Shoals Technologies Group Reports Record Q4 and Full Year 2025 Financial Results, Provides Strong 2026 Outlook

Shoals Technologies Group Reports Strong Q4 and Full-Year 2025 Results, Issues 2026 Guidance

Key Highlights from the Corrected Earnings Release

Q4 2025 revenue reached a record \$148.3 million, up 39% YoY.
Quarterly operating profit of \$17.4 million and net income of \$8.1 million.
Quarterly adjusted EBITDA of \$30.3 million.
Record backlog and awarded orders (“BLAO”) of \$747.6 million, up 18% YoY.
Full-year 2025 revenue up 19% to \$475.3 million; net income up 39% to \$33.6 million.
2026 guidance: revenue of \$560–600 million, adjusted EBITDA of \$110–130 million.
Clarification: No material changes in customer order patterns; quarterly guidance will continue.
Significant legal and litigation expenses related to wire insulation shrinkback and IP cases.
Balance sheet: \$7.3 million in cash, \$304.1 million in total liabilities, and \$599.9 million in stockholders’ equity at year-end 2025.

Management Commentary and Strategy

CEO Brandon Moss emphasized that 2025 was an “exceptional year” for Shoals Technologies Group despite political volatility. The company delivered strong revenue growth, driven by robust demand for its electrical balance of system (EBOS) solutions, including battery energy storage systems (BESS) and OEM components for the global energy transition market.

Moss highlighted the execution of Shoals’ strategic plan, including portfolio expansion, defending market share, and diversification into new segments. He noted particularly strong momentum in the BESS offering, with more than \$67 million in BLAO attributed to this line as of year-end.

The company enters 2026 with a record order book, diversified product base, and strong positioning across multiple market segments such as utility solar and battery storage.

Financial and Operational Details

Quarterly Performance

Revenue: \$148.3 million, up 39% from Q4 2024 (\$107 million).
Gross Profit: \$46.9 million, up from \$40.2 million. Gross margin declined to 31.6% (from 37.6%) due to higher material costs, \$3.3 million in new duties and tariffs, and \$1.5 million in right-of-use asset amortization for a new facility.
General & Administrative Expenses: \$27.3 million (vs. \$21.5 million prior year), mainly due to \$7.9 million increase in professional services for wire insulation shrinkback, IP, and securities litigation, partially offset by lower payroll costs.
Net Income: \$8.1 million (vs. \$7.8 million), with EPS steady at \$0.05 (basic/diluted).
Adjusted EBITDA: \$30.3 million (vs. \$26.4 million).
Adjusted Net Income: \$17.5 million (vs. \$14.1 million), with adjusted diluted EPS of \$0.10 (vs. \$0.08).

Full-Year 2025 Performance

Revenue: \$475.3 million, up 19% from \$399.2 million in 2024.
Gross Profit: \$166.5 million (vs. \$142 million). Gross margin decreased to 35.0% (from 35.6%), affected by tariffs, material costs, non-recurring charges, competitive dynamics, volume discounts, and product mix, partially offset by lower shrinkback expenses.
General & Administrative Expenses: \$101.5 million (vs. \$82.3 million), due to higher legal/professional costs including:
- IP litigation: \$9.1 million (up from \$6.0 million)
- Wire insulation shrinkback litigation: \$18.3 million (up from \$7.2 million)
- Shareholder litigation: \$2.5 million (up from \$0.9 million)
Net Income: \$33.6 million (up from \$24.1 million), EPS of \$0.20 (vs. \$0.14).
Adjusted EBITDA: \$99.5 million (flat vs. \$99.1 million).
Adjusted Net Income: \$60.6 million (up 3%), adjusted diluted EPS \$0.36 (vs. \$0.35).

Order Backlog

Backlog and awarded orders: \$747.6 million as of December 31, 2025, up 17.8% YoY and 3.7% from the previous quarter. Growth reflects continued demand and new market penetration (both domestic and international).

Balance Sheet and Cash Flows

Cash & Equivalents: \$7.32 million at year-end 2025 (down from \$23.5 million in 2024).
Total Assets: \$904.1 million (vs. \$793.1 million prior year).
Total Liabilities: \$304.1 million (vs. \$236.3 million).
Stockholders’ Equity: \$599.9 million (vs. \$556.8 million).
Operating Cash Flow: \$17.1 million (down from \$80.4 million), mainly impacted by changes in working capital, including a significant increase in accounts receivable and inventory.
Capital Expenditures: \$33.0 million (up from \$8.4 million), mostly related to a new operations facility.
Revolving Credit Facility: \$136.8 million outstanding at year-end.

2026 Guidance

Q1 2026:
- Revenue: \$125–135 million
- Adjusted EBITDA: \$16–21 million
Full-Year 2026:
- Revenue: \$560–600 million
- Adjusted EBITDA: \$110–130 million
- Operating cash flow: \$65–85 million
- Capex: \$20–30 million
- Interest expense: \$8–12 million

The company confirmed it will continue providing quarterly guidance, correcting an earlier error in a previous press release that suggested otherwise.

Shareholder and Price-Sensitive Information

Correction of Prior Guidance Comments: Shoals clarified that there are no material recent changes in customer order patterns and that it will continue to provide quarterly guidance. This correction removes uncertainty and could be viewed positively by the market.
Legal Risks and Litigation Costs: Substantial ongoing legal expenses, especially related to the wire insulation shrinkback issue and related litigation, continue to impact the company’s profitability and could represent a risk if not successfully resolved or recovered from suppliers.
Tariff and Material Cost Increases: Gross margins have been pressured by new tariffs and higher material costs. If these persist, they could impact future profitability.
Significant Growth in BESS Backlog: Over \$67 million of backlog attributed to BESS offerings highlights growth in this high-potential segment.
Cash Flow and Working Capital: Operating cash flow declined significantly, mainly due to higher receivables and inventory, which may warrant monitoring if trends persist.
Order Book Strength: Robust backlog and awarded orders, with continued expansion into new markets, underpin confidence in revenue growth for 2026.

Risk Factors and Forward-Looking Statements

The company listed numerous risk factors that could materially impact performance, including:

Diminished demand for solar projects
Costs/risks associated with the wire insulation shrinkback matter
Supply chain disruptions, tariffs, and duties
Manufacturing and operational risks, concentration of production in Tennessee
Competition and pricing pressures
Legal and regulatory challenges, including ongoing litigation
Significant customer concentration risk
Macroeconomic and geopolitical risks (inflation, interest rates, instability)
International market expansion risks and cybersecurity threats
Indebtedness and potential changes to tax or energy policy

These risks should be carefully considered by shareholders as they could impact future results and share value.

Conclusion

Shoals Technologies Group delivered a strong 2025 with record revenue, significant order book growth, and progress in new product segments such as BESS. However, rising costs, tariffs, and substantial litigation expenses have pressured margins and cash flow. The clarified guidance and confirmation of robust underlying demand provide support for a positive outlook in 2026, but investors should monitor ongoing legal risks and their financial impact.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult official filings and their financial advisors before making any investment decisions. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.