
common shares |
|
113,584 |
|
|
102,251 |
|
|
112,816 |
|
|
96,527 |
Assumed pro forma conversion
of Class B common shares to Class A common shares |
|
54,253 |
|
|
64,813 |
|
|
54,579 |
|
|
70,285 |
Adjusted diluted weighted
average shares outstanding |
|
167,837 |
|
|
167,064 |
|
|
167,395 |
|
|
166,812 |
|
|
|
|
|
|
|
|
Adjusted Net Income(a) |
$ |
16,567 |
|
$ |
11,602 |
|
$ |
37,369 |
|
$ |
35,040 |
Adjusted Diluted EPS |
$ |
0.10 |
|
$ |
0.07 |
|
$ |
0.22 |
|
$ |
0.21 |
(a) Represents Adjusted Net Income
for the full period presented.
Shoals Technologies (NASDAQ:SHLS)
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Shoals Technologies (NASDAQ:SHLS)
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From Jun 2022 to Jun 2023