Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to Shoals Technologies Group First Quarter 2023 Earnings Conference Call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Mehgan Peetz, Chief Legal Officer for Shoals Technologies Group. Thank you.

You may begin.

Mehgan Peetz

thank for and us operator, you, you, joining everyone, today. Thank Interim call Bardos. President, with the CEO me Dominic Hosting CFO, are and and Jeff Tolnar;

this subject to other and projections uncertainties. current be management risks and statements expectations are based on On or which assumptions, call, will forward-looking making

statements As and Actual from guarantees not of comments, or results. consider any you these materially understand that if are you including year the assumptions factors. forward-looking or XXXX, could our listen results our differ of statements, because guidance these are should regarding of full performance incorrect other

These the Exchange events, and industry conditions, our Commission and in chain among of for market factors and as regulatory filings changes, our disruptions and components well demand include, policy and economic other risk factors materials. supply availability products, macroeconomic as Securities current and circumstances, things, with price the decreased described our

that are or the underlying indicate the Although assumptions the will undertake the results statements may therefore, update contemplated forward-looking and incorrect statement date is could statements. statements this that forward-looking the no assumptions can in there and assurance we be that of any prove believe reasonable, any do as forward-looking in to this the realized. discussion We included made and discussion of any of be duty not caution forward-looking any inaccurate

includes measures. Today's financial also non-GAAP presentation to references

in company's of quarter first the contained press definitional information financial the measures non-GAAP historical reconciliations to to information for refer and should the You measures. release comparable

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

Jeffery Tolnar

by provide for brief of especially I'll conditions support start update like update to our then on the our wrap up gratitude a patent some good filed and review everyone. our a success. other followed financial an infringement over introductions, with key first and updated set our I'd search results turning to an quarter overview contributions first CEO and Megan, their growth pending highlights for before complaint employees, solar-market our fantastic to who of quarter, current initiatives, to for and outlook much, results, and from my it overview XXXX. very customers afternoon an product will on you new quarter partners, and the and with I'll Thank our last Thursday. express first Dominic Shoals

records and Shoals Compared set growth quarter. in generally, net as-you-go to first period, demand new EBOS solar adjusted combined the first increased year prior revenue, grew for revenue profit, EBITDA, and the quarter driven our specifically. solutions adjusted by for system XX%, income

demonstrating highs and ability new to production, achieved for growth. continue monthly for our weekly scaling also We

quarter in achieved and XXX system efficiency discussed of resulting First margin from last growth EBITDA we costs, greater points XX.X% the was The fixed basis mix quarter. margin quarter and operational enhanced first growth X,XXX margin expanded the points driven higher grew by than more revenue, leverage basis a more than initiatives to on XX.X%. solutions to adjusted we operating

backlog very of demand strong, and increase we year-over-year. XX% $XXX.X Shoals the record of million awarded remained products with quarter orders The for ended and and

saw hitting to also and U.S. Solutions System XX% in activity quotes quoted nearly an All reflecting our gains and acceleration submitted utility new growing revenue we with share In quarter by demand, XX% doubled, values and growth year quarter-over-quarter. scale, in quotes fact, related during the products. year-over-year XX% are compared continued strong ago, quoting increased records. both a solar

an to six XX we of developers with BLA combined additional converted additional total customers the transition. to system During quarter, our in XX the bringing and as-you-go number EPCs

New plan product on remain for track. introductions XXXX

second first quarter. and BLA+ revenues expect the In to first known quarter as we in X.X began quoting formerly solution, record our BLA

in Western to building megawatt to solution a best-in-class contract solar XXX BLA+ In a supply winning backlog our Australia. fact, project BLA+ system we started of recently utility after scale

end. Benchmark IV the in revenues after second before progressing is and quarter indicated year offering quarter first Our with expected launch earnings, Curve late plan fourth as commercial

harnesses Our of launch high the play capacity occur and with second UL capacity and to certification XXXX. and plug in high connectors half tracking full market are

in to our the advanced for solution activity BLA win first quarter wire and released further including many growing international significant similar Australia the BLA We expansion anticipate with quoting in is plus our management to we more international efforts contract come. offerings, entire solution global and The plus. a projects recently our to supply project

as with business, introduce continued partnership Turning the our payments and deliveries of multiunit EV charging announced system charging Renewables We a a flow first in recently commercial retail, deployment order and upfront installations network EV innovative service infrastructure streamlined traditional with to production with EV dwellings an or cast of large fleets, large associated properties. underway. to other enable solution and solution, quarter Brookfield strategic of to which charging our eliminates scale

development less accelerate offering ultimately cast EV more clean EV making costly infrastructure the entry deployments across The and will and to lower by U.S. efficient the energy infrastructure barrier charging charging of and space the

by against in recently a foreign alleged U.S. take of I'll Shoals infringing United the infringement two the discuss briefly Now States. International our moment bar and importation of based We the competitors. Trade infringement to the filed the with Commission products patent ITC alleged ask TD to complaints investigate or ITC

safety storage reliability solutions has innovative that solar EBOS the developing efficiency increase invested scale system last the improving years, and for millions and EV charging Shoals installation of utility markets. performance our while Over XX significantly dollars and

that portfolio strong to products limits replicate these ability patent Our develop benefits. competitor’s can

are part While we take competitive patents, our important infringement we stop mode. competition, to healthy welcome vigorous will of which action our of an

hope and believe creation a what and California, manufacturing domestic U.S. company and ITC support Tennessee, Alabama in the by will and from protect design entering market. based we import the products job with IP are of our manufacturing the infringing As banning U.S. we

be market very favorable to for current continues strong. and to Overall, specifically. the solar conditions. Project a market industry whole remain Moving visibility solar conditions Shoals for as

long-term supports growth cost fastest and Solar remains energy the the lowest deploy outlook. of to which our

for is potential move impact there to while seeing always it, noticeable we're quarter-to-quarter, due projects USLPA. any to addition, In not

on to Finally, want a I provide brief search. CEO update

Stuart the stages several working closely comprehensive board the months, is last search Over and undertook the CEO of with Spencer the vetting final process. in a

it I'll now will first quarter financial to Dominic over XXXX who discuss results. turn

Dominic Bardos

on call. Thanks to good and afternoon the everyone Jeff,

XX% quarter prior First revenue year XX% grew Similar combined the EBOS which to period. strong volume versus year of solutions, was by in XX% demands driven system period our revenue our sales versus comprised prior the quarters, as-you-go higher $XXX.X prior for our million. primarily to

a basis year compared the to $XX.X Gross percentage profit period. prior net than margin The to was XX.X% as profit to Jeff Gross higher system products earlier. increase than of proportion a of other driven revenue operations, as the gained our grew mentioned more points higher primarily million, well as in year by increased XX.X% compared in from as-you-go efficiencies increased on $XX.X which XX% prior which a carry fixed leverage the and XXX solutions, combined costs million period. in to revenue companies

initiatives. compared count First result compensation, year-over-year administrative $XX.X payroll prior were in same $XX the expense period the administrative higher-head supporting stock-based increases during general was higher million quarter and million in primarily to product to general expenses and of The increase non-cash and expenses the new and growth in due year.

XX.X% million income stock-based period. the points compared over the that in approximately increased and CEO's $X.X year G&A G&A impact basis quarter call increased compensation transition. prior I our to Net $XX.X the in year $XX.X XXXX million $XX.X would on the increase was prior EBITDA expense. of reflecting $X.X related compared to for expense first in million Adjusted Adjusted million like to year-over-year million prior XXX% out period. to to to year-over-year higher the in margins of gross EBITDA margin leverage was

$X.X quarter in the the $XX.X prior year million Adjusted to XXX% net million income compared grew to in first period.

we operations cash quarter, $X.X of generated the million. During from

continue our investments expect year, this of cash in capital. levels profitability moderating We higher generation working to driven by improving and

XXXX As awarded million the for sequentially. in backlog products, $XXX.X reflects backlog robust increase of continued recently orders and solar we of introduced and XX, orders, an and XX% including XX% imported our BLA+. growth in March year-over-year demand The had

current be conditions million, now the of year-over-year. Based full XX% $XXX outlook. we and XX% our up $XXX follows: from to to million year as XXXX outlook our in input Turning We now to range raising customers, our on to expect revenue are market

$XXX range of the EBITDA adjusted the $XXX be expect to in income million. million $XXX in of to million million to and range We $XX be adjusted to net

outlook revised and supported is on exceptional back record and of our Our by the results strong first awarded orders. visibility backlog quarter

of expense be to full continue range the million. million in to We to $XX $XX XXXX year interest expect

for the year continue full $XX $X expect of the we Finally, million capital range to to expenditures million. in

Jeff to remarks. closing Now for back

Jeffery Tolnar

to continued of us ahead. about shareholders we excited customers continuous Thanks, for in effectively With not and again products incredibly Dominic. and efficiencies, for quarter the thanking is by following be customers Shoals, our our for results Momentum I'm all increasing can phenomenal sales optimistic solar, I our operational for would confidence and first incredibly employees in It XXXX. XXXX could more in enabling to robust achieve successful coming the what and like demand of strong quarters. the serve about initiatives their opportunity new support. their our close

you everyone. I time And that, thank your with appreciate today.

questions. We open for will the now line

Operator

[Operator Shen ROTH Thank Instructions] ahead. Philip Please from first The you. question MKM. go comes with

Philip Shen

thanks taking for my the questions. results. on guys Congrats Hey strong

the might backlog since your to wondering be First you the the trend share you seen and about also in been for on March. has Was April? and quarter talk then question How the is orders. you've that awarded bookings momentum can mix able if

the Was Thanks. in change small a release orders. then we and And there your or in finally, a your backlog update awarded disclosures noticed round methodology?

Dominic Bardos

Hey is Phil, this Dominic.

and start order. I'll come reverse with one that me in and Let go

eagle First here. of yes, all, I'm eyes

change regards change little the did our more disclosures release some incremental now. in I guidance not with have disclosures, that align are have SEC in earnings methodology. we to It's release noticed as press a think that of just bit with a a we of but our you've we

revenue of also of part kind to because our an majority we're footnote think future backlog and and we've the health twelve as a awarded business probably ultimately now month a saw nine vast things an a of window. doing important become are revenues. a and reason business And do typically and the we expect indicator is orders the that awarded reminder, to I But backlog that such doing. of non-GAAP measures with started orders you of and

million in in the to release levels the ended quarters. were not built point the trends, we quarter's about and January Phil. did from at We XX. in the we to early $XXX.X record we you think this it year talked second pleased about where on now, as in saw achieving that anything last talking that I But we time continue are are the ends we throughout from March quarter With

out filed one key And now. to looked the with our you I there regards front to we've next, for on I believe me to as right that at in have very back I'll second. just the don't I of information. have got come it that

me give question. can you one a minute, if to I'll the So to find try going that

Philip Shen

great. margins Okay, Great on Thanks the as Dominic. job well.

we guys should for this of run and you What close hit new expect XX%. think in the I terms Is So to beyond? margins rate? QX

Dominic Bardos

the so pleased Yes, with we're margin. yes, very

you time as last long a been Phil, first half challenges in had think recall, I you've following are gross recall and margin. with year for companies the to regards that some to we there you the the

And so level this as would mix. have level the of expect it we kind to on achieved normal based of I'd really characterize that

solutions a a had system if mid you to we fact, XXs when go In similar mix comparable and margin. saw of you back very revenue XXXX, components,

are investments investments some have we planned guided are things that COGS we're in to some and that. We side. that making I've some the Now, against still there making

that solutions going But components mix about say there guidance to product a going forward. margins system that our quarterly we forward cautious do a be gross of very to I'd are. we're expect is give So going what healthy versus

our And overall, now our margin. to point well, saw guidance up you as improvement according range, EBITDA in lifted did, EBITDA to we've in as total margin basis the we XXX

of ahead the and achieved our we So some we're Jeff team at of efficiencies a little very operation schedule. pleased bit yes, operationally,

wanted for pass and the year. full to so that, with that And guidance raise the we long

Philip Shen

Great it Great. pass job I'll on. Thanks, again. Dominic.

Dominic Bardos

got You it. you. Thank

Operator

comes Mark question with next JPMorgan. The Strouse ahead. Please from go

Mark Strouse

Yes, good afternoon. questions. Thanks for taking our

on up the on following of there kind backlog. question So Phil’s

in XXXX May months historical X going kind to some conversion there is assume filling early sitting you're XXXX? that or that for you we So in of still in in sneak here XX so, potential or forward, should now, deliveries could out

Dominic Bardos

quickly. months quarter why we at point like Oh, deals mid-year We to in in characterized the that XX burn projections position get done of when we can still can yes. in a of at pretty revenue we come get a are that opportunity guidance out it the typically deals XXXX. of I and X have year. say we earnings this kind we'll second It's And past, things to are, as still that feel believe with turn release, to definitely the the tighten think point back fill in months, the that's latter. And one in the time, we've the half the But we even to time, we the up from range, further. that there

Mark Strouse

update And Okay, of you. ITC on potential say then limited on Thank up you. you and competitive of case, color a probably what that's following bookends there. and a investors environment you're helpful. look commentary general But And be much any as kind the how would timeline helpful. you can the Thank more that then just understand kind of kind far just on your can like. give for as might

Jeffery Tolnar

Yes, this Mark, thanks Jeff. for the question

litigation. are As you mentioned, we in active

over So foundational years to can say. and I of and into the I'm resources what our we have significant product limited IP's on market. company building in the financial sets somewhat What of IP will our is time the I our amount spent much a emphasize that

manufacturing our support are company ITC the IP creation. We still the seeing competition And we're coming that job a recently we the foreign-based to has domestic protect helped continue internationally. is predominantly And at domestic market. will into that solar our and domestic competitors and expanded

to say actually would what very IPO. I saw we the during similar is general, in Competition

We continue at the to look marketplace.

in far look our we buyability. as our and competitive feel continue the themselves to we for operate. speaks speak which that at We regions competition And respective in overall, as for solution our itself results

Mark Strouse

I'll Thank take the off rest you. line.

Dominic Bardos

of million XXX If question I $XXX and just could back and on awarded orders about to mix. half log. Phil's answer jump It the was in real quickly, of a

Operator

question ahead. And comes Percoco Morgan with then next Andrew from go Please Stanley.

Andrew Percoco

here. much taking for question the so Thanks Great.

quick last before key have you you expire, around time the remind question portfolio. were one the case? to patent Just you duration, win Can follow-up the much patents those what on us of the of SEC how if left some

Jeffery Tolnar

get time foundational I'll decade on to back is good specific patents. I question, And Andrew. believe you think I But to That's of a it close have the to duration. on do runtime the longer

specific to of we’ll time. timeframes. get it's fairly a amount So substantial I back you on

Andrew Percoco

quick follow-up product? the solar and seeing you. Thank side. there growth with the are Great. battery you And in maybe storage just BLA storage backlog one booking of on terms What and growth attaching opportunity? battery Maybe

Jeffery Tolnar

is we've Yes, which a solar the deployments in And one one. participate. in few things. there That's seen increase in storage we an that attach

our of as gigawatt And and year. is and we've to in. come The staff one the added our business we second the are producing purchase order we late orders last part storage in activity, proposal increasing received overall quotes new

differentiate well in as the encouraged position to has we’re the Shoals really strong we're market that So that in. I heading. others that's feel the about a direction And as

Andrew Percoco

Thank you. Great.

Operator

with Maheep go Please question Crédit comes The Suisse. from ahead. Mandloi next

Maheep Mandloi

evening and thanks here. for Great. questions Good the

on Just versus the for projects? new think others. the should How in BLA+ contract the other any of is there BLA or backlog a portfolio? and about we convert And the and BLA+ question margins upside current ASPs your those of to to some products,

Jeffery Tolnar

I believe that are BLA. date what XX% that overall BLA+ end enjoy offerings to sales hi The numbers is The grown presented consistent again. within with which bundled the to with that incremental we've of is this ASP target Jeff mix Yes have Maheep, target. of on is fourth solution. margins met due quarter, I to to with the at the XX%

that from So you see perspective. erosion won't any

as in traditional far are for and already BLA+ projects backlog year awarded includes And quoting upside our traditional as in BLA, go, our the are this earlier that activity, order began timing BLA. and which

Maheep Mandloi

to see on revenue year I should on recognition and understand new we the this Just just should of see year? you, of this in awarded revenue when XXXX? to for bookings the the UFLPA be want it pipeline all the comments we recognition of bookings Is -- XXXX, orders in the bookings duration them? your the new what's for

Dominic Bardos

contracts, complete And revenue. ASC contracts XXX, that products. most piece So about, talked revenue with a production period facilities On revenue for on for of we recognition I'll see us, XX actually orders, something recognition becomes allows about by look revenue as is month when mainly when X we our first us we typically, to awarded because actually average, awarded when go we recognize to have the contract but is before time. something we've contract, to some once at in ship as

it's what awarded about a orders. months for talk X So and about to backlog XX we

So end at to million month typically of March, X the the start of $XXX awarded that would orders window. you XX

was we it I have in question, hey, and might it fact, Now that come as can. year. we with can saying, patent infringement, for had some this like coming following of in just hey, us yet do talked we customers with Mark's think to about, Yes, announcement us our you an also, can earlier? And something

accelerate, is it do materials that can always So assuming to the we get work. possible the to

With million going awarded then, regards in we're the now is million a XXXX majority to quarter, combined $XXX quoting backlog we the in just to $XXX because and be guiding in we're put to still orders million to recognized $XXX revenue. of and where

fully the we're So items with. the is vast to the drained backlog we majority, as go contractual because are expected backlog that to replenish for be example, those ready

out we the mentioned in up into for our is significantly remarks, -- his as time, we're Jeff the quoting are as pipeline activity further over well. booking So but future,

confident very pleased And with activities. the feel very Shoals specifically, that's is sales well. that are our why for doing very could we So -- we're industry we solar

Jeffery Tolnar

Maheep. point, one Dominic, if I add can more

XX we've planning while, If durations bit curve, little slide which the further for based stages you would nice in pictorial a a the time much at come in as EPCs. is types and But add, used deck, the and some come some of that projects said, on Slide quicker really are view. a Dominic out our look gives a I the project

Maheep Mandloi

Got the I’ll guess it. on follow I rest. quarter. congratulations the

Operator

The ahead. Please from Brian with comes Goldman go Lee Sachs. next question

Brian Lee

Kudos guys, Dominic. on here. Maybe execution good for first afternoon. Hey you, nice question the

COGS investment here the You over quarters. be making you're mentioned going some to few next that

the for And changing so of just kind on based guidance you're how year.

be downtick more forward. do does may investments quantify recapture And bit? you those going here then like point It margins basis a maybe what frame you it that? time what be? a COGS on little are seem Is elaborate bit a point Can going drag? drag? of XXX XXX basis bit kind Is to it And

Dominic Bardos

Sure.

So as planning couple One our growth. at talked to about of at things. on look future. we the the a look and is We're need we've facilities,

plan haven't We're looks come We multiple the yet broader from really in you and like about back year X-year the to of the IPO this the third community materials. what point.

about we've So talked facilities. the need for

very it's we in unproductive line costs some quarter, of likely first had of we COGS the up having that that like the some may While new back this half be when year. last in much in year facility the that

to look in can at As that we we capacity; Portland looking for capacity and going at our demand are we forward. make meet facilities, we're look we sure where

be one would that impact that would So COGS.

making There's cycle. from things to no internally team just timing rent a have that full and as own that wages. that. recognize of with with investments our like a incurred. expense normal anything a amortization We or few it we're a It's it's There's standpoint

happen So in was QX, standpoint, didn't from it QX. a happen planned it in to plan

things some are being are invested that in. those So

right back be gross given the margin the there's you're decline that what We guidance an in expected to margin business going going specifically the the slight of in to But half. side be. to is infer haven't to

Brian Lee

and try you X with fairenough. storage, much the assume for and any so I what to the forth. awarded or And terms that you And percentage on as handle and of non-solar guess as you're super I EV has do get mentioned then solar Okay, just some opportunity that? as backlog you of would is a a that around to to what quoting the year accelerated plan, battery appreciate X provide I sense activity helpful. color. what for that going better of time the growth be investing it's Is orders any non-solar, can sort of alluded and we there the seeing whether to guys in non-solar, mix growth metrics frame solar charging would that pipeline are lot look of the versus to you but that, like

Jeffery Tolnar

So I'll go. would say. I

Dominic Bardos

say... Go going going ahead. to I was Go just Well, to ahead.

Jeffery Tolnar

All yours Dominic.

Dominic Bardos

going to run I'm time with This it. Okay.

you customers. Let relationships, the out And and pleased then is of me go has expectations for exceeded of ago. with domestic One services adoption were first of years that a we industry can jump our couple the of and with kind in. right A us the solar things. are products our couple very laid

And with pleased we're the we've very seen. so growth levels that

sure I expectations so and want the that make past that the that appropriate predominance that business. outpaced the give think has of attention has dedication to of years grown we And for level and of aspect to X it since we the

to the our With other the to and others, talk there. multiyear with some I'm going Product of are let Jeff underway that about Officer regards Development things strategies Chief some of

you to over it turn I'll Jeff, now. So

Jeffery Tolnar

of business, we've couple I Yes. of over launched X you as domestic strong the those X solar things coming mention. still is would still the Thanks, growth growth at X believe pillars X the that to projecting be pillars predominant are that incremental are growth growth a is solar IPO. firms analyst looked still Brian, growth would foundational. Domestic in We different We driver Dominic. years. planned at our to domestic curve. is expect, And the a considering One that whole, our as

launched they're progressing. all all and They're

to them of or growth their a development Our mass into segment goal to continue is towards curve. drive broader

offerings able plan. to to also incremental continue we look be at we're excited additional As strategic to announce that our with

broader it's it function really the who's in the big asked -- well, And a within thinking I've is and past, been Shoals. doing

Chief the us Product offerings. the Product from came ideas the Chief is with the John turns initiative, engineering team as but inception those at our of really, the Officer, ConnectPV that faces market John who acquisition. the Officer, anybody look then Hass, and our we in then into have leading customer We

feel have think about to grow, good got continues of we great overall, we as pillars very, future -- to So very complement we we've business. solar the some the And growth domestic that.

Brian Lee

Okay. offline. I’ll take Thanks guys. it

Operator

the from And Levy Truist ahead. Please question comes with Securities. next Jordan go

Jordan Levy

Maybe Afternoon on follow-up quick all. just last a non-solar. the question on

if Just we get for detail a little partnership sense might could wanted Brookfield you to say the and more be quarters? able see timing on of in over to how you're there about thinking few whatever of the any that next terms

Jeffery Tolnar

a I'm be They Jordan. you one. will Thanks, counterparty us. Brookfield, but We're partnering also very Brookfield as the strong excited is Renewables. that really internationally. Yes. for know, with domestically company about

Brookfield So ecosystem Shoals and into a an Charging Service. it then solutions will sell will as will to be its open be offering that bundled

they to than owners, that. point to charge operators. fleet for go has upfront rather if the to able will team, city desire operating go will will, charging systems driving property to then the have expense means their to be and capital operators, shift if the method via Brookfield So deployment And you do spend than

also EPC this said partner companies I and OEM we involves the ecosystem with that pull open When and into want that partners. ecosystem charging to

market the to we that So will in to very a impact this strong we the presence year. it's market believe have start and going

Jordan Levy

the on that's how expansion to according today how maybe domestic? it And thinking wanted more thoughts efforts international just And stands to of versus kind around follow-up side. get that. your I the expectations about if that segment a out are solar as you're market playing and your Appreciate going?

Jeffery Tolnar

focuses Europe, Australia, our our Latin we where quoting say in with countries in hone in would market product to win we've fourth have offerings. a our report we progressing. to right I activity America, continued with certain is The certain Yes. quarter, consistent are feel offerings

occur. The still a starting market standpoint. tremendous solar order to from It's a flow is

I intend at mentioned right this when to the a we we we last I customer that facilities us so believe still got play. And to that that So fulfill can to and starting do market quarter, can resources it orders look so right as add occur. expand. we also are further we've they for year is

Jordan Levy

much. so Thanks

Operator

The go Rusch comes Colin Please next ahead. question with Oppenheimer. from

Colin Rusch

so Thanks guys. much

charging of the bit With by flow the can little that about are project wanting you're IIJA clarity tax on from or IRA solution, treatments out of being gatekept a folks products talk you is of color perspective? How what the are a EV on? that can any provide you these funds for many seeing helpful. Any

Jeffery Tolnar

seeing they start Yes. I then still funds It's they're not the is bus a on to X primary significant strong would project as NEVI say quoting the from continue to not diesel. That's fleet the still be amount determine corridor how from date, the charging are I would electrify across say either compressed fleets a natural very of We're just grants. EV world. much but electrification driving that and activity, segment their charging going the or flow infrastructure to away in the IRA those to drivers country. areas. And gas then school the

drivers So in segments. the those though are the primary

Colin Rusch

shortness projects the right power now, little on you approaching pricing about given then talk a working have infrastructure you how electricians, can how And and of think you're helpful. That's Okay. skilled much you pricing bit here?

Jeffery Tolnar

don't couple labor pricing that shortages. I know with I Yes. would

project pulled early need. They on really know a their they get sizes really got in know So with teams XX visibility what X-year project EPC They've into sometimes in what they our partners. windows. capacity XX, we We and is, cycle. team their closely work months,

X As the we're from longer time customers. than to the XX Dominic even time providing that it's from firm we mentioned, months quotes get in order, awarded to

began ramping EPC Shoals gets the hired, they involved. is time then the by So crews their and

we is ways a talk So And down availability what quite to would tend a then the Shoals project and macro come first other are factors comes then EPCs that say and panel road. I thereafter. in about

at the and and choosing now the have year quite right macro panel some providers UFLPA the the paperwork, of the they they're developers correct, is the making EPCs out good of well So so right some on. other and documentation filling sure last that headwinds events, learned saw the with negotiate quite how to getting

Colin Rusch

much so thanks Okay, guys.

Operator

The Please Harrison Sandler. next question with comes from go Kashy ahead. Piper

Kashy Harrison

Good for taking thanks the afternoon everyone questions. and

for are a growth? indicated watt I those current that quarter-over-quarter. higher say much me, solar Jeff, Would that up your and because EBOS So first of one versus think U.S. I Or are per your $X.XX indicative year? offering the quotes watt last you market XX% now XX% covers, quotes quotes were $X.XXX think, solar you of year-over-year

Jeffery Tolnar

is projects there launched. activity were global. important quoting quotes at is average it's similar has upside additional number increased price. that that levels. the The in From Yes. note some the a first. the That's of some But also also of volumetric It to includes quoted standpoint,

So Kashy. it's both, really

Kashy Harrison

enough. Fair Slide at a of XX maybe then your deck. just Okay. taking investor look And

So is $X.XXX watt. That's EBOS that per offering the about up from $X.XXX you last current deck per and watt. now show you're the targeting still

so gets that balance $X.XXX, launched Or is additional year you fill that play that that gets the curve next you chart? be are the to out will that that and And and products plug benchmarking to high-capacity IV pie there? there

Jeffery Tolnar

lion's We are It's It's that feel products two the in the the targeted former. get we've we that of that product share category. slide. can announced

IV growth deployed to going each It's there's that trace though, of be fields. opportunity. just that about thing I really too, curve for adoption not The be it a them. remember, Now like one existing is can in new an

Kashy Harrison

that. Thank for me. for Thanks it. That’s it Got you.

Operator

Capital Please Markets. Donovan from go ahead. with comes question Schafer next Northland The

Donovan Schafer

the questions start I to and congratulations taking guys, off. on the want quarter. Hey for thanks and

a charging because has in common fleet consultant very in I concrete trying in deal up stuff. a do ACT do guys at said, is here apparently to one Expo I and booth the and And pretension can't pretension fantastic And week, to big job, when problem. to it's I I'm you really seismic it's been got So areas prone rebar, parking reps see sorry, had it booth not trenching touch came a of last got structure great. your basically activity, And a which a sales rebar. was or prestressed expensive. there, California. I've or to was the -- clean it's the energy that

not even it's consultant, particular an this on option. based least at that, It's

you being it's you as trenching. rock to -- you only piles, and a let know when I and is that got -- Australia, talk the into about alone, hard the drill imagine So already it then have to drive I pain there could rock with

does up? things how intents radar between non-trench the on of only where where even options, not really Are maybe it's but haven't option. yet side, or thought you on the wondering So other often solar the come of solution charging all about I'm side EV there a whether choosing off is for purposes, it's the it and kind --

there on I this on elaborate realized can you I missed concrete. thing that anything the Just

So curious I'd about to else. learn anything be

Jeffery Tolnar

the question, start didn't got your And that UL search, But it much do with thrilled to Donovan. believe up are a cities is UL that. love we -- picking really mostly we now We that's brought have if is quite property year, a Shoals. bit of needed until also retrofit. state that's were certification last we quarter of that type around. team, our And fence. the now I last was because driving if third you opportunities to great happy there's really were be, They that. you're owners we event to that have responded that the One push are that market strengths. we behind you way for momentum. consult the up week, looking coming in But to And sales you our and specifically as and to one

ways, whether DC and power above deliver the it it fundamentally, When in opportunities Power. Shoals do very is AC a it's ground. electrons, or efficient you what effective and do look at we different does We

of case of lead or in or So inhibition there's a of may whatever be, landfill is perfect that a our has a digging think assembly. a it whenever mounting you opportunity. the kind that's Shoals some one and many, big electrons, for requires solution Whenever

Our trunk Shoals an caps that, of off opportunity. has and our

that too, do focus we it EV solar. and adjacencies gain. is So remember, on -- everything focusing at on look create, We're we might other we that but markets we

you're to Donovan way. environment also because on, species and protect we're spot So trenching considered not and digging helping in we're that also underground, the endangered

Operator

comes The go Vikram next ahead. with from question Bagri Please Citigroup.

Vikram Bagri

efficiency prices in much margin? was raw How that better on versus afternoon impact if way this. missed costs other negotiated Apologies lower sustainable. material that operating wondering how any Can Good It in contracts? perhaps all of sustainable improvement gross from of and seems was talked much everyone. lower leverage drivers costs are material came contribution about I of to you quantify higher due how the and you I of gross margin raw the that is.

Dominic Bardos

the we of last comments regard recover various specific the to how and drain to didn't don't raw from about components goods margins and challenges And we negative that. that Yes. materials disclose intentionally of cost some with model our change make a year. in go disclose sold. was -- the input we some had on pricing to But last of breakdown did We year the

there were gains. some So

so of And bespoke the in very is custom about talk our a to of solutions disclosure for hard are our because say and we it's all "pricing" when pricing customer. which environment

and $X difficult very a SKU last that to this it's say, here's $X.XX was So year at sold year.

disclosed So But haven't materials. specifics actions some with regarding we take there. anything corrective did we

a of we the some price. On purchase we've to about that our through that at I typically in We wire talk when time, materials. gone because last don't opportunities at suggest discounted comes wire. stockpile this a buy order we would typically is job a typically secure half the had we we backlog purchase year, But when did lots and point of through wire

for materials to of really materials, raw a cost was off we price replacing our of lift value our specific the onetime the that or and based So if at lift look maintain margins. there

Vikram Bagri

content the on once I be credits change a been if asked are there? about we'll guidance domestic on what guys talk happening also, can seeking step answered and backlog much quoting application meaningful from of released. is XXX And Understood, and thank has activity. I about is times. you multiple was wondering ahead It acceleration see And How if you. wondering clarification? was a of then activity in talked And that you how expectations in the related can note, the filed an you clarification

Jeffery Tolnar

quoting Yes. look at But it's credit broken new plus question. when in purposes. a you the I'll can we offerings. would comment specifically I what the as hit mentioned, plus comment domestic our now Dominic general, and haven't volume the you international quoting what combination product for or out is hit volume quoting of increased, RECs increase, perhaps say Vikram,

add So those to overall win default continue by goal quoting business. to is additive factors the to to are going value. And our

the to we that's So continue hope direction on. that

Dominic Bardos

from directly that And to we'd production with any of be there's sorts credits standpoint, very on, the going IRA regards qualify with what's and credits. for little doing to associated a

We not space. in that are

pursue for and Our And raises customers, great the a customers -- however, all great it's therefore, benefit. folks to boats where better for would receive all owners. credits, and have return lots projects solar of those our tide industry. that's rising It's the their for

Operator

next with Osha Guggenheim Partners. comes Please from The Joseph question ahead. go

Joseph Osha

Hi, thanks.

that find some some Just been manufacturing to follow your crevice question, up credits. on to into operations might direct had previous XXX you in there sort discussion earlier language on a of way that wedge the the

So this that no that's us option? likely at you're point telling longer a

Dominic Bardos

are the There it the specific customers guidance, about. we're is is understand things of that apply for still some that very are the get expectation goods. credits way the we talking our most purchasing we what Until for will

that new our to it's talked qualify. and a For specific would capacity, building. go expenditures example, when about like off going I there build But capital very are we're expanding not

the I fact, are In credits. expressly buildings think written out of

light. very we So capital are

credits direct us angle. and the vast that can to every going we'll possible Yes, us. majority the what So was I aren't benefit are saying, look help that's there to be some of

we course, the themselves, and be where of content that's maximum seem the most credits will. But customers the to and qualifying Of for for domestic get they're looking to the credits.

Joseph Osha

Sure.

just share about a feedback you wondering environment heard getting an updated up you. from can little LPA clearance the come you're EPCs Thank unrelated -- Okay. any how And follow-up, panel if your U.S. panel I bit ago. is? I'm

Jeffery Tolnar

Yes.

that because arrangements, right In our far job made making have panel to panel-agnostic. that. on documentation time sure to would supporting -- alternate all filling -- UFLPA. very in completed we're are can decisions get the for the and on that impact is a the I of as monitor said, then a say still issue. when we deployed. making and we operators in expected. decisions in that also, far Joe. needs panels materials thanks we're likelihood, which the So so I proper done It's they've We've market an And design and are not that also question, seen the far significant And from ahead so the the projects making of like the anticipation panel continue But accommodate then our already nice out issue

Operator

comes from Please go question next with The Cho Barclays. Christine ahead.

Christine Cho

don't Thank get is into longer presentation, if I'm your a getting your seems you little you In know that an for taking my just much EBOS. awarded from it question. order it, line time but when to reading I too that? the if to solar it I'm for now risk U.S. talk before extended? months. line Could is driving this XX it's X getting months, you about XX what's see time guessing in was for And X this And to you

or well your this and same it products as is internationally or for longer shorter? non-solar So line time is the

Jeffery Tolnar

few version range for the XXX the just point that a to try it can to to What are tried the expand projects, duration. question. going they're larger a more is really a we thanks out, and megawatts/gigawatt more of this more I'll do more complex quickly. Christine, the there's be tend deck things is longer longer much and cycle. in projects The in range. projects rapid The to designs, They're be time of turn take they we smaller because

tend the cycle When they or to times. on projects, cycle you smaller look international size be at

while tried it a that's X blend. into hard We've a encapsulate that broad. a page. having do is all not it It's kind a because of mix. So but providing so range range It's to it's to silly

if into have offline that I'd it, questions. much still discuss Christine, more happy to further So I you too read know don't and

Christine Cho

the usually goes And doesn't Okay. X days is the reason? like order quote Does purchase give move convert, then a between And which before the it to it final becomes order awarded event order what in an PO, backlog. into awarded around purchase quote order? much the looks is you the and when also

Jeffery Tolnar

with it scale quotes larger, there of move around some a because percentage around will they move awarded that to the and do the that's arm won't There's at awarded, -- they look wasted treated center doing orders lot of to time things, picture with proceed, of if around. the put get They'll a The not tend that substantial time point. when it's commodities. and they as Yes. that a of change become And And detailed move EPC. some when them lot total the always because center or effort design. for predominance but work effort They'll are a always I and get on them. you because we are of backlog. The direction of design. bundled arm were smaller finalize because the orders we start get and we've when to view spent a EPC grand around

final final report it the PO always X comes as we've our in important the awarded that's So And treated something cycle, such. order is quote. why we then as days incredibly the quote final that to and after

design. So and Is that the commodities with helpful? in and data quote that's that along us allows the better understand for final to

Operator

comes with Please Castelli Morningstar. question from Brett next go The ahead.

Brett Castelli

you. thank Hi,

to Just color terms any sales of percentage you with repeat from your XXXX or Can guidance. coming versus what customers? customers give is in respect existing new

Dominic Bardos

I way. all of expanding guided know mix. are time. the the EPC historically, with number customers we report we've think kind that customer of And we out don't I

our it top the Originally, where then was smaller of X business we're I the top saw XX. it XX, would think and characterize EPCs. and vast the as of the top continuing targeted add is XX. but majority I So repeat known out you we And XX top got to

as coming the and back folks to it next projects. speaking, buy for So generally continuing I characterize would it's

Brett Castelli

and you BLA+ the new to in existing overtake on terms BLA product expect the Okay, thanks when curve And you of majority expect then the customer there, adoption that and just Dominic. be that the orders? would

Jeffery Tolnar

product merit from the customers also would procure our of feel I to conversion. BLA+ are whether every What a and that could that We those has a in solar cannibalistic BLA. not a Shoals Yes. project or needs bundle. is say would those matter say the not. bundle that strong BLA+ that is position components I It's provided But

for looking wire, they've hangers, already company Shoals duration needs comfort kits longer. from have is don't got So of the to method If tensioning wire If for the that their they one there, then may that and hanging answer. take continues procure the EPC the be with an a time. the messenger if and could they're comfortable it very a really wires, a BLA solution they of it feel the meets has then long

So short, time. take some to in it's going

those follow see the And provide we'll some announce on We from to wins near-term as traction, one and we to start we get to expect they that just more visibility. further announced.

Operator

Derek from comes with question Please next The Soderberg Fitzgerald. Cantor ahead. go

Derek Soderberg

occur Yes starting hey that are Thanks. what mentioned be guys what guys. order I'll I growth And Curious And terms different have Jeff, you the challenges for working might that internationally there? you believe that before? are might keep doing what's of it internationally. in here. flow helping? you guys back held to one you to

Jeffery Tolnar

portfolio. Yes. Thanks, What's Derek. of breadth working our the is

those the a system of of where full Australia, markets In projects LatAm, deployment the solution. than time to different got range fit opportunities long some solutions, system components we've chosen the domestically, is we've you very, If market also component for enter in Europe, solution. business a then very we recall, been with the but our full Shoals in has which have better

XX now, in to the feet So got those the We've we on fact markets for better market XX we've months. street understand been that deployed.

to compete in understanding win respective and markets. what of portfolio parts best their are really we're Now our

starting say that's materialize. learned, that's and to we're see what more would we've I orders So why

Derek Soderberg

guys. it. Got Thanks

Operator

question-and-answer and This concludes today's session the call. conference

You for and have participating, may disconnect day. you a pleasant Thank your lines.

Shoals Technologies (SHLS) 8 May 232023 Q1 Earnings call transcript