8-K - SHLS - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 10, 2021

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Shoals Technologies Group, Inc.
(Exact name of registrant as specified in its charter)

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Delaware	001-39942	85-3774438
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1400 Shoals Way
Portland, Tennessee		37148
(Address of principal executive offices)		(Zip Code)
(615) 451-1400
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.00001 Par Value	SHLS	Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On August 10, 2021, Shoals Technologies Group, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and six months ended June 30, 2021. In the press release, the Company also announced that it would be holding a conference call on August 10, 2021 to discuss its financial results for the quarter and six months ended June 30, 2021. The full text of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. The transcript of the conference call is attached hereto as Exhibit 99.2 to this Form 8-K.

The information set forth in this Item 2.02, including Exhibit 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release issued by Shoals Technologies Group, Inc. dated August 10, 2021
99.2	Earnings release transcript dated August 10, 2021

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Shoals Technologies Group, Inc.
By:	/s/ Jason Whitaker
	Name:	Jason Whitaker
	Title:	Chief Executive Officer

Date: August 10, 2021

Document

Exhibit 99.1

Shoals Technologies Group, Inc. Reports Financial Results for Second Quarter 2021

– Reports Record Second Quarter Revenue Increased 38% Year-Over-Year to $59.7 million –

– System Solutions Revenue Increased 62% to $51.2 million –

– Second Quarter Gross Profit Margin Expands More Than 500 bps Year-Over-Year –

– Backlog and Awarded Orders at June 30, 2021 Up 63% Versus Last Year –

– Reaffirms 2021 Outlook –

PORTLAND, TN., August 10, 2021 (GLOBE NEWSWIRE) – 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 Results

Revenues 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.

Exhibit 99.1

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 Results

Revenues 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

Exhibit 99.1

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 Orders

The 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 9 -10 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 Information

Company 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

Exhibit 99.1

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

Exhibit 99.1

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.

Exhibit 99.1

Shoals Technologies Group, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except shares)

	June 30,<br>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

Exhibit 99.1

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,
	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<br>June 30, 2021				Period from January 27, 2021<br><br>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

Exhibit 99.1

Shoals Technologies Group, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(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 of 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

Exhibit 99.1

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.

Reconciliation of Net Income 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.

Exhibit 99.1

Shoals Technologies Group, Inc.

Adjusted EBITDA and Adjusted Net Income Reconciliation (Unaudited)

(in thousands)

(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	%

(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.

Document

Exhibit 99.2

Shoals Technologies Group, Inc.

Q2 2021 Earnings Conference Call Script

August 10, 2021

Operator

—————————————————————————————————————————————————

Good afternoon, and welcome to Shoals Technologies Group Second Quarter 2021 Earnings Conference Call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Mehgan Peetz, General Counsel for Shoals Technologies Group. Thank you. You may begin.

Mehgan Peetz, General Counsel, Shoals Technologies Group, Inc.

—————————————————————————————————————————————————

Thank you, operator and thank you everyone for joining us today. Hosting the call with me are CEO, Jason Whitaker, CFO, Philip Garton and SVP of EV Solutions, Jeff Tolnar.

On this call, management will be making statements based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of other factors discussed in today's press news release regarding second quarter earnings and the comments made during this conference call or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.shoals.com. We do not undertake any duty to update any forward-looking statements.

Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's second quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures.

With that, let me turn the call over to Jason.

Jason Whitaker, CEO, Shoals Technologies Group, Inc.

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Thank you very much Mehgan and good afternoon, everyone. I will start off by giving an overview of the current solar market landscape and the opportunities that it is creating for Shoals. I will then discuss the progress Shoals is making on three of its core growth initiatives—converting the industry to BLA, growing wallet share with new complementary products and entering the EV charging equipment market.

As most of you know, 2020 was a record year for Shoals both in terms of revenues and profits. That momentum continued in Q1, and now again in Q2. Revenues and adjusted EBITDA for Q2 were up 38% and 34% respectively.

Our second quarter results were driven by continued growth in our System Solutions business. That growth was the result of sustained strong demand for utility-scale solar as well as market share gains. Increasingly, customers are seeing the value that our combine-as-you-go system provides and we are converting customers to BLA in a much shorter period of time than it took us in the past.

In our core U.S. solar business, we're seeing increasing levels of demand as the build-out of new projects accelerate. The acceleration is being driven by continued declines in the LCOE of solar, which makes it more competitive with other sources of generation; growing corporate and utility commitments to source energy from renewable resources; the two-year extension of the solar ITC that was passed in December 2020; the IRS’

Exhibit 99.2

expansion of the “Continuity Safe Harbor” to 2025 in June; and the normalization of permitting processes as states reopened from the pandemic. According to many industry analysts, the effect of all of that has been to increase the size of the addressable market over the next three years by about 30%. That's a huge increase in the size of the market and aligns with what we've been seeing in the marketplace and hearing from our customers.

It is also important to highlight that the acceleration of the solar market does more than just increase our addressable market. We find it is also indirectly leading customers to choose our solution versus conventional EBOS. The reason for that is as activity levels grow, labor rates rise and labor availability falls. And many of our EPC customers are telling us that they're having difficulty staffing jobs. The opportunity right now is that big.

And because our combine-as-you-go system installs much faster than conventional EBOS, and does not require skilled labor, we can be the difference between our customers being able to take on an incremental job versus letting it go to a competitor because they don't have the crews available to do the work.

And to give you some perspective for how strong demand is for our products currently, our quoting activity has more than doubled from what we were seeing last year. Average project size, measured in dollars, has increased 62% versus last year, which is very favorable to us because we have certain fixed costs that are the same regardless of the job size, so as the job gets bigger, we get more leverage on those costs. More leverage on our fixed costs usually translates into higher job margins.

The growing demand for our solutions is reflected in our total backlog and awarded orders, which was $200.5 million as of June 30, 2021 an increase of 63% versus the same period last year. And to put that in perspective, that’s more than our total revenues last year.

And now turning to our progress on our growth initiatives.

We’re continuing to take share with our combine-as-you-go system and we’re converting EPCs and developers to our system faster than ever before. To provide some context for how much we have accelerated the customer conversion process, when we went public in January, there were four major EPCs that used our system for most or all of their projects and another 10 that were “in transition”, meaning they had placed an order that is included in our backlog and awarded orders. Winning over those first four EPCs took years. Contrast that with the last six months, where we completed conversion of an additional five EPCs. We’re getting faster at winning new customers.

More importantly, the amount of time it is taking for sales prospects to place their first order is compressing. Since our IPO in January we identified 32 new prospects. During the first and second quarters, nine of them placed orders, successfully converting from prospect to an order in less than 90 days. And that is an extremely short period of time for an EPC or developer to move to a new system that has different means and methods. And we think it underscores the tremendous strength and differentiation of our product offering. And it's also worth highlighting that some of these new customers that we are winning are international.

While we are seeing tremendous performance from our core combine-as-you-go products, we are not standing still. We remain focused on expanding our wallet share with new products, including our recently introduced IV Curve Benchmarking and Wire Management solutions. IV Curve Benchmarking systems give owners unparalleled insights into the performance of their products, all the way down to the string level. And we believe that will be a valuable tool for owners to improve production and lower O and M costs. Our Wire Management solutions are an improvement on conventional wire ties that have a high rate of failure in the field, and will be a

Exhibit 99.2

high volume, high margin product for us. Both of these new products are currently being field tested with customers, and we're on track to generate revenues from both in Q4 of this year.

And finally, we are our progressing steadily on our expansion into EV charging equipment, which we are confident will be an attractive new leg for us and further accelerate our growth.

On our last quarterly earnings call, our SVP of EV Solutions, Jeff Tolnar, spoke in detail about the opportunity that we see for Shoals in EV charging. Installation is nearly half of the cost of deployment; as a reference, for a solar project it is about 30%. The reasons for high cost installation revolve around a lot of the very same issues encountered in solar: the need for trenching, complex interconnections, homerun cabling, and the need for expensive, skilled labor. Together those characteristics make the EV charging market ripe for innovation. And the innovation it needs are at exactly the areas where Shoals has unique expertise and manufacturing capabilities.

To capitalize on this immense opportunity, we are currently developing four new product families for the EV charging market, which we believe will reduce the installation cost of a charging deployment by 20-30%:

1.Skid solutions that package the key components required for an EV charging station in the factory with the objective of reducing the amount of labor required in the field and increasing quality;

2.Raceways that allow wire to be run above ground rather than in an underground conduit;

3.EV-BLA that eliminates homeruns from each dispenser and offers benefits similar to our solar BLA, including a 75% reduction in wire runs; and

4.Prefabricated skids for DC or HP chargers and AC skids with either two or four dispensers. Charging skid solutions minimize placement time and increase quality while reducing cable and costs.

Importantly, each of our product families can be used individually or in concert with one and other. We will encourage customers to purchase a complete system which will be a value multiplier, but we designed each product to stand on its own if customers want to purchase only certain components.

We expect to introduce our first offerings for EV charging in the fourth quarter of 2021. Specifically, our phase I products – Skid Solutions and the Quad Charger are already in advanced development and we expect to have our first units deployed with customers in Q4. Our phase II products – Raceways and EV-BLA – are being developed now and we expect to have our first units deployed with customers in the first quarter of next year. We currently expect full commercial launch of all products will occur in the second quarter of 2022.

I’ll wrap up by saying that we’re very excited about what we see ahead for our core solar business and our new EV charging business.

I'll now turn it over to Phil who will discuss second quarter and first six months financial results.

Philip Garton, CFO, Shoals Technologies Group, Inc.

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Thank you, Jason. For the second quarter, revenues increased 38% versus the prior-year period to $59.7 million, driven by a 62% year-over-year increase in our System Solutions revenues which was partly offset by an expected decline in Components revenues. The growth in System Solutions revenues reflects strong demand for our combine-as-you-go system. The declining Components revenue 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.

Prices across our product lines during the second quarter were comparable to the prior year.

Exhibit 99.2

Gross margin in the second quarter increased by over 500 basis points versus the prior-year period to 43.8% as a result of a higher portion of revenue coming from combine-as-you-go system solutions, purchasing efficiencies from increased volumes, improved materials planning which reduced logistics costs, enhancements to product design that lowered manufacturing costs, and other manufacturing efficiencies resulting from higher production volume.

Second quarter general and administrative expenses were $10.0 million compared to $9.3 million in the prior-year period, this was driven by planned increase in payroll expense due to higher headcount to support our growth and product initiatives, new public company costs and public offering expenses, partially offset by a decrease in equity-based compensation.

Adjusted EBITDA for the second quarter was $20.6 million up 34% from $15.4 million in the prior year period, with adjusted EBITDA margin decreasing approximately 90 basis points year-over-year to 34.5%.

Adjusted net income was $14.7 million in the second quarter compared to $13.1 million during the same period in the prior year, increasing 12% primarily due to increased System Solutions revenue partially offset by an increase in interest expense.

Please see the adjusted EBITDA and adjusted net income reconciliation tables in our second quarter press release for a bridge to our GAAP results.

Now turning to our results for the first six months of 2021. Revenues grew to $105.3 million, compared to $84.2 million in the prior-year period, an increase of 25%, driven by a 55% year-over-year increase in System Solutions revenues, partially offset by a decline in Components revenues. This reflects strong demand for Shoals’ combine-as-you-go system for the first six months of 2021. We derived 80% of revenues from System Solutions versus 65% in the prior-year period.

Prices across our product lines during the first half of 2021 were comparable to the prior-year period.

Gross margin in the first half of the year increased by 590 basis points versus the prior-year period to 42.7% as a result of a higher proportion of revenue coming from combine-as-you-go System Solutions, purchasing efficiencies from increased volumes, improved materials 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 in the prior-year period, driven primarily by new public company costs and public offering expenses, planned increased payroll expense due to higher headcount to support our growth and product initiatives, partially offset by a decrease in equity-based compensation.

Adjusted EBITDA for the first half of 2021 was $34.7 million up 26% from $27.5 million in the prior year period, with adjusted EBITDA margin increasing more than 30 basis points year-over-year to 33.0%.

Adjusted net income for the first six months of 2021 was $23.4 million compared to $22.1 million for the prior-year period.

Please see the adjusted EBITDA and adjusted net income reconciliation tables in our second quarter press release for a bridge to our GAAP results.

Exhibit 99.2

As of June 30, 2021, we had backlog and awarded orders of $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 Shoals’ products from our customers.

Turning to our outlook for 2021, based on current market conditions and input from our customers and team, we are reaffirming our previous guidance and expect 2021 revenues to be in the range of $230 million to $240 million, up 31% to 37% year-over-year. We expect adjusted EBITDA to be in the range of $75 million to $80 million, and adjusted net income to be in the range of $47 million to $51 million.

As we noted last quarter, we expect year-over-year revenue growth to increase in subsequent quarters. Specifically, we currently expect the second half of the year to be 4Q weighted with 3Q to be comparable to up modestly on a sequential basis from Q2. And from a margin perspective, as previously communicated, the mix related gross margin expansion that we saw this quarter may not re-occur next quarter when we expect to have greater percentage of component sales.

Before I turn it back over to Jason, I wanted to make a couple of comments regarding the growing pains that the solar market is currently experiencing.

The ones we hear about the most are price of commodities, potential for project delays given supply chain disruptions, and shipping costs. Now, while we're not immune to what happens in the market, we set our business up in a way that these issues have a minimal impact on us. First, when we quote a price, we match that price against a quote for key inputs from our suppliers. And we'll only honor that quote for seven days. That means we are not caught in a position where we promised a price to a customer, but then have the cost of the inputs for that order increase on us and change our margin profile. We essentially lock both sides of the ledger when an order gets signed.

We've been doing things that way since before the current inflation in commodity prices, and it has served us very well in this environment. And with respect to project delays, we're aware of some in the market, but we're not seeing them materially impact Shoals. And the reason for that is most of our customers are already in construction or about to start construction when they sign a contract with us. That means it's very unlikely that it will cause a delay or cancel a project.

And I think a good analogy here is once you start a new skyscraper, even if the real estate market changes, you're still going to order the windows and finish that project. And we're essentially the window guys. And lastly, as it relates to shipping, we're seeing increases in costs like many other players in the solar industry. But in our case, shipping is not a big component of our cost structure. And the reason for that is that our products are fairly lightweight and packed very dense. So we have a lot of options for how we get products to the customer. Also, on the supplier side of things, most of our suppliers are located in North America. So we don't have the challenges with overseas shipping that some of our peers are experiencing right now.

Jason, back to you.

Jason Whitaker, CEO, Shoals Technologies Group, Inc.

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I would like to close by thanking all our customers for their commitment to Shoals, our employees for their contributions to our company’s success and our shareholders for their continuous support.

And with that, thank you everyone, and I appreciate your time today. I would like to ask the operator to open the line for questions.