Shoals Technologies Group (SHLS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $99.2 million, down 16.7%–17% year-over-year but up 9.3% sequentially, with gross margin at 40.3% and adjusted EBITDA at $27.7 million.

• Backlog and awarded orders reached a record $642.3 million, up 18% year-over-year and 4% sequentially, reflecting strong customer momentum and new agreements.

• Project delays shifted $40 million in revenue from 2024 into 2025, driven by permitting, interconnection, equipment shortages, labor, and high interest rates.

• Major new product launches at Intersolar expanded international capabilities, addressing 90% of unique customer needs.

• Commercial execution remains strong, with improved customer diversification and significant wallet share gains from previously underserved customers.

Financial highlights

• Net income for Q2 2024 was $11.8 million, down from $18.9 million year-over-year; adjusted net income was $17.8 million, with adjusted diluted EPS of $0.10.

• Adjusted EBITDA for Q2 2024 was $27.7 million, down from $48.2 million a year ago; adjusted EBITDA margin was 27.9%, down from 40.4%.

• Cash flow from operations for the first half of 2024 was $50.7 million; Q2 cash flow from operations was $37.8 million; capital expenditures were $2.0 million.

• Net debt to adjusted EBITDA improved to 1.1x from 1.5x a year ago; total liquidity at $56.1 million as of Q2 2024.

• Cash and cash equivalents at June 30, 2024, were $3.2 million; outstanding borrowings were $146.8 million.

Outlook and guidance

• Q3 2024 revenue expected between $95–$105 million; Q3 adjusted EBITDA $25–$30 million.

• Full-year 2024 revenue guidance revised to $370–$400 million; adjusted EBITDA $96–$110 million; adjusted net income $62–$76 million.

• Cash flow from operations for 2024 expected at $62–$82 million; capex and interest expense each $15–$20 million.

• Guidance reflects timing delays, not lost projects; project delays and slower growth in the domestic utility scale solar market are expected to persist through 2024.

• Global inflation, higher interest rates, and supply chain challenges are anticipated to continue impacting results.