Shoals Technologies (SHLS) 10-Q 8 May 23 2023 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2023	May 01, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-39942
Entity Registrant Name	Shoals Technologies Group, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-3774438
Entity Address, Address Line One	1400 Shoals Way
Entity Address, City or Town	Portland
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37148
City Area Code	(615)
Local Phone Number	451-1400
Title of 12(b) Security	Class A Common Stock, $0.00001 Par Value
Trading Symbol	SHLS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Amendment Flag	false
Entity Central Index Key	0001831651
Current Fiscal Year End Date	--03-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		169,820,407
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		0

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents	$ 6,460	$ 8,766
Accounts receivable, net	75,415	50,575
Unbilled receivables	19,661	16,713
Inventory, net	73,729	72,854
Other current assets	8,094	4,632
Total Current Assets	183,359	153,540
Property, plant and equipment, net	18,388	16,870
Goodwill	69,941	69,941
Other intangible assets, net	54,563	56,585
Deferred tax assets	476,283	291,634
Other assets	6,067	6,325
Total Assets	808,601	594,895
Current Liabilities
Accounts payable	21,936	9,481
Accrued expenses and other	17,382	17,882
Deferred revenue	23,450	23,259
Long-term debt—current portion	2,000	2,000
Total Current Liabilities	64,768	52,622
Revolving line of credit	45,000	48,000
Long-term debt, less current portion	188,836	189,063
Other long-term liabilities	3,917	4,221
Total Liabilities	302,521	293,906
Commitments and Contingencies (Note 13)
Stockholders’ Equity
Preferred stock, $0.00001 par value - 5,000,000 shares authorized; none issued and outstanding as of March 31, 2023 and December 31, 2022	0	0
Additional paid-in capital	457,304	256,894
Accumulated earnings	48,774	34,478
Total stockholders’ equity attributable to Shoals Technologies Group, Inc.	506,080	291,374
Non-controlling interests	0	9,615
Total stockholders' equity	506,080	300,989
Total Liabilities and Stockholders’ Equity	808,601	594,895
Class A Common Stock
Stockholders’ Equity
Common stock	2	1
Class B Common Stock
Stockholders’ Equity
Common stock	$ 0	$ 1

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock authorized (in shares)	5,000,000	5,000,000
Preferred stock issued (in shares)	0	0
Preferred stock outstanding (in shares)	0	0
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock authorized (in shares)	1,000,000,000	1,000,000,000
Common stock issued (in shares)	169,820,407	137,904,663
Common stock outstanding (in shares)	169,820,407	137,904,663
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock authorized (in shares)	195,000,000	195,000,000
Common stock issued (in shares)	0	31,419,913
Common stock outstanding (in shares)	0	31,419,913

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue	$ 105,086	$ 67,976
Cost of revenue	56,829	41,684
Gross profit	48,257	26,292
Operating expenses
General and administrative expenses	19,992	13,919
Depreciation and amortization	2,165	2,366
Total operating expenses	22,157	16,285
Income from operations	26,100	10,007
Interest expense, net	(5,996)	(3,836)
Income before income taxes	20,104	6,171
Income tax expense	(3,121)	(1,522)
Net income	16,983	4,649
Less: net income attributable to non-controlling interests	2,687	2,009
Net income attributable to Shoals Technologies Group, Inc.	$ 14,296	$ 2,640
Earnings per share of Class A common stock:
Basic (in dollars per share)	$ 0.10	$ 0.02
Diluted (in dollars per share)	$ 0.10	$ 0.02
Weighted average shares of Class A common stock outstanding:
Basic (in shares)	146,409	112,211
Diluted (in shares)	147,107	112,240
Class A Common Stock
Earnings per share of Class A common stock:
Basic (in dollars per share)	$ 0.10	$ 0.02
Diluted (in dollars per share)	$ 0.10	$ 0.02
Weighted average shares of Class A common stock outstanding:
Basic (in shares)	146,409	112,211
Diluted (in shares)	147,107	112,240

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Changes in Members’ / Stockholders’ Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Class A Common Stock	Class B Common Stock	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid-in Capital	Accumulated Earnings	Non-Controlling Interests
Balance at beginning of period (in shares) at Dec. 31, 2021				112,049,981	54,794,479
Balance at beginning of period at Dec. 31, 2021	$ (7,498)			$ 1	$ 1	$ 95,684	$ (93,133)	$ (10,051)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	4,649						2,640	2,009
Equity-based compensation	5,636					5,636
Activity under equity-based compensation plan	(1,297)					(2,944)		1,647
Distributions to non-controlling interests	(2,938)							(2,938)
Vesting of restricted share units (shares)				308,416
Balance at end of period (in shares) at Mar. 31, 2022				112,358,397	54,794,479
Balance at end of period at Mar. 31, 2022	(1,448)			$ 1	$ 1	98,376	(90,493)	(9,333)
Balance at beginning of period (in shares) at Dec. 31, 2022		137,904,663	31,419,913	137,904,663	31,419,913
Balance at beginning of period at Dec. 31, 2022	300,989			$ 1	$ 1	256,894	34,478	9,615
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	16,983						14,296	2,687
Equity-based compensation	7,523					7,523
Activity under equity-based compensation plan	(3,532)					(4,219)		687
Distributions to non-controlling interests	(2,628)							(2,628)
Vesting of restricted share units (shares)				495,831
Exchange of Class B to Class A common stock, net (in shares)				31,419,913	(31,419,913)
Exchange of Class B to Class A common stock, net	186,745			$ 1	$ (1)	186,745
Reallocation of non-controlling interests	0					10,361		(10,361)
Balance at end of period (in shares) at Mar. 31, 2023		169,820,407	0	169,820,407	0
Balance at end of period at Mar. 31, 2023	$ 506,080			$ 2	$ 0	$ 457,304	$ 48,774	$ 0

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows from Operating Activities
Net income	$ 16,983	$ 4,649
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	2,507	2,694
Amortization/write off of deferred financing costs	350	276
Equity-based compensation	7,523	3,831
Provision for credit losses	308	0
Provision for obsolete or slow-moving inventory	2,322	0
Deferred taxes	2,999	1,419
Changes in assets and liabilities:
Accounts receivable	(25,148)	(25,388)
Unbilled receivables	(2,948)	(2,616)
Inventory	(3,197)	(11,111)
Other assets	(3,281)	(3,421)
Accounts payable	12,521	(2,106)
Accrued expenses and other	(1,217)	1,124
Deferred revenue	191	4,790
Net Cash Provided by (Used in) Operating Activities	9,913	(25,859)
Cash Flows from Investing Activities
Purchases of property, plant and equipment	(2,003)	(882)
Net Cash Used in Investing Activities	(2,003)	(882)
Cash Flows from Financing Activities
Distributions to non-controlling interests	(2,628)	(2,938)
Employee withholding taxes related to net settled equity awards	(3,532)	(1,297)
Proceeds from revolving credit facility	5,000	35,000
Other	(556)	0
Net Cash Provided By (Used in) Financing Activities	(10,216)	30,265
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(2,306)	3,524
Cash, Cash Equivalents and Restricted Cash—Beginning of Period	8,766	9,557
Cash, Cash Equivalents and Restricted Cash—End of Period	6,460	13,081
Supplemental Cash Flows Information:
Cash paid for interest	5,193	2,710
Cash paid for taxes	181	37
Non-cash investing and financing activities:
Recording of deferred tax assets and capital contribution related to exchanges of Class B common stock to Class A common stock	187,648	0
Secured Debt
Cash Flows from Financing Activities
Payments on/ repayments of credit facilities	(500)	(500)
Revolving Credit Facility
Cash Flows from Financing Activities
Payments on/ repayments of credit facilities	$ (8,000)	$ 0

Organization and Business

Organization and Business	3 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business	Organization and Business Shoals Technologies Group, Inc. (the “Company”) was formed as a Delaware corporation on November 4, 2020 for the purpose of facilitating an initial public offering (“IPO”) and other related organizational transactions to carry on the business of Shoals Parent LLC and its subsidiaries (“Shoals Parent”). The IPO and related reorganization transactions that occurred on January 29, 2021 resulted in the Company becoming the sole managing member of Shoals Parent, with the Company having sole voting power in and control of the management of Shoals Parent. As of March 31, 2023 the Company, along with a newly wholly-owned subsidiary, Shoals Intermediate Parent, Inc., owned 100% of Shoals Parent. Shoals Parent is a Delaware limited liability company formed on May 9, 2017. The Company is headquartered in Portland, Tennessee and is a manufacturer of electrical balance of systems (“EBOS”) solutions and components for solar, battery storage and electric vehicle charging applications, selling to customers primarily in the United States as well as internationally. Shoals Parent, through its wholly-owned subsidiaries, Shoals Intermediate Holdings LLC (“Intermediate”) and Shoals Holdings LLC (“Holdings”) owns four other subsidiaries through which it conducts substantially all operations: Shoals Technologies, LLC, Shoals Technologies Group, LLC, Solon, LLC, (collectively “Shoals”) and Shoals Connect LLC. Shoals Parent acquired Shoals on May 25, 2017. Secondary Offering On March 10, 2023, selling stockholders, which consisted of certain entities controlled by Dean Solon, our founder (the “Founder”), completed a secondary offering consisting of 24,501,650 shares of Class A common stock. Following the closing of the secondary offering, the Founder no longer owns any shares of our Class B common stock or membership interests in Shoals Parent (“LLC Interests”). The Company did not receive any proceeds from the sale of shares of our Class A common stock by the selling stockholders in this offering. Shoals Technologies Group, Inc. Ownership in Shoals Parent In March 2023, following the secondary offering described above, all Continuing Equity Owners (as defined in Note 11 - Stockholders’ Equity), exchanged all the LLC Interests and corresponding shares of Class B common stock of the Company beneficially owned by them into shares of Class A common stock of the Company. As a result, upon effectiveness of such exchanges, all of the LLC Interests in Shoals Parent are held by the Company, no other holders own LLC Interests and no Class B common stock is outstanding.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Accounting and Presentation The condensed consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Non-Controlling Interests The non-controlling interests on the condensed consolidated statements of operations represent a portion of earnings or loss attributable to the economic interests in the Company’s subsidiary, Shoals Parent, formerly held by the Continuing Equity Owners (as defined in Note 11 - Stockholders’ Equity). Non-controlling interests on the condensed consolidated balance sheets represent the portion of net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders. As of March 31, 2023 the Company, along with a newly wholly-owned subsidiary, Shoals Intermediate Parent, Inc., owned 100% of Shoals Parent. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, the statements of operations, changes in stockholders’ equity (deficit) and cash flows for the periods ended March 31, 2023 and 2022 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023 and the results of its operations and its cash flows for the periods ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited. The results for the three months ended March 31, 2023 and 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. The balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include revenue recognition, allowance for credit losses, useful lives of property, plant and equipment and other intangible assets, impairment of long-lived assets, allowance for obsolete or slow moving inventory, valuation allowance on deferred tax assets, equity-based compensation expense and product warranty liability. Trends and Uncertainties In 2022, significant levels of inflation increased energy prices, freight premiums, and other operating costs, which levels remained elevated during the first quarter of 2023. As a result of inflation, during 2022 and the first quarter of 2023, the Federal Reserve increased interest rates. Such increased interest rates have resulted in higher interest rates associated with our Senior Secured Credit Agreement, as defined in Note 8 Long-Term Debt. The Federal Reserve may continue raising interest rates, and any such additional increases will have a corresponding increase in the interest rates charged under our Senior Secured Credit Agreement. The eventual implications of higher government deficits and debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital during our forecast period. In 2022 and to a lesser extent during the first quarter of 2023, in part as a consequence of the novel coronavirus (“COVID-19”) pandemic and other macroeconomic events, our ability to obtain raw materials required to manufacture our components and system solutions from domestic and international suppliers, as well as our ability to secure inbound logistics to and from our facilities, were impacted, with additional delays linked to international border crossings and the associated approvals and documentation. The Company does not directly source raw materials from Europe. However, the ongoing conflict in Ukraine has reduced the availability of certain materials that can be sourced in Europe and, as a result, increased global logistics costs for the procurement of some inputs and materials used in our products. We expect these trends to persist throughout the year. In addition, changes over the last few years in the international relations and tariff regimes between the U.S. and China in response to various political issues and heightened uncertainty regarding China-Taiwan relations could significantly adversely impact the availability of parts and components to us, and, correspondingly, our ability to produce our components at targeted levels, although we did not experience such negative effects during the first quarter of 2023. We are continuously monitoring the situation of our supply chain and evaluating our procurement strategy and supply chain to reduce any negative impact on our business, financial condition, and results of operations. In response to supply chain constraints, in 2022 we increased certain raw materials inventory, partly to limit the potential impact of supply chain issues of raw materials in the near term. During the first quarter of 2023, we have continued to carry increased inventories. In March 2023, various financial institutions sustained liquidity problems. Even though the FDIC and other government agencies intervened, there is uncertainty in the markets regarding the stability of the banking system and especially of regional banks. If the banks and financial institutions at which we or our customers hold our cash enter receivership or become insolvent, our liquidity and financial results may be threatened. As of March 31, 2023, other than increased interest expense, we did not experience material adverse effects on our financial results from the events and trends discussed above. Restricted Cash Restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statements of cash flows. Restricted cash is restricted as to withdrawal or use. Prior to the termination of the Tax Receivable Agreement (“TRA”), tax distributions paid by Shoals Parent to the Company were restricted under the limited liability company agreement (“LLC Agreement”) for future payments under the TRA and totaled $10.5 million as of March 31, 2022. There was no restricted cash as of March 31, 2023. March 31, March 31, Cash and cash equivalents $ 6,460 $ 2,534 Restricted cash included in other current asset — 4,222 Restricted cash included in other assets — 6,325 Total cash, cash equivalents and restricted cash $ 6,460 $ 13,081 Customer Concentrations The Company had the following revenue concentrations representing 10% or more of revenue for the three months ended March 31, 2023 and 2022 and related accounts receivable concentrations as of March 31, 2023 and December 31, 2022: 2023 2022 Revenue % Accounts Revenue % Accounts Customer A 19.0 % 20.7 % 16.4 % 8.4 % Customer B 0.5 % 8.3 % 12.2 % 12.6 % Customer C 0.1 % 1.1 % 10.5 % 1.6 % Customer D 6.6 % 7.3 % 10.0 % 0.1 % Recent Accounting Pronouncements Adopted In October 2021, the FASB issued Accounting Standard Update (“ASU”) No. 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . This ASU requires that contract assets and contract liabilities acquired in a business combination be recognized and measured in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within that fiscal year. The adoption of this standard on January 1, 2023 did not have an impact on the Company’s condensed consolidated financial statements. Not Yet Adopted Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

Accounts Receivable

Accounts Receivable	3 Months Ended
	Mar. 31, 2023
Receivables [Abstract]
Accounts Receivable	Accounts Receivable Accounts receivable, net consists of the following (in thousands): March 31, December 31, 2022 Accounts receivable $ 76,191 $ 51,061 Less: allowance for credit losses (776) (486) Accounts receivable, net $ 75,415 $ 50,575

Inventory

Inventory	3 Months Ended
	Mar. 31, 2023
Inventory Disclosure [Abstract]
Inventory	Inventory Inventory, net consists of the following (in thousands): March 31, December 31, 2022 Raw materials $ 78,975 $ 75,778 Allowance for obsolete or slow-moving inventory (5,246) (2,924) Inventory, net $ 73,729 $ 72,854

Property, Plant and Equipment

Property, Plant and Equipment	3 Months Ended
	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	Property, Plant and Equipment Property, plant, and equipment, net consists of the following (in thousands): Estimated Useful Lives (Years) March 31, December 31, 2022 Land N/A $ 840 $ 840 Building and land improvements 5-40 9,551 9,031 Machinery and equipment 3-5 13,670 12,371 Furniture and fixtures 3-7 1,948 1,787 Vehicles 5 125 125 26,134 24,154 Less: accumulated depreciation (7,746) (7,284) Property, plant and equipment, net $ 18,388 $ 16,870 Depreciation expense for the three months ended March 31, 2023 and 2022 was $0.5 million and $0.4 million, respectively. During the three months ended March 31, 2023 and 2022, $0.4 million and $0.3 million, respectively, of depreciation expense was allocated to cost of revenue and $0.1 million and $0.1 million, respectively, of depreciation expense was allocated to operating expenses.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Other Intangible Assets	Goodwill and Other Intangible Assets Goodwill Goodwill relates to the acquisition of Shoals and ConnectPV, Inc. There were no changes in the carrying amount of goodwill during the three months ended March 31, 2023. Goodwill totaled $69.9 million as of March 31, 2023 and December 31, 2022. Other Intangible Assets Other intangible assets, net consists of the following (in thousands): Estimated Useful Lives (Years) March 31, December 31, 2022 Amortizable: Costs: Customer relationships 13 $ 53,100 $ 53,100 Developed technology 13 34,600 34,600 Trade names 13 11,900 11,900 Backlog 1 600 600 Noncompete agreements 5 2,000 2,000 Total amortizable intangibles 102,200 102,200 Accumulated amortization: Customer relationships 23,998 22,925 Developed technology 15,526 14,860 Trade names 5,513 5,230 Backlog 600 600 Noncompete agreements 2,000 2,000 Total accumulated amortization 47,637 45,615 Total other intangible assets, net $ 54,563 $ 56,585 Amortization expense related to intangible assets amounted to $2.0 million and $2.3 million for the three months ended March 31, 2023 and 2022, respectively.

Accrued Expenses and Other

Accrued Expenses and Other	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Accrued Expenses and Other	Accrued Expenses and Other Accrued expenses and other consists of the following (in thousands): March 31, December 31, 2022 Accrued compensation $ 2,791 $ 4,917 Accrued interest 7,627 7,226 Other accrued expenses 6,964 5,739 Total accrued expenses and other $ 17,382 $ 17,882

Long-Term Debt

Long-Term Debt	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Long-Term Debt	Long-Term DebtLong-term debt consists of the following (in thousands): March 31, December 31, 2022 Term Loan Facility $ 194,750 $ 195,250 Revolving Credit Facility 45,000 48,000 Less: deferred financing costs (3,914) (4,187) Total debt, net of deferred financing costs 235,836 239,063 Less: current portion (2,000) (2,000) Long-term debt, net current portion $ 233,836 $ 237,063 Senior Secured Credit Agreement Holdings has a senior secured credit agreement (as amended, the “Senior Secured Credit Agreement”), consisting of (i) a $350.0 million senior secured six-year term loan facility (the “Term Loan Facility”) and (ii) a $150.0 million revolving credit facility (the “Revolving Credit Facility”). As of March 31, 2023, interest rates on the Term Loan Facility were SOFR plus 5.75%, or 10.59%, and on the Revolving Credit Facility, SOFR plus 3.25%, ranging from 7.88% to 8.09%. As of March 31, 2023, there were $194.8 million outstanding under the Term Loan Facility, $45.0 million outstanding under the Revolving Credit Facility, and the Company had $105.0 million of availability thereunder. The Senior Secured Credit Agreement contains affirmative and negative covenants, including covenants that restrict the Company’s incurrence of indebtedness, incurrence of liens, dispositions, investments, acquisitions, restricted payments, and transactions with affiliates. The Senior Secured Credit Agreement also includes customary events of default, including the occurrence of a change of control. The Revolving Credit Facility also includes a consolidated leverage ratio financial covenant that is tested on the last day of each fiscal quarter. To remain in compliance with the financial covenant, Shoals Intermediate Holdings’ consolidated leverage ratio, as of the last day of any quarter, cannot be greater than 6.50 to 1.00. As of March 31, 2023, the Company was in compliance with all the required covenants.

Earnings per Share ("EPS")

Earnings per Share ("EPS")	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Earnings per Share ("EPS")	Earnings per Share ("EPS") Basic EPS of Class A common stock is computed by dividing net income attributable to the Company by the weighted average number of shares of Class A common stock outstanding during the period. Diluted EPS of Class A common stock is computed similarly to basic EPS except the weighted average shares outstanding are increased to include additional shares from the exchange of Class B common stock under the if-converted method and the assumed exercise of any common stock equivalents using the treasury stock method, if dilutive. The Company’s restricted and performance stock units are considered common stock equivalents for this purpose. Basic and diluted EPS of Class A common stock have been computed as follows (in thousands, except per share amounts): Three Months Ended March 31, 2023 2022 Numerator: Net income attributable to Shoals Technologies Group, Inc. - basic $ 14,296 $ 2,640 Reallocation of net income attributable to non-controlling interests from the assumed exchange of Class B common stock — — Three Months Ended March 31, 2023 2022 Net income attributable to Shoals Technologies Group, Inc. - diluted $ 14,296 $ 2,640 Denominator: Weighted average shares of Class A common stock outstanding - basic 146,409 112,211 Effect of dilutive securities: Restricted / performance stock units 698 29 Class B common stock — — Weighted average shares of Class A common stock outstanding - diluted 147,107 112,240 Earnings per share of Class A common stock - basic $ 0.10 $ 0.02 Earnings per share of Class A common stock - diluted $ 0.10 $ 0.02 For the three months ended March 31, 2023 and 2022, the reallocation of net income attributable to non-controlling interests from the assumed exchange of Class B common stock has been excluded along with the dilutive effect of Class B common stock to the weighted average shares of Class A common stock outstanding – dilutive, as they were antidilutive.

Equity-Based Compensation

Equity-Based Compensation	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Equity-Based Compensation	Equity-Based Compensation 2021 Long-term Incentive Plan The Shoals Technologies Group, Inc. 2021 Long-Term incentive Plan (the “2021 Incentive Plan”) became effective on January 26, 2021. The 2021 Incentive Plan authorized 8,768,124 new shares, subject to adjustment pursuant to the 2021 Incentive Plan. Restricted Stock Units During the three months ended March 31, 2023, the Company granted 203,498 restricted stock units (“RSUs") to certain employees and officers of the Company. The RSUs have grant date fair values ranging from $23.94 to $28.26 per unit and generally vest ratably over 3 years. Activity under the 2021 Incentive Plan for RSUs was as follows: Three Months Ended Restricted Weighted Average Price Outstanding, beginning of period 1,736,975 $ 22.34 Granted 203,498 $ 27.15 Forfeited (29,863) $ 21.70 Vested (592,160) $ 20.30 Outstanding, end of period 1,318,450 $ 24.01 Performance Stock Units During the three months ended March 31, 2023, the Company granted an aggregate of 143,810 Performance Stock Units ("PSUs") to certain executives. The PSUs cliff vest after 3 years upon meeting certain revenue and gross margin targets and contain certain modifiers which could increase or decrease the ultimate number of Class A common stock issued to the executives. The PSUs were valued using the market value of the Class A common stock on the grant date ranging from $26.55 to $28.26. Activity under the 2021 Incentive Plan for PSUs was as follows: Three Months Ended Performance Weighted Average Price Outstanding, beginning of period 256,305 $ 11.89 Granted 143,810 $ 28.19 Forfeited (79,533) $ 10.42 Vested (53,144) $ 10.42 Outstanding, end of period 267,438 $ 21.38 During the three months ended March 31, 2023 and 2022, the Company recognized $7.5 million and $3.8 million, respectively, in equity-based compensation. As of March 31, 2023, the Company had $32.5 million of unrecognized compensation costs which is expected to be recognized over a period of 2.1 years.

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2023
Equity [Abstract]
Stockholders' Equity	Stockholders' Equity Shoals Parent Ownership The Company is the sole managing member of Shoals Parent and has the sole voting power in, and controls the management of Shoals Parent. As of March 31, 2023, the Company owned 100% of Shoals Parent. Prior to owning 100% of Shoals Parent, the remaining interest in Shoals Parent, was held by direct or indirect holders of LLC Interests and our Class B common stock, including the Founder and certain current and former executive officers, employees and their respective permitted transferees (collectively, the “Continuing Equity Owners”), who could exchange at each of their respective options, in whole or in part, from time to time, their LLC Interests (along with an equal number of shares of Class B common stock (which shares were then immediately canceled)) for cash or newly issued shares of our Class A common stock. Accordingly, the Company consolidated the financial results of Shoals Parent and reported non-controlling interests in its condensed consolidated financial statements. In accordance with the Shoals Parent LLC Agreement, Shoals Parent has made cash distributions to its members in an amount sufficient to cover the members’ tax liabilities, if any, with respect to each member’s share of Shoals Parent taxable earnings. The payment of these cash distributions by Shoals Parent to Continuing Equity Owners was recorded as distributions to holders of Shoals Parent LLC Interests in the accompanying condensed consolidated statements of stockholders’ equity (deficit) and condensed consolidated statements of cash flows. Common Stock Economic and Voting Rights Holders of Class A common stock and Class B common stock (if any shares are outstanding) are entitled to one vote per share and, except as otherwise required, vote together as a single class on all matters on which stockholders generally are entitled to vote. Holders of Class B common stock (if any shares are outstanding) are not entitled to receive dividends and will not be entitled to receive any distributions upon the liquidation, dissolution or winding up of the Company. Shares of Class B common stock were only issuable to

Non-Controlling Interests

Non-Controlling Interests	3 Months Ended
	Mar. 31, 2023
Noncontrolling Interest [Abstract]
Non-Controlling Interests	Non-Controlling Interests As of March 31, 2023, the Company owns 100% of Shoals Parent. The following table summarizes the effects of the changes in ownership in Shoals Parent on equity: Three Months Ended March 31, 2023 2022 Net income attributable to non-controlling interests $ 2,687 $ 2,009 Transfers to non-controlling interests Increase as a result of activity under equity-based compensation plan 687 1,647 Decrease from tax distributions to non-controlling interests (2,628) (2,938) Reallocation of non-controlling interests (10,361) — Change from net income attributable to non-controlling interests and transfers to non-controlling interests $ (9,615) $ 718 Issuance of Additional LLC Interests Under the LLC Agreement, the Company is required to cause Shoals Parent to issue additional LLC Interests to the Company when the Company issues additional shares of Class A common stock. Other than as it relates to the issuance of Class A common stock in connection with an equity incentive program, the Company must contribute to Shoals Parent net proceeds and property, if any, received by the Company with respect to the issuance of such additional shares of Class A common stock. The Company must cause Shoals Parent to issue a number of LLC Interests equal to the number of shares of Class A common stock issued such that, at all times, the number of LLC Interests held by the Company equals the number of outstanding shares of Class A common stock. During the three months ended March 31, 2023 and 2022, the Company caused Shoals Parent to issue to the Company a total of 495,831 and 308,416 LLC Interests, respectively, for the vesting of awards granted under the 2021 Incentive Plan. Distributions for Taxes As a limited liability company (treated as a partnership for income tax purposes), Shoals Parent does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. As authorized by the LLC Agreement, Shoals Parent was required to distribute cash, to the extent that Shoals Parent has cash available, on a pro rata basis, to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to each member’s share of Shoals Parent taxable earnings. Shoals Parent made such tax distributions to its members quarterly, based on the single highest marginal tax rate applicable to its members applied to projected year-to-date taxable income, with a final accounting once actual taxable income or loss has been determined. During the three months ended March 31, 2023 and 2022, tax distributions to non-controlling LLC Interests holders was $2.6 million and $2.9 million, respectively.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Litigation The Company is from time to time subject to legal proceedings and claims, which arise in the normal course of its business. In the opinion of management and legal counsel, except as disclosed below, the amount of losses or gains that may be sustained, if any, would not have a material effect on the financial position, results of operations or cash flows of the Company. On May 4, 2023, the Company filed a patent infringement complaint with the U.S. International Trade Commission (“ITC”) against Hikam America, Inc., a corporation based in Chula, California, and its related foreign entities (together, “Hikam”), and Voltage LLC, a limited liability company based in Chapel Hill, North Carolina, and its related foreign entities (together, “Voltage”). The complaints primarily request that the ITC (i) investigate unlawful imports of certain photovoltaic connectors and components that the Company alleges infringe on two valid and enforceable patents owned by the Company related to improved connectors for solar panel rays and (ii) issue a limited exclusion order and a cease and desist order against the Hikam defendants and the Voltage defendants to bar them from importing, marketing, distributing, selling, offering for sale, licensing, advertising, transferring, or otherwise using the infringing photovoltaic connectors and components in and into the United States. Also on May 4, 2023, the Company filed complaints against the Hikam defendants in the U.S. District Court for the Southern District of California, and against the Voltage defendants in the U.S. District Court for the Middle District of North Carolina on the same subject matter. These complaints seek injunctive relief and damages for reasonable royalty and lost profits. The Company intends to vigorously pursue these actions. However, at this stage, the Company is unable to predict the outcome or impact on its business and financial results. The Company is accounting for this matter as a gain contingency, and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450 Contingencies . Surety Bonds The Company provides surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee the Company’s performance in accordance with contractual or legal obligations. As of March 31, 2023, the maximum potential payment obligation with regard to surety bonds was $9.0 million. Product Warranty The Company offers an assurance type warranty for its products against manufacturer defects which does not contain a service element. For these assurance type warranties, a provision for estimated future costs related to warranty expense is recorded when they are probable and reasonably estimable. As of March 31, 2023 and December 31, 2022 our estimated accrued warranty liability was $0.4 million and $0.6 million, respectively. The Company has been notified by certain customers that a subset of wire harnesses used in its EBOS solutions is presenting excessive pull back of wire insulation at connection points (“shrinkback”). Based upon the Company’s initial assessment, the Company believes the shrinkback is related to a subset of specific colored wire provided by one specific supplier. While it is probable that the Company will incur costs related to the repair or replacement of the impacted wire harnesses, based on the limited information available as of the date of this Quarterly Report, including the scope of affected sites, potential solutions and the possibility of recovery from the wire supplier, it is not possible to reasonably estimate those costs. The Company is continuing its investigation of this matter to determine a course of action, and has substantially ceased use of the related wire from this supplier. As additional information becomes available, the Company expects to

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes In August 2022, the U.S. President signed into law the Inflation Reduction Act of 2022 (the “IRA”), which revised U.S. tax law by, among other things, including a new corporate alternative minimum tax (the “CAMT”) of 15% on certain large corporations, imposing a 1% excise tax on stock buybacks, and providing incentives to address climate change, including the introduction of advanced manufacturing production tax credits. The provisions of the IRA are generally effective for tax years beginning after 2022. Given the complexities of the IRA, which is pending technical guidance and regulations from the Internal Revenue Service and U.S. Treasury Department, we will continue to monitor these developments and evaluate the potential future impact to our results of operations. The Company is taxed as a subchapter C corporation and is subject to federal and state income taxes. The Company’s sole material asset is Shoals Parent, which is a limited liability company that is taxed as a partnership for U.S. federal and certain state and local income tax purposes. Shoals Parent’s net taxable income and related tax credits, if any, are passed through to its members and included in the member’s tax returns. Shoals Parent is subject to and reports an entity level tax in various states. The income tax burden on the earnings taxed to the non-controlling interest holders is not reported by the Company in its condensed consolidated financial statements under U.S. GAAP. As a result, the Company’s effective tax rate can differ materially from the statutory rate, depending on the ownership percentage of the non-controlling interests. Our effective income tax rate for the three months ended March 31, 2023 and 2022, was 15.5% and 24.7% respectively. In calculating the provision for interim income taxes, in accordance with ASC Topic 740, an estimated annual effective tax rate is applied to year-to-date ordinary income. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year. For annual periods, the Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. The Company recognizes penalties and interest related to uncertain tax positions within the provision (benefit) for income taxes line in the accompanying condensed consolidated statements of operations. As of the quarter ended March 31, 2023, the Company has recorded $1.0 million of gross unrecognized tax benefits inclusive of interest and penalties, all of which, if recognized, would favorably impact the effective tax rate. The Company recognizes penalties and interest related to uncertain tax positions within the income tax expense line in the accompanying condensed consolidated statements of operations. The Company files U.S. federal and certain state income tax returns. The income tax returns of the Company are subject to examination by U.S. federal and state taxing authorities for various time periods, depending on those jurisdictions’ rules, generally after the income tax returns are filed.

Revenue Recognition

Revenue Recognition	3 Months Ended
	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
Revenue Recognition	Revenue Recognition Disaggregation of revenue Based on Topic 606 provisions, the Company disaggregates its revenue from contracts with customers based on product type. Revenue by product type is disaggregated between system solutions and components. System solutions are contracts under which the Company provides multiple products typically in connection with the design and specification of an entire EBOS system. Components represents sales of individual components. The following table presents the Company’s revenue disaggregated by product type (in thousands): Three Months Ended March 31, 2023 2022 System solutions $ 91,299 $ 46,829 Components 13,787 21,147 Total revenue $ 105,086 $ 67,976 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), retainage (contract assets), and deferred revenue (contract liabilities) on the condensed consolidated balance sheets, recorded on a contract-by-contract basis at the end of each reporting period. The Company’s contract balances consist of the following (in thousands): (*) March 31, December 31, 2022 Billed accounts receivable Accounts receivable, net $ 71,091 $ 48,571 Retainage Accounts receivable, net $ 4,324 $ 2,004 Unbilled receivables Unbilled receivables $ 19,661 $ 16,713 Deferred revenue Deferred revenue $ 23,450 $ 23,259 (*) Location on the condensed consolidated balance sheets. The majority of the Company’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project. Billing sometimes occurs subsequent to revenue recognition, resulting in unbilled receivables. The changes in unbilled receivables relate to fluctuations in the timing of billings for the Company’s revenue recognized over-time. Certain contracts contain retainage provisions. Retainage represents a contract asset for the portion of the contract price earned by the Company for work performed but held for payment by the customer as a form of security until the Company obtains specified milestones. The Company typically bills retainage amounts as work is performed. Retainage provisions are not considered a significant financing component because they are intended to protect the customer in the event that some or all of the obligations under the contract are not completed. The changes in retainage relate to fluctuations in the timing of retainage billings and achievement of specified milestones.

Related Party Transaction

Related Party Transaction	3 Months Ended
	Mar. 31, 2023
Related Party Transactions [Abstract]
Related Party Transaction	Related Party TransactionAs part of the LLC Agreement we were required to pay tax distributions to the non-controlling interest holders, some of which were considered related parties at the time of distribution. See Note 12 - Non-controlling Interests.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of Accounting and Presentation	Basis of Accounting and PresentationThe condensed consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Principles of Consolidation	Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Reclassifications	ReclassificationsCertain prior period amounts have been reclassified to conform to the current period presentation.
Non-controlling Interests	Non-Controlling Interests The non-controlling interests on the condensed consolidated statements of operations represent a portion of earnings or loss attributable to the economic interests in the Company’s subsidiary, Shoals Parent, formerly held by the Continuing Equity Owners (as defined in Note 11 - Stockholders’ Equity). Non-controlling interests on the condensed consolidated balance sheets represent the portion of net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders. As of March 31, 2023 the Company, along with a newly wholly-owned subsidiary, Shoals Intermediate Parent, Inc., owned 100% of Shoals Parent.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include revenue recognition, allowance for credit losses, useful lives of property, plant and equipment and other intangible assets, impairment of long-lived assets, allowance for obsolete or slow moving inventory, valuation allowance on deferred tax assets, equity-based compensation expense and product warranty liability.
Restricted Cash	Restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statements of cash flows. Restricted cash is restricted as to withdrawal or use.
Recent Accounting Pronouncements	Recent Accounting Pronouncements Adopted In October 2021, the FASB issued Accounting Standard Update (“ASU”) No. 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . This ASU requires that contract assets and contract liabilities acquired in a business combination be recognized and measured in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within that fiscal year. The adoption of this standard on January 1, 2023 did not have an impact on the Company’s condensed consolidated financial statements. Not Yet Adopted Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Schedule of Cash and Cash Equivalents	March 31, March 31, Cash and cash equivalents $ 6,460 $ 2,534 Restricted cash included in other current asset — 4,222 Restricted cash included in other assets — 6,325 Total cash, cash equivalents and restricted cash $ 6,460 $ 13,081
Schedule of Restricted Cash	March 31, March 31, Cash and cash equivalents $ 6,460 $ 2,534 Restricted cash included in other current asset — 4,222 Restricted cash included in other assets — 6,325 Total cash, cash equivalents and restricted cash $ 6,460 $ 13,081
Schedule of Revenue and Accounts Receivable Concentration Risks	The Company had the following revenue concentrations representing 10% or more of revenue for the three months ended March 31, 2023 and 2022 and related accounts receivable concentrations as of March 31, 2023 and December 31, 2022: 2023 2022 Revenue % Accounts Revenue % Accounts Customer A 19.0 % 20.7 % 16.4 % 8.4 % Customer B 0.5 % 8.3 % 12.2 % 12.6 % Customer C 0.1 % 1.1 % 10.5 % 1.6 % Customer D 6.6 % 7.3 % 10.0 % 0.1 %

Accounts Receivable (Tables)

Accounts Receivable (Tables)	3 Months Ended
	Mar. 31, 2023
Receivables [Abstract]
Schedule of Accounts Receivable	Accounts receivable, net consists of the following (in thousands): March 31, December 31, 2022 Accounts receivable $ 76,191 $ 51,061 Less: allowance for credit losses (776) (486) Accounts receivable, net $ 75,415 $ 50,575

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2023
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventory, net consists of the following (in thousands): March 31, December 31, 2022 Raw materials $ 78,975 $ 75,778 Allowance for obsolete or slow-moving inventory (5,246) (2,924) Inventory, net $ 73,729 $ 72,854

Property, Plant and Equipment (

Property, Plant and Equipment (Tables)	3 Months Ended
	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Schedule of Property, Plant, and Equipment, Net	Property, plant, and equipment, net consists of the following (in thousands): Estimated Useful Lives (Years) March 31, December 31, 2022 Land N/A $ 840 $ 840 Building and land improvements 5-40 9,551 9,031 Machinery and equipment 3-5 13,670 12,371 Furniture and fixtures 3-7 1,948 1,787 Vehicles 5 125 125 26,134 24,154 Less: accumulated depreciation (7,746) (7,284) Property, plant and equipment, net $ 18,388 $ 16,870

Goodwill and Other Intangible_2

Goodwill and Other Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Other Intangible Assets	Other intangible assets, net consists of the following (in thousands): Estimated Useful Lives (Years) March 31, December 31, 2022 Amortizable: Costs: Customer relationships 13 $ 53,100 $ 53,100 Developed technology 13 34,600 34,600 Trade names 13 11,900 11,900 Backlog 1 600 600 Noncompete agreements 5 2,000 2,000 Total amortizable intangibles 102,200 102,200 Accumulated amortization: Customer relationships 23,998 22,925 Developed technology 15,526 14,860 Trade names 5,513 5,230 Backlog 600 600 Noncompete agreements 2,000 2,000 Total accumulated amortization 47,637 45,615 Total other intangible assets, net $ 54,563 $ 56,585

Accrued Expenses and Other (Tab

Accrued Expenses and Other (Tables)	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Schedule of Accrued Expenses and Other Consists	Accrued expenses and other consists of the following (in thousands): March 31, December 31, 2022 Accrued compensation $ 2,791 $ 4,917 Accrued interest 7,627 7,226 Other accrued expenses 6,964 5,739 Total accrued expenses and other $ 17,382 $ 17,882

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Schedule of Long-term Debt	Long-term debt consists of the following (in thousands): March 31, December 31, 2022 Term Loan Facility $ 194,750 $ 195,250 Revolving Credit Facility 45,000 48,000 Less: deferred financing costs (3,914) (4,187) Total debt, net of deferred financing costs 235,836 239,063 Less: current portion (2,000) (2,000) Long-term debt, net current portion $ 233,836 $ 237,063

Earnings per Share ("EPS") (Tab

Earnings per Share ("EPS") (Tables)	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Schedule of Basic and Diluted Earnings Per Share	Basic and diluted EPS of Class A common stock have been computed as follows (in thousands, except per share amounts): Three Months Ended March 31, 2023 2022 Numerator: Net income attributable to Shoals Technologies Group, Inc. - basic $ 14,296 $ 2,640 Reallocation of net income attributable to non-controlling interests from the assumed exchange of Class B common stock — — Three Months Ended March 31, 2023 2022 Net income attributable to Shoals Technologies Group, Inc. - diluted $ 14,296 $ 2,640 Denominator: Weighted average shares of Class A common stock outstanding - basic 146,409 112,211 Effect of dilutive securities: Restricted / performance stock units 698 29 Class B common stock — — Weighted average shares of Class A common stock outstanding - diluted 147,107 112,240 Earnings per share of Class A common stock - basic $ 0.10 $ 0.02 Earnings per share of Class A common stock - diluted $ 0.10 $ 0.02

Equity-Based Compensation (Tabl

Equity-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Schedule of RSU And PSU Activity	Activity under the 2021 Incentive Plan for RSUs was as follows: Three Months Ended Restricted Weighted Average Price Outstanding, beginning of period 1,736,975 $ 22.34 Granted 203,498 $ 27.15 Forfeited (29,863) $ 21.70 Vested (592,160) $ 20.30 Outstanding, end of period 1,318,450 $ 24.01 Activity under the 2021 Incentive Plan for PSUs was as follows: Three Months Ended Performance Weighted Average Price Outstanding, beginning of period 256,305 $ 11.89 Granted 143,810 $ 28.19 Forfeited (79,533) $ 10.42 Vested (53,144) $ 10.42 Outstanding, end of period 267,438 $ 21.38

Non-Controlling Interests (Tabl

Non-Controlling Interests (Tables)	3 Months Ended
	Mar. 31, 2023
Noncontrolling Interest [Abstract]
Schedule of Effects of Changes in Ownership	The following table summarizes the effects of the changes in ownership in Shoals Parent on equity: Three Months Ended March 31, 2023 2022 Net income attributable to non-controlling interests $ 2,687 $ 2,009 Transfers to non-controlling interests Increase as a result of activity under equity-based compensation plan 687 1,647 Decrease from tax distributions to non-controlling interests (2,628) (2,938) Reallocation of non-controlling interests (10,361) — Change from net income attributable to non-controlling interests and transfers to non-controlling interests $ (9,615) $ 718

Revenue Recognition (Tables)

Revenue Recognition (Tables)	3 Months Ended
	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
Schedule of Revenue Disaggregated by Product	The following table presents the Company’s revenue disaggregated by product type (in thousands): Three Months Ended March 31, 2023 2022 System solutions $ 91,299 $ 46,829 Components 13,787 21,147 Total revenue $ 105,086 $ 67,976
Schedule of Contract Balances	The Company’s contract balances consist of the following (in thousands): (*) March 31, December 31, 2022 Billed accounts receivable Accounts receivable, net $ 71,091 $ 48,571 Retainage Accounts receivable, net $ 4,324 $ 2,004 Unbilled receivables Unbilled receivables $ 19,661 $ 16,713 Deferred revenue Deferred revenue $ 23,450 $ 23,259 (*) Location on the condensed consolidated balance sheets.

Organization and Business (Deta

Organization and Business (Details)	Mar. 10, 2023 shares	Mar. 31, 2023 subsidiary shares	Dec. 31, 2022 shares
Class of Stock [Line Items]
Number of subsidiaries | subsidiary		4
Shoals Parent
Class of Stock [Line Items]
Ownership interest		100%
Class A Common Stock
Class of Stock [Line Items]
Common stock outstanding (in shares)		169,820,407	137,904,663
Class B Common Stock
Class of Stock [Line Items]
Common stock outstanding (in shares)		0	31,419,913
Stock Offering By Selling Shareholders | Class A Common Stock
Class of Stock [Line Items]
Stock issued in IPO (in shares)	24,501,650

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Narrative (Details) - USD ($)	Mar. 31, 2023	Mar. 31, 2022
Condensed Income Statements, Captions [Line Items]
Restricted cash and cash equivalents	$ 0	$ 10,500,000
Shoals Parent
Condensed Income Statements, Captions [Line Items]
Ownership interest	100%

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Schedule of Cash Cash Equivalents And Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Cash and cash equivalents	$ 6,460	$ 8,766	$ 2,534
Restricted cash included in other current asset	0		4,222
Restricted cash included in other assets	0		6,325
Total cash, cash equivalents and restricted cash	$ 6,460	$ 8,766	$ 13,081	$ 9,557

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Schedule of Revenue and Accounts Receivable Concentrations (Details) - Customer Concentration Risk	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Revenue % | Customer A
Concentration Risk [Line Items]
Concentration risk	19%	16.40%
Revenue % | Customer B
Concentration Risk [Line Items]
Concentration risk	0.50%	12.20%
Revenue % | Customer C
Concentration Risk [Line Items]
Concentration risk	0.10%	10.50%
Revenue % | Customer D
Concentration Risk [Line Items]
Concentration risk	6.60%	10%
Accounts Receivable % | Customer A
Concentration Risk [Line Items]
Concentration risk	20.70%	8.40%
Accounts Receivable % | Customer B
Concentration Risk [Line Items]
Concentration risk	8.30%	12.60%
Accounts Receivable % | Customer C
Concentration Risk [Line Items]
Concentration risk	1.10%	1.60%
Accounts Receivable % | Customer D
Concentration Risk [Line Items]
Concentration risk	7.30%	0.10%

Accounts Receivable (Details)

Accounts Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Receivables [Abstract]
Accounts receivable	$ 76,191	$ 51,061
Less: allowance for credit losses	(776)	(486)
Accounts receivable, net	$ 75,415	$ 50,575

Inventory (Details)

Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 78,975	$ 75,778
Allowance for obsolete or slow-moving inventory	(5,246)	(2,924)
Inventory, net	$ 73,729	$ 72,854

Property, Plant and Equipment -

Property, Plant and Equipment - Schedule of Property, Plant, and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 26,134	$ 24,154
Less: accumulated depreciation	(7,746)	(7,284)
Property, plant and equipment, net	18,388	16,870
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	840	840
Building and land improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 9,551	9,031
Building and land improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (Years)	5 years
Building and land improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (Years)	40 years
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 13,670	12,371
Machinery and equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (Years)	3 years
Machinery and equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (Years)	5 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 1,948	1,787
Furniture and fixtures | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (Years)	3 years
Furniture and fixtures | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (Years)	7 years
Vehicles
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (Years)	5 years
Property, plant and equipment, gross	$ 125	$ 125

Property, Plant and Equipment_2

Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 0.5	$ 0.4
Depreciation expense allocated to cost of revenue	0.4	0.3
Depreciation expense allocated to operating expenses	$ 0.1	$ 0.1

Goodwill and Other Intangible_3

Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 69,941		$ 69,941
Amortization expense of intangible assets	$ 2,000	$ 2,300

Goodwill and Other Intangible_4

Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Total amortizable intangibles	$ 102,200	$ 102,200
Total accumulated amortization	47,637	45,615
Total other intangible assets, net	$ 54,563	56,585
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives (Years)	13 years
Total amortizable intangibles	$ 53,100	53,100
Total accumulated amortization	$ 23,998	22,925
Developed technology
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives (Years)	13 years
Total amortizable intangibles	$ 34,600	34,600
Total accumulated amortization	$ 15,526	14,860
Trade names
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives (Years)	13 years
Total amortizable intangibles	$ 11,900	11,900
Total accumulated amortization	$ 5,513	5,230
Backlog
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives (Years)	1 year
Total amortizable intangibles	$ 600	600
Total accumulated amortization	$ 600	600
Noncompete agreements
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives (Years)	5 years
Total amortizable intangibles	$ 2,000	2,000
Total accumulated amortization	$ 2,000	$ 2,000

Accrued Expenses and Other (Det

Accrued Expenses and Other (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued compensation	$ 2,791	$ 4,917
Accrued interest	7,627	7,226
Other accrued expenses	6,964	5,739
Accrued expenses and other	$ 17,382	$ 17,882

Long-Term Debt - Schedule of Lo

Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Less: deferred financing costs	$ (3,914)	$ (4,187)
Total debt, net of deferred financing costs	235,836	239,063
Less: current portion	(2,000)	(2,000)
Long-term debt, net current portion	233,836	237,063
Senior Secured Credit Agreement | Line of Credit | Secured Debt
Debt Instrument [Line Items]
Long-term debt, gross	194,750	195,250
Senior Secured Credit Agreement | Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt, gross	$ 45,000	$ 48,000

Long-Term Debt - Narrative (Det

Long-Term Debt - Narrative (Details) - Senior Secured Credit Agreement - Line of Credit - USD ($)	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Secured Debt
Debt Instrument [Line Items]
Face amount of debt instrument	$ 350,000,000
Term of debt instrument	6 years
Long-term debt, gross	$ 194,750,000	$ 195,250,000
Effective interest rate of debt instrument	10.59%
Secured Debt | SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	5.75%
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity of credit facility	$ 150,000,000
Long-term debt, gross	45,000,000	$ 48,000,000
Remaining borrowing capacity under credit facility	$ 105,000,000
Maximum net leverage ratio	6.50
Revolving Credit Facility | SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	3.25%
Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Effective interest rate of debt instrument	7.88%
Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Effective interest rate of debt instrument	8.09%

Earnings per Share ("EPS") (Det

Earnings per Share ("EPS") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net income attributable to Shoals Technologies Group, Inc. - basic	$ 14,296	$ 2,640
Reallocation of net income attributable to non-controlling interests from the assumed exchange of Class B common stock	0	0
Net income attributable to Shoals Technologies Group, Inc. - diluted	$ 14,296	$ 2,640
Denominator:
Weighted average shares of Class A common stock outstanding - basic (in shares)	146,409	112,211
Weighted average shares of Class A common stock outstanding - diluted (in shares)	147,107	112,240
Earnings per share of Class A common stock - basic (in dollars per share)	$ 0.10	$ 0.02
Earnings per share of Class A common stock - diluted (in dollars per share)	$ 0.10	$ 0.02
Restricted / performance stock units
Denominator:
Effect of dilutive securities (in shares)	698	29
Class B Common Stock
Denominator:
Effect of dilutive securities (in shares)	0	0

Equity-Based Compensation - Nar

Equity-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Jan. 26, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation	$ 7.5	$ 3.8
Unrecognized compensation costs	$ 32.5
Period for recognition of unrecognized compensation costs	2 years 1 month 6 days
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted (in shares)	203,498
Granted (in dollars per share)	$ 27.15
Award vesting period	3 years
Restricted Stock Units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in dollars per share)	$ 23.94
Restricted Stock Units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in dollars per share)	$ 28.26
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted (in shares)	143,810
Granted (in dollars per share)	$ 28.19
Award vesting period	3 years
Performance Shares | Minimum | Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in dollars per share)	$ 26.55
Performance Shares | Maximum | Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in dollars per share)	$ 28.26
2021 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)			8,768,124

Equity-Based Compensation - Res

Equity-Based Compensation - Restricted And Performance Stock Unit Activity (Details)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Restricted Stock Units
Restricted Stock Units
Outstanding at beginning of period (in shares) | shares	1,736,975
Granted (in shares) | shares	203,498
Forfeited (in shares) | shares	(592,160)
Vested (in shares) | shares	(29,863)
Outstanding at end of period (in shares) | shares	1,318,450
Weighted Average Price
Balance at beginning of period (in dollars per share) | $ / shares	$ 22.34
Granted (in dollars per share) | $ / shares	27.15
Vested (in dollars per share) | $ / shares	21.70
Forfeited (in dollars per share) | $ / shares	20.30
Balance at end of period (in dollars per share) | $ / shares	$ 24.01
Performance Shares
Restricted Stock Units
Outstanding at beginning of period (in shares) | shares	256,305
Granted (in shares) | shares	143,810
Forfeited (in shares) | shares	(79,533)
Vested (in shares) | shares	(53,144)
Outstanding at end of period (in shares) | shares	267,438
Weighted Average Price
Balance at beginning of period (in dollars per share) | $ / shares	$ 11.89
Granted (in dollars per share) | $ / shares	28.19
Vested (in dollars per share) | $ / shares	10.42
Forfeited (in dollars per share) | $ / shares	10.42
Balance at end of period (in dollars per share) | $ / shares	$ 21.38

Stockholders' Equity (Details)

Stockholders' Equity (Details)	Mar. 31, 2023 vote shares	Dec. 31, 2022 shares
Class of Stock [Line Items]
Maximum ratio of class B common stock held to LLC interests held	1
Shoals Parent
Class of Stock [Line Items]
Ownership interest	100%
Class A Common Stock
Class of Stock [Line Items]
Number of votes per share of common stock | vote	1
Common stock outstanding (in shares)	169,820,407	137,904,663
Common stock issued (in shares)	169,820,407	137,904,663
Class B Common Stock
Class of Stock [Line Items]
Number of votes per share of common stock | vote	1
Common stock outstanding (in shares)	0	31,419,913
Common stock issued (in shares)	0	31,419,913

Non-Controlling Interests - Nar

Non-Controlling Interests - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Noncontrolling Interest [Line Items]
Distributions to non-controlling interests	$ 2,628	$ 2,938
Shoals Parent
Noncontrolling Interest [Line Items]
Interests purchased in subsidiaries (in shares)	495,831	308,416
Shoals Parent
Noncontrolling Interest [Line Items]
Ownership interest	100%

Non-Controlling Interests - Sch

Non-Controlling Interests - Schedule of Effects of Changes in Ownership (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Noncontrolling Interest [Abstract]
Net income attributable to non-controlling interests	$ 2,687	$ 2,009
Increase as a result of activity under equity-based compensation plan	687	1,647
Decrease from tax distributions to non-controlling interests	(2,628)	(2,938)
Reallocation of non-controlling interests	(10,361)	0
Change from net income attributable to non-controlling interests and transfers to non-controlling interests	$ (9,615)	$ 718

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Loss Contingencies [Line Items]
Estimated accrued warranty liability	$ 0.4	$ 0.6
Surety Bond
Loss Contingencies [Line Items]
Maximum potential payment obligation with regard to surety bonds	$ 9

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	15.50%	24.70%
Penalties and interest on uncertain tax positions	$ 1

Revenue Recognition - Schedule

Revenue Recognition - Schedule of Revenue Disaggregated by Product (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 105,086	$ 67,976
System solutions
Disaggregation of Revenue [Line Items]
Total revenue	91,299	46,829
Components
Disaggregation of Revenue [Line Items]
Total revenue	$ 13,787	$ 21,147

Revenue Recognition - Schedul_2

Revenue Recognition - Schedule of Contract Balances (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Billed accounts receivable	$ 71,091	$ 48,571
Retainage	4,324	2,004
Unbilled receivables	19,661	16,713
Deferred revenue	$ 23,450	$ 23,259

Revenue Recognition - Narrative

Revenue Recognition - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($)
Revenue from Contract with Customer [Abstract]
Contract with customer, liability, revenue recognized	$ 10.1